How to acquire property in Bali ?

How a foreigner can own a property in Indonesia
There are 3 options for foreigner to own a property in Indonesia

A. Using a Nominee (Indonesian Citizen)
Since the freehold title can only be registered under Indonesian Citizen, thus a foreigner can attain a property and keep the Freehold title of the property using a Nominee.

However the foreigner can protect their right upon the property by doing these arrangement with the nominee :

The Nominee will sign four documents with the foreigner as follow:

• A Loan agreement: acknowledges that the foreigner has lent to the Nominee the purchase price of the land.
• A Right of Use agreement: allows the foreigner to use the land.
• A Statement Letter: where the Nominee acknowledges the foreigners loan and intention to own the land.
• Power of Attorney: The nominee signs an irrevocable Power of Attorney giving the foreigner the complete authority sell, mortgage, lease or otherwise deal in the land.

B. Using a PMA /Corporate Ownership
The legally permissible way for a foreigner to invest in Indonesia is to establish a PMA (Penanaman Modal Asing) company. The process is straightforward, and provides for the shares in the limited liability company to be held either in the foreigner's name or that of an offshore investment company, if appropriate.

The PMA company can acquire land by purchase this allows for purchase of the land with an HGB (hak guna bangunan) title. This title is valid for 30 years, extended for 20 years and renewable for a further 30 years. A foreigner also has the option of simply leasing the land to the PMA or purchasing through a nominee and leasing to a PMA company.

To set up a PMA, you will be required to:

• Submit the detailed business plan.
• Operate in a business environment that adds value to Indonesia in terms of foreign skills, employment and environmental benefit.
• Make an appropriate cash deposit in an Indonesian based Bank. The amount varies and is calculated from the capital employed in the business.
• Show the property investment as an asset of the company.

The process takes approximately 3 to 4 months and once its completed; the company can apply for work permits for the foreign directors, 3 permits in the first year of operation.

C. Purchase a property under a Leasehold Arrangement (Hak Pakai)
For a foreigner uncomfortable with the nominee arrangement, land may be leased. The maximum period of a notarized lease is 25 years, though it's the practice in Bali to have two leases of 25 years each, executed on consecutive days with a 25-year option on the second lease, effectively yielding a 75-year lease.

For detailed information regarding this option please consult the notary

With any property purchase in Indonesia, it is important that the prospective purchaser conduct a proper due diligence on the land, ensuring that the owner has title, that the title is genuine and incontestable, and that the land can be used for the intended purpose. Each locale will also have regulations requiring local advice.