This is How Foreigners Invest in Indonesia Property
For foreigners, invest in Indonesia may be challenging, especially, when you do not have a clue how to start it. On this occasion, you will learn more about how to invest in Indonesia property. In general, there are two ways: asking an Indonesian citizen to hold the property on your behalf and/or investing through a foreign-owned company (PMA). Following is the simple description.
Why Invest in Indonesia Property?
But first, let us search for more reasons.
- The price index. According to Bank Indonesia’s Residential Property Price Survey (SHPR) per QIV of 2018, the index might be lower than the prior quarter, but it is predicted will rise on the QI of 2019 from 0.32% to 0.42%.
- The population. Implies to the market demand, Indonesia is listed as the fourth most populous country in the world with the number touches about 265 million people.
- Indonesia economic growth. According to the World Bank, per 2018 economic quarterly, Indonesia holds a steady percentage in several contributing factors to economic growth, and others are competitive. The steady growth is the effect of increased social spending and a strong labor
2 Ways to Invest in Indonesia Property
Following are the ‘how’ to invest, and you can choose based on your requirement.
a) Asking for Indonesian citizen to be the representative
A foreign investor can ask an Indonesian citizen to be the direct property owner and/or to be a representative. To complete this procedure, investors must prepare some document, as follow:
- A contract and it could be a lease or purchase, which will be the property ownership proof.
- A Loan Agreement for the lease of purchase price between the citizens and the investors. This agreement is the information about the citizens has received money from foreign
- A Right of Use letter or also known as Hak Guna Bangunan (HGB). This letter is an agreement for a foreign investor to use the property.
- A statement letter from Indonesia citizen that explains he/she has lent or received money from a foreign investor and also his intention in using/owning the property.
- A power of attorney from Indonesia citizen to the foreign investor. This statement contains permission for investors to use and/or sell the property and also to be his/her representative in a dispute related to the property.
b) Invest in Indonesia property through the foreign-owned company (PMA)
Compare to the first way, investing a property through PMA will take more time and energy. The plot is like this: a foreign investor forms a legal entity for business, and then of course issues the licensing to the Investment Coordinating Board (BKPM), and finally moves to the property leasing or purchasing step.
To use the property, foreign investors must have a Right of Use letter. And the permitted time for the property is limited from 20-30 years, with the extension is 20 years more. Some investors-to-be find it is not practical because only the legal entity can use the property until the permitted time ends. You can sell it also only after the permit ends.
At last but not the least, each way, of course, their advantage, like strong legality through PMA and flexibility by using a representative. You can adjust it according to your situation and condition. And if you find it difficult, hire a local service could help you following the procedure.