Can Foreigners Own Property in Indonesia?

Questions regarding property ownership by foreign nationals in Indonesia continue to arise to this day. This is understandable, as many foreign investors, expatriates, and long-term residents wish to own a home or property assets in Indonesia. In principle, foreigners are allowed to own property in Indonesia; however, such ownership is strictly regulated and must comply with the applicable Indonesian laws and regulations.

 

 

1) "Hak Pakai"

 

Right to Use ("Hak Pakai") is the most common form of property ownership available to foreigners in Indonesia. Its key characteristics include the following:

 

a) Registered under the name of the foreign national

 

b) Used for personal residential purposes

 

c) Valid for up to 30 years and eligible for extension

 

d) Applicable to landed houses, villas, or certain types of apartments

 

 

2) Through a Foreign Investment Company ("PT PMA")

 

Foreign nationals who wish to make commercial investments or own property for business purposes can establish a Foreign Investment Company ("PT PMA") in Indonesia. The advantages of owning property through a PT PMA include the following:

 

a) Eligible to own commercial properties such as hotels, office buildings, shop-houses, or rental apartments

 

b) Allowed to hold Building-Use-Rights ("Hak Guna Bangunan" / "HGB") over property

 

c) Fully legal and compliant with foreign investment regulations in Indonesia

 

This method is generally safer for foreign nationals who plan to purchase property on a larger scale or for business and commercial activities.

 

 

 

Although foreigners are legally allowed to own property in Indonesia, many ownership practices still do not comply with the law and carry significant risks. These unsafe methods may seem attractive at first, but they can lead to serious problems in the future, such as loss of property rights, legal disputes, and financial losses. Therefore, it is essential for foreign nationals to understand and avoid illegal or non-compliant property ownership arrangements.

 

Below are several property ownership procedures that are considered unsafe for foreign nationals in Indonesia:

 

1) Using an Indonesian Nominee (Indonesian Citizen’s Name)

 

2) Private or Under-the-Table Agreements (Without a Notarial Deed)

 

3) Absolute Power-of-Attorney Arrangements

 

4) Name-Borrowing Schemes

 

Therefore, foreign nationals are strongly advised to avoid the illegal procedures mentioned above, as they carry significant risks. Instead, use lawful ownership structures such as Right-to-Use ("Hak Pakai") or ownership through a Foreign Investment Company ("PT PMA"), ensure that all required documents are duly registered, and consult with qualified legal professionals to secure property ownership and protect your investment.