Like most of South East Asia, foreigners are
not permitted to have outright title to property here. They can
however, legally acquire property in Indonesia and enjoy full beneficial
rights to the property by leasing, entering into legal contracts
with an Indonesian citizen for the freehold or by establishing a
Foreign Investment Company.
We recommend that potential customers seek impartial
and independent advice from an accredited legal firm specialising
in property acquisition. There are a number of law firms on the
Island and our office staff will guide you in the direction of the
most appropriate legal partners.
There are 3 different ways that foreigners can
acquire property in Indonesia :
1) The most popular method is to enter into a legal
contract with an Indonesian citizen (‘nominee' as they are
referred to), whereby he/she holds freehold title to the property
but signs over power of attorney and practical control to the foreign
investor.
2) Acquiring the leasehold of a property is the
most straight forward approach for a foreigner. However at the expiry
of the lease, the property would revert back to the Indonesian owner.
This method is popular in commercial property situations where a
return on investment can be achieved within the lease period, but
less popular with individuals who wish to make longer term investments.
Lease periods vary and extensions are often agreed in advance; 20-30
years is a common lease period in Indonesia.
3) Forming a foreign investment company (PMA) is
the preferred choice of those intending to operate a business in
Bali. Here the foreigner can own 100% of a PMA company and the freehold
title of the property will be in the company name. However, there
are tax implications to be considered and the Department of Trade
will review PMA companies after 25 years so it may be necessary
to re-apply for the PMA license.
NOMINEE METHOD
You will need to identify an Indonesian individual
who is willing to act as your nominee. Quite often a fee is required
by the nominee, either at the start of the arrangement and/or at
the end, if and when you sell the property. In any event your legal
adviser should draw up a written agreement between you and your
nominee covering the terms of your arrangement.
Further agreements will be created covering power
of attorney, right of use and mortgage/loans which collectively
will give you the beneficial rights to the property.
PMA (Foreign Investment Company)
In 1997 the Indonesian Government introduced the
PMA program (Penanaman Modal Asing or Foreign Investment Company)
to encourage overseas investment. A PMA allows foreigners to set
up a company in Indonesia which can be owned 100% by the foreigner
and which can in turn own property as part of its assets. To establish
a PMA company you will be required to:
1) Submit a detailed business plan
2) Make an appropriate cash deposit in an Indonesian based bank
as working capital. (The amount of deposit is calculated from the
total capital employed)
3) List the property investment as an asset of the company
4) Pay the PMA start up fee, which at the time of this publication
was between Rp. 40 – 50 million (approx US$5,000)
STATUS OF PROPERTY IN BALI
Land parcels for sale in Bali fall into one of
two categories:
1) Pipil : Land that has been
passed down over the years through a local Balinese family but has
never been formally registered with the Land Registry Office.
2) Sertifikat : Land which has been registered
with a certificate by the Land Registry Office. Only land which
has this certificate can be sold.
‘ARE' (pronounced “arra”) is
the unit size of land in Bali ; properties are usually advertised
as a certain number of ‘Are'. For your convenience we also
show the square metre size equivalent. 1 Are equals 100 Sqms, 1
Hectare is 100 Are or 10,000 Sqms, 1 Acre is approximately 44 Are.
If you intend to acquire ‘pipil' land you
will first need to have the Government measure the parcel and create
a ‘sertifikat' before a transaction can be completed. We and
your legal adviser will co-ordinate this process, which usually
takes 4-6 months.
If the property you wish to purchase already has
a certificate, the acquisition can be much quicker.
The first step in any property acquisition is to
have both the buyer and seller sign an ‘akte jual beli' or
‘binding sale agreement'. This document will lock in both
parties whilst the certificates are being prepared.
Once your lawyer has the certificates, 1-2 weeks,
subject to due diligence and the transfer of funds, is a typical
completion period. All of our offices have escrow bank accounts
(set up with international foreign banks) allowing monies to be
safely held prior to disbursement.
Land purchases in Indonesia must by witnessed by
an officially appointed 'Notaris'. The standard contracts are written
in the Indonesian language, however, translations can be arranged
upon request.
Prior to completion the Notaris will arrange for
the Government property transfer tax to be paid. This tax is based
on 10% of the taxable value of the land, which is assessed by the
Land Registry Office and is usually considerably lower than the
actual price being paid for the property. 5% is payable by the buyer
and 5% is payable by the vendor.
OUR FEES
Our commission fees are amongst the lowest in Bali
and are normally paid by the vendors. All property prices we advertise
have our fees built in, including those featured in this website.
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