The question everyone is asking, can foreigners invest in Indonesia?
With so much confusion and constant changes in Indonesian property laws, information about expatriate ownership is unclear at best.
Amidst rumours and whispers, we at LetsMoveIndonesia are often asked; can expatriates buy property and land legally? Well we are delighted to tell you that the answer is yes, you can invest in Indonesia…. But it wouldn’t be Indonesia if it was that simple.
Gary Joy from LetsMoveIndonesia.com talks to us about the different ways expatriates can buy property and the benefits and drawbacks of each option.
GJ: Everyone who has lived in Indonesia will know that the government can act very inconsistently and with little caution before making changes. Indonesia wants to promote growth and investment opportunities, but is still frightened to release the reigns entirely and let go of control. That being said, the government has made it so expatriates can buy, but it does follow one or two complicated stipulations.
Let’s look at all the options:
Marriage: Getting married to a local is the most common form of expatriate ownership, although this may be a little extreme for the non-committal types. The other issue with this is that the property is still not actually in your name, but in your spouses.
Right of use (hak pakai): In 2015 the government allowed expatriates with valid residence permits to buy property legally, however, imposed a few stipulations. Firstly, the landed house or apartment is bought with a lease agreement of 30 years. This agreement can be extended twice, firstly by 20 years and then by another 30 years. One benefit of this legislation is that you can pass the property onto offspring. Unfortunately, the property cannot be extended after the 80 years, but by then there is a good chance the rules would have changed.
Importantly with this arrangement you need to remember that if the owner leaves the country they need to transfer ownership to another entity within one year, either Indonesian or one that meets all the requirements to buy property in Indonesia. Failure to do so will result in the Indonesian government confiscating the property.
The other note to remember is that this only applies to luxury property. Currently the lowest property price is set at 5 Billion Rupiah for an apartment and 10 billion Rupiah for homes in Jakarta. Property outside the capital is purchasable at 5 billion Rupiah.
Company set up: It is possible to buy property as a business entity in Indonesia if the property is bought in the company name. To do so is quite a complicated procedure, but once you have done so, you can buy via this route. There are two types of company set up, PT (local company) and PMA (foreign owned company). Setting up a PT is the easier option, however this still requires Indonesians to be the shareholders of the company. There are ways you can safeguard yourself in this agreement, which would require advice from a legal expert.
If you are considering buying property in Indonesia, we would recommend speaking to an expert to check out all of your options first. LetsMoveIndonesia is proud to have struck a partnership with Elson Indonesia, to help offer the soundest advice for all those looking to call Indonesia their home more permanently.
