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Ownership in Indonesia

We are proud to be the only real estate company in Hong Kong that offers its clients an investment in Indonesia and an opportunity to invest through a verifiable, regulated entity without the need for a local nominee. This makes due diligence far more transparent.

Invest Islands has spent significant time and resources in order to establish the correct legal structure to ensure full compliance with Indonesian foreign ownership laws as well as Hong Kong (commonwealth) investment regulations.

Ownership in Indonesia

Protection of your investment is capital to us

INVEST INDONESIAN ISLANDS has spent lots of time and finance in order to establish the correct legal company structure in order to ensure full compliance with Indonesian foreign land ownership laws.

We are proud to be the only Fund Manager Company in Lombok that offers its clients an investment that is 100% legally secure.

Penanaman Modal Asing (PMA) translates as: Foreign Investment Company

The legal entity through which a foreign person, foreign company, or foreign government body can conduct business in Indonesia (meaning generating revenue streams and profit) is the PT PMA. The establishment of a PT PMA is regulated by Law No. 40/2007 regarding Limited Liability Companies (Company Law).

 

Creating a local Indonesian company (PMA), or controlling through an investment contract a parcel of land that is owned by such a company is a tried and tested method that is 100% legal and safe.

 

Create a Foreign Investment Company (“PMA” – the Indonesian acronym for “Penanaman Modal Asing”), and transfer the property into the name of the company.

Since foreigners are not allowed to own freehold property in Indonesia, the same restriction applies to PMAs. However, total control and title of the property by the PMA are secured by changing the property ownership right from “Hak Milik” to “HGB” (“Hak Guna Bangunana”). HGB can later easily be converted back to Hak Milik, for example if the property is sold to an Indonesian or if the foreign investor decides to use the Nominee method.

Penanaman Modal Asing

Penanaman Modal Asing ( PMA ) translates as :
Foreign Investment Company

The legal entity through which a foreign person, foreign company, or foreign government body can conduct business in Indonesia is the PT PMA, the only and safest method to be compliant with the Indonesian property ownership regulation.

Individuals  who  are Indonesian citizens  are entitled  to  own  land under the Hak  Milik  title.  For eigners may  acquire other  forms  of entitlements  over land  such  a lease hold  rights  ( Hak  Sewa )  or the right  to  use the land  ( Hak  Pakai ).

Property ownership in Indonesia Under a Foreign Investment Company

The right to build title (Hak Guna Bangunan or HGB) gives the holder the right to construct and develop buildings on the land and to possess land for an 80-year period. HGB can be owned by an individual who is an Indonesian citizen, or by a legal entity, including a PMA licensed company. A PMA company may be up to 100% foreign owned, thereby allowing a foreign investor to have direct legal
control over the company and its business activities. A PMA currently requires a
minimum paid up share capital of US$750,000 (February 2017).

The best solution for foreign investors in terms of legal aspect, cost and peace of mind is purchasing land through an existing PMA. Invest Islands offers a full service agreement between the PMA and individual investor specifying amounts, duration of investment hold, security of investment and exit strategy.

If a buyer decides to develop their land holdings, the PMA structure will even allow them to fully own, develop and control the property within the lawful term of HGB. It also allows them to sell any interest in the property offshore if they wish to do so.

Lease agreements will be registered directly in the buyer’s name without the need of an Indonesian nominee. A PMA is a business that has to be compliant with BKPM regulations; therefore it is much safer than using an individual nominee.

What therefore is the solution for foreign investors?

The best solution for foreign investors in terms of legal aspect, cost and peace of mind, is purchasing a land that belongs to an existing PMA ensuring that a binding contract between the PMA and Individual investor is in place in order to specify amounts , duration of investment hold, security of investment etc.

If the buyers decide to sign Notarized documents to enter into a lease with the PMA, this structure will even allow them to fully own, develop and control the property within the lawful term of HGB. It also allows them to sell any interest in the property offshore if they want to do so. Lease agreements will be registered directly in the buyer’s name without the need of an Indonesian nominee.

A HGB is granted for an initial period of 30 years, with a 20 year extension, and then can again be renewed again for up to 30 years. The total period is therefore 80 years.

All agreements and legal documentation have been prepared by Law Firm: Lombok Investment Law and Immigration Consultant of Jalan Adi Sucipto Pertokoan Griya Ellen No 19 Ampenan Mataram, Lombok Indonesia, an Indonesian owned and managed law firm with many years of experience in setting up companies and assisting foreigners with their local Property Investments.

 

By using an Indonesian person as a Nominee – which is a widely used method as well. However, the authorities are recently discouraging foreigners to use it, as they see it as a way to get around the law rather than a real 100% legal ownership right.

 

Nominees can be any Indonesian citizen – including a foreigner who has become an Indonesian citizen. A set of documents are then signed to secure the investor’s ownership interests.

 

INVEST INDONESIAN ISLANDS advises all its investors to opt for the first method, as it is the only 100% legal way to own a property in Indonesia. However, any investor who would prefer

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