OWNERSHIP IN INDONESIA
Invest Islands has spent significant time and resources to establish the correct legal structure to ensure full compliance with Indonesian foreign ownership laws as well as Hong Kong (commonwealth) investment regulations.
Penanaman Modal Asing | PMA
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, which is 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. Foreigners 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 possess land for an 80-year period, with the freedom to construct and develop buildings on the land during that 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).
For foreign investors, the best solution in terms of the legal aspect, cost and peace of mind is to purchase land through an existing PMA. Invest Islands offers a full-service agreement between the PMA and individual investor which specify 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 will also allow them the freedom 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; making it a more secure method of investing compared to using an individual nominee.
How to set up a PMA company in Indonesia
This guide to starting a PMA is the first release of our legal guide to investing in Indonesia. It will include an introduction to corporate structures and a guide on how to start a foreign investment company in Indonesia. We define what a PMA is, list the requirements for starting one and what you can expect post-establishment.
With our professional advice and personalized service, the details of Indonesia’s foreign ownership laws and regulations are easy to navigate and understand, making investment in one of the world’s most idyllic locations clear and painless.
Investing in Indonesia through a company is one of the safest options available, allowing you to remove risk and comply with Indonesian law. For foreign investors, the best solution in terms of legality, cost and peace of mind is to consult with experienced professionals to guide you through the process and ensure your investment roadmap is clear, long-term and structured.