Legal Options for Land Stewardship in Indonesia

In the past, there has been a large reliance upon nominee arrangements and a tendency to choose the property before conducting due diligence. There were conflicting interpretations of the regulations, low levels of enforcement and a culture of do now, structure later.

The current land ownership climate in Indonesia is rapidly changing. It is no longer viable to acquire property without proper due diligence around the existing title and zoning regulations. Some zoning areas to consider: tourism, commercial, residential, industry, farming, greenbelt, fishery or protected area. Your personal, business or investment land decision will need to be in the correct zone.


The first step is ensuring you have the correct land title. Options in Indonesia Include:


Hak Milik (Freehold)

Duration: Ongoing

Appropriate for: Residential and Commercial projects

Eligible to: Indonesian citizens only

Legislation: The Law of the Republic of Indonesia, Act No. 5 of 1960 Concerning Basic Regulations on Agrarian Principles Part 3 – Articles 20 and 21


Hak Guna Bangunan (HGB)(Right to Construct and Own Buildings on land)

Duration: 30 + 20 + 30 years (up to 80 years)

Appropriate for: Commercial projects

Eligible to: Indonesian citizens and legal entities established in Indonesia

Legislation: The Law of the Republic of Indonesia, Act No. 5 of 1960 Concerning Basic Regulations on Agrarian Principles Article 36; The Law of the Republic of Indonesia, No. 40 of 1996 Concerning Representatives, Building Rights and Rights to Land Part 4 – Article 25


Hak Pakai (Right to Use)

Duration: 25 + 20 + 25 years (up to 70 years)

Appropriate for: Residential projects

Eligible to: Residents of Indonesia seeking residential property

Legislation: Minister of Agrarian and Spatial Regulation / Head of the National Land Agency (BPN) of the Republic of Indonesia, No. 29 of 2016 Concerning Procedures for Granting, Disposal, or Transfer of Right to Residential or Residential Ownership by Foreigners domiciled in Indonesia. Articles 1, 3, 6, 8, 17


Hak Sewa (Right to Lease)

Duration: 30 + 20 + 30 years (Up to 80 years)

Appropriate for: Residential; Long-term sub-lease

Eligible to: Indonesian citizens; legal entities established in Indonesia; Foreign citizens

Legislation: The Law of the Republic of Indonesia, Act No. 5 of 1960 Concerning Basic Regulations on Agrarian Principles Article 44


Hak Milik Atas Satuan Rumah Susun (Right of Ownership over SHM Condominium Units)

Duration: 25 + 20 + 25 years (up to 70 years)

Appropriate for:Residential or commercial

Eligible to: Foreigners

Note: can be issued on top of Hak Milik, HGB, Hak Pakai

Legislation: Law Number 16 of 1985 on Condominium “Condominium Law”


Hak Guna Usaha (HGU) (Right to Cultivate)

Duration: 25 + 25 + 25 years (up to 75 years)

Appropriate for: Fisheries, Agriculture, Animal Husbandry

Eligible to: Indonesian citizens (35 years); legal entities established in Indonesia

Legislation: Law Number 5 of 1960 Concerning Agrarian Principles (UUPA) Article 28

The Solution?


The only solution to be safe in the current landscape is to ensure you have a competent team conducting the due diligence before you pay the money to secure your new piece of paradise. It is possible to conduct yourself, however you will need to know your way around the Indonesia system, the Indonesian language and be prepared to allocate sufficient time. Most of our clients prefer to have these matters dealt with by experts in the area and that where Alam Santi and our legal partners become your legal partner.


How Alam Santi can help


Our consultants and legal partners are highly experienced in conducting thorough due diligence that will give you peace of mind when relocating to, starting a business or investing in Indonesia. Whether you are new to understanding due diligence in Indonesia or a well seasoned expat, our consultants can advise and coordinate your due diligence or if your needs are clear our legal partner can commence the legal work streams right away.


Can we help you?


Contact us to arrange a consultation.


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