Ownership in Indonesia: What is the safest method?

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PMA vs Nominee, what is the safest method to own a property in Indonesia?

Indonesian property ownership | Investing in overseas property can sometimes be a tricky game when it comes to ownership. In Thailand foreigners can purchase freehold interest in land or property in cases where they own not more than 49% of the company and the other 51% is owned by a local person. In the Philippines the law currently stands at 60% local ownership.

Until fairly recently – 10 years ago to be exact – land ownership in Indonesia for foreigners was only possible through loopholes in the nominee system, which was strictly designed for married couples. In April 2007, government legislation was finalized and signed in Jakarta which changed everything in this regard – well, on paper at least.

The new laws meant it was possible for foreigners to own property in Indonesia outright through a Penaman Modal Asing (PMA) licensed company.

The intention of the legislation change was to bring foreign investment into the country, but at the time the document was signed by Susilo Bambang Yudhoyono, one of the most corrupt leaders of our time. Even the most spontaneous of investors would have hesitated to capitalize on such a venture.

Seven years after the important bill was passed though, Indonesia had a new leader. In October Joko Widodo became the 7th President of the famous archipelago and with him came a change in Indonesia’s fortunes. In his first term in office ‘Jokowi’ has cleaned up the countries corruption, welcomed and encouraged foreign investment and in turn boosted the economy to become the 5th fastest growing in the world.

The landscape of investment in Indonesia has changed massively since then and now stands as one of the most attractive emerging economies for any savvy investor in today’s market.

Giuseppe Nicolosi of Ernst & Young says: “If a company doesn’t look at Indonesia as a potential investment destination, I think they’re missing out on a great opportunity.”

The key to any investment is how early one can recognize an opportunity. One of the first to see the potential in the PMA license after Jokowi was elected; specifically in Lombok, was Belgian businessman Kevin Deisser. He is founder and director of Invest Islands – an Indonesia and Hong Kong based PMA licensed real estate investment company.

indonesian property ownership

Indonesian property ownership through PMA model

Mr Deisser says: “For a few years we have seen an increasing level of interest in investment in Indonesia, especially in emerging regions such as Lombok. This highly beneficial phenomenon for the local economy would have never been possible without Jokowi’s new pro-foreign investment policies that have shaped a new way of dealing with the Indonesian property ownership system.

“In the past, many investors have lost a lot of money with the nominee system which is risky and illegal. Now they’re finally in a position to legally secure their investment through the PMA system.”

Jokowi is both celebrated and respected by Indonesians for bringing a new era of hope and prosperity to the country, and is looking certain to carry on into a second term to continue the work he has started so well. From an investment point of view, with each day that passes Indonesia is looking increasingly like the land of opportunity. Now is the golden era, now is the time to invest in Indonesia.

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