​BuildBali will Assist You In Setting Up Your Land And Property Investment Plan With The Most Secure Way.

  • Prepare a list of potential investments based on your requirements. We have local knowledge about the scope of investment opportunities (find out the updated negative investment list). That includes information about local master plans as well as public and private projects. Which including new roads, airports, business centers, etc. These are important issues that will impact the value of your investment in the future.

  • Provide analysis for shortlisted investments. Your selected projects will be investigated and we will perform a detailed analysis to ensure all required parameters.

  • Conduct local negotiation to start up the investment. We will help you locally negotiate and purchase the target of your investment. We check and ensure the authenticity of all documents.

  • Manage your ownership. Individual foreign ownership of land is prohibited in Indonesia. You can own it through a local nominee. But please remember that can sometimes be quite dangerous if you do not choose the nominee correctly. Another way is to register your own Indonesian company that can purchase and own the land for you (Here you can read about how to register your own local company). Or, you can buy land through our verified nominee.

For those of you who want to own property in Bali or Indonesia, you definitely need to understand that land certificates are divided into three types, namely Freehold Certificate (SHM/Hak Milik), and Leasehold Certificate, Right to Build (HGB), and Right of Use Certificate (Hak Pakai).

Hak Milik is the Freehold Certificate that is only for Indonesian Citizens.

The differences between the Leasehold Certificate, Hak Pakai and an HGB title, can be seen from the party receiving the certificate. The Hak Pakai can be granted to a foreign citizen, either an individual or a legal entity, while the HGB cannot by Foreigners, only by Entity/Company.

 

Right of Use Certificate (Hak Pakai)

This is the right of use over state-owned (crown land) or property owned by public or private persons/entities for a specific purpose for (generally) a finite period.

Hak Pakai has a validity period and may be extended in accordance with applicable regulations.

 

Hak Pakai can be issued to:

  • Indonesian citizens

  • Foreigners domiciled in Indonesia

  • A foreign legal entity that has a representative in Indonesia

  • A legal entity established under Indonesian law and domiciled in Indonesia

  • Departments, Non-Departmental Government Agencies, and Local Governments

  • Religious and social bodies

  • Representatives of foreign countries and representatives of international bodies.

 

Hak Pakai Validity Period

Hak Pakai also has a usage time limit, in accordance with Government Regulation (PP) Number 103 of 2015 stating that a Hak Pakai has a validity period of not more than 30 (thirty) years. However, it can be renewed for 20 (twenty) years and then renewable for 30 (thirty) years as agreed with the holder of the land certificate. 

 

Right to Build (HGB)

Right to Build (HGB) is a type of certificate in which the certificate holder is allowed to establish and own buildings on land which is state-owned or freehold, with a maximum period of 30 years and can be extended for a maximum period of 20 years. The land can be owned by the state or an individual (Hak Milik).

Just like Hak Pakai, HGB also has a usage time limit, but the difference is, this certificate can be mortgaged for credit applications to financial institutions.

 

HGB can be issued to:

  • Indonesian citizens

  • A legal entity established under Indonesian law and domiciled in Indonesia

 

Applicability Period of HGB

Based on Government Regulation (PP) of the Republic of Indonesia Number, the validity period of an HGB certificate is 30 years and can be extended for a maximum period of 20 years.

The application for renewal of the Hak Guna Bangunan should be filed no later than two years before the expiration of the HGB.

 

Land Status As a Result Of Expired HGB

After the HGB validity period is over, the status of the land is transferred back to the party entitled as the legal owner of the land, either to the State or to the holder of the Hak Milik certificate.

 

Conclusion

The differences between a Hak Pakai and an HGB title can be seen from the party receiving the certificate. The Hak Pakai can be granted to a foreign citizen, either an individual or a legal entity, while the HGB cannot.

There is also a difference in the validity period of the certificates. A Hak Pakai certificate can be extended for up to 80 years, whilst an HGB is only for 50 years. In addition, the HGB certificate can be mortgaged for credit applications while the Hak Pakai cannot.

Note: The normal payment in the transaction to Notary is 1% 

 

Hotel & Villa Business in Indonesia

A thought that undoubtedly crosses every Bali tourist’s mind, is how to stay on this beautiful island longer. Many people look into ways of making a living by setting up a viable business, such as an accommodation business in Bali. Indonesian legislation has its own peculiarities, which can sometimes make matters complicated for foreign investors looking to invest in guests houses, hotels and resorts.

 

 

First and foremost is to consider where your land will be, how many rooms are necessary, the land size, the percentage of land that can be utilized, and what type of accommodation business to setup in Bali. Will it be a bed and breakfast type setup, a small hotel, or a full-fledged resort with facilities. Many districts around Bali have varied zoning laws and local regulations, especially in areas such as South Bali (Kuta, Seminyak, Denpasar, Sanur and Gianyar regency) which has heavy population density and various restrictions for accommodation businesses are in place. Therefore it is important to verify local zoning laws and corporate laws with local authorities and the Foreign Investment board before any land transactions are made.

 

Pondok Wisata – Indonesian sole entrepreneur 

 

A bed and breakfast with less than 5 rooms is only open to sole Indonesian proprietorship. Many foreigners own a bed and breakfast through nominee arrangements. It is important to understand that a foreigner will not be able to legally own nor legally work with this type of setup.

The next two structures, a Hotel Melati and 3 Star Hotel and up, are open to foreign investment.

A foreign investment company, or PMA requires a minimum of two shareholders.

The maximum foreign shares allowed depends on the classification of the company. Indonesian regulation determines the maximum foreign investment as well as the minimum capital that a foreigner must invest in the creation of business in Bali. This is established according to the sector of activity.

 

 

Hotel, Non starred hotel

 

A small non-starred hotel would require you to have an Indonesian shareholder with a minimum of 33% shares, and you may hold the majority of shares. Your main interlocutor will be the Investment Coordinating Board (BKPM) because it will provide you the necessary license for setting up a company in Bali. It will be only with this license that you can begin the creation of your society. This authorization has a validity of three years.

 

 

Hotel 3, 4 & 5 Stars

A 3 star hotel would need approximately 25 rooms and more, and requires standard hotel facilities such as swimming pool, business center, restaurant, wheelchair access to name a few. A 3 starred hotel can be 100% owned by a foreigner or a foreign entity.

A 3 starred hotel should have a principal license, company act, legalization by the ministry of domicile certificate, Tax ID code Number, Manpower report, and Business certification (new).

For the restaurant, an alcohol license can be obtained, and in addition, there are licenses such as hygienic license, environment licenses to name a few.

Do not neglect the tedious parts of zoning checks on your land, and proper due diligence to ensure the legalities are in check, the legal consultants are here for assisting you in the creation of your business in Bali, safely and legally.

 

Whatever your choice, the creation of a PMA needs an agreement provided by the Indonesian government. This process can take 2 months and you have to be advised by professionals.

 

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