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FTW advises on legal aspect of real estate and hotel
development and on all aspect of construction law, including the
preparation and negotiation of consultancy and construction project
agreements. We also assists clients on compliance with environment laws
and hazardous waste regulations.
The Indonesian law is mostly
governed by the provision of the Basic Agrarian Law Number 5 year 1960
and its numerous implementing regulations. The basic agrarian law
constitutes major inroad on the civil law tradition of Indonesia. An
important element of the replacement of the old law regime is the
registration of land envisaged under the Basic Agrarian Law. In
practical terms, registration of land means that the uniform ser of
land titles of the basic law imposed on land.
The basic agrarian
law specifies several types of land right which all offer the right to
utilize the land concerned. Differences exits in duration of validity,
nature of utilization, possibility to mortgage and proof title. The
most important of which are the following:
Right of ownership / free hold
called as Hak Milik, here right of ownership is the most complete form
of individual right on land. It gives the holder the right to use land
and the earth underneath and also water and air above it. Right of
ownership to apiece of land does not include the right to obtain the
wealth underneath the earth. Right of ownership has no time limit, the
land owner is entitled to convey the use this land to another. The land
owner is given a legal document as evidence of his right officially
known as a Certificate.
called as Hak Guna Usaha, this right to cultivate state land or to use
it for other agricultural purposes is for a fixed period of time not to
exceed 35 years, extendible for 25 years. Right to cultivate can also
be released to the state . In practice there are two kinds of Hak Guna
Usaha, one for farming enterprise which smaller then 25 hectares, and
one for enterprise which are 25 hectare or more. The regulation
applicable to each kind are not same. However according to our new
investment law number 25/2007 which just approved on the end of April
2007 Hak Guna Usaha may be given for 95 (ninety-five) years and
simultaneously renewed in advance for 60 (sixty) years, and it may be
further renewed for 35 (thirty-five) years. Right of building (Hak Guna Bangunan)
is a title on land which gives its holder the right to erect and
posses, normally belongs to company. In turn the holder of the title is
given a certificate as evidence of the right. Right of building does
not entitle its holder to obtain the natural resources in the earth
underneath the land possessed. However according our new law investment
number 25/2007 Hak Guna Bangunan may be given for 80 (eighty) years and
simultaneously renewed in advance for 50 (fifty) years, and it may be
further renewed for 30 (thirty) years; and
is a title on land which gives its holder the right to use and obtain
the product of a certain piece of land. The land possessed with right
of use can be either state land or land belonging to a private sector.
According our new law investment number 25/2007 Hak Pakai may be given
for 70 (seventy) years and simultaneously renewed in advance for 45
(forty-five) years, and it may be further renewed for 25 (twenty-five)
years.
Basically foreigner
cannot own land in Indonesia, its totally restricted according law
number 5/1960, however since 1967 Indonesian government already
governed about investment law whereas foreigner through investment
mechanism they could have land in Indonesia legally. Foreign direct
investment normally called as PMA, here foreigner could set a PMA with
100% ownership which can own land and properties in Indonesia.
Land
rights may be granted and simultaneously renewed in advance for any
investment activity, with, among others, the following conditions:
- such investment is for long term and associated with the structural change of Indonesian economy into the more competitive one;
- such
investment is with the level of investment risk requiring long-term
Return on Investment according to the types of the investment activity;
- such investment doesn’t require extensive area;
- such investment uses state-owned land rights; and
- such investment doesn’t interrupt the sense of impartiality in the community as well as public interest.
Land
Rights may be renewed after being evaluated that the land can be
further used according to the condition, nature and objective of
granting such rights.
The granting and the simultaneous renewal
of land rights in advance and further renewal may be halted or annulled
by the government if such investment company abandons, inflicts damage
to public interest, uses or makes use of the land in violation with the
purpose and objective of such granting of land rights, or violates any
rules of law applicable to land maters.
To own land through PMA company.
For
a new prospective PMA company especially that which requires land or
real estate to conduct its business, one crucial procedure must be
followed in respect of land. This regards the processing of the
location permit. The location permits allows a PMA company to acquire
the land needed for its operation, and also serves as license for the
transfer of rights and for utilizing the land for its investment. The
location permits must be obtained from the Regent (camat) which has
jurisdiction where such land is located. Please note also that there is
a strong policy in Indonesia against ownership or control of land.
Hence the PMA companies while granted the rights in land necessary to
make their project viable, are not allow to hold land beyond that which
is actually required and specifically licensed for their project.
Ownership of Strata Unit / Condominium by individual foreigners
The
ownership of strata unit by individual foreigner in Indonesia is
governed by a government regulation issued in 1996 (Government
regulation No.41 of 1996). Under this regulation foreigners resident in
Indonesia are only allowed to buy and own residential property if it
is built upon land Hak Pakai over state owned land. Ownership of strata
unit covers :
- Joint right on parts of the condominium (Bagian Bersama);
- Joint right on things attached to the condominium (benda bersama) and
- Joint right on land which the condominium built.
All
these form a unity of rights which functionally cannot be separated.
Ownership will be evidenced by a Land Right Certificate (Sertifikat Hak
atas Tanah) issued by the relevant land office in local regency. All
ownership rights to a strata unit are initially issued in the name of
Developer and only after the respective strata unit is bought. The deed
and land certificate will be registered in the name of the buyer as the
owner of strata unit. Once it has been properly registered, the owner
will be entitled to (i) use or alternatively rent such strata unit to
other party (ii) secure such strata unit in the form of land mortgage
(hak tanggungan) and (iii) transfer it to other party.
In additional FTW also provide legal all services in the field of tourism services in Indonesia especially in Bali.
Contact : - D.Aloysia Trombine at
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- Ida Bagus Sudarsana at
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- Dewa Ayu Mas Ismayani at
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- Merlyn Onita at
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