An Indonesian foreign investment company can hold eligible land rights and buildings, or lease property. The company owns the asset; its foreign shareholders own shares in the company. Neither arrangement gives those shareholders personal freehold ownership.
What land rights can a PMA hold?
A PT PMA is a limited liability company incorporated under Indonesian law with foreign investment. An overseas company does not automatically qualify for the same land rights simply because it has Indonesian customers.
An ordinary PT PMA cannot hold Hak Milik, Indonesia’s strongest form of land ownership, commonly called freehold. It can qualify for HGB and HGU because it is an Indonesian legal entity.
| Structure | Typical purpose | Main limitation |
|---|---|---|
| HGB — Hak Guna Bangunan | Buildings and approved commercial development | Time-limited; planning and licensing requirements apply |
| HGU — Hak Guna Usaha | Agricultural, plantation, fisheries or livestock enterprises | Not a general villa-development title |
| Hak Pakai | Approved use under the relevant grant or agreement | Conditions depend on the land and holder |
| Company lease | Using another party’s land or premises | Contractual occupation does not transfer title |
HGB: the usual starting point for buildings
For investors considering HGB via PMA in Lombok, the underlying land matters. HGB over state land or Hak Pengelolaan (HPL) land can run for up to 30 years, followed by a 20-year extension and a 30-year renewal.
Those stages are conditional, not an automatic 80-year entitlement. HGB over Hak Milik has a different arrangement: up to 30 years, with renewal through a new grant deed. Check the actual certificate, expiry date and underlying agreement.
HGU: appropriate for a genuine agricultural enterprise
HGU can be granted over state or HPL land for up to 35 years, extended by up to 25 years and renewed for up to 35 years, subject to requirements.
It is relevant to a properly licensed agricultural operation. Buying agricultural land does not automatically create HGU, and calling a villa project an “eco-farm” does not authorise tourist accommodation on it.
Company property ownership versus personal ownership
The appeal of company property ownership in Lombok is strongest when the property supports a real business. A PMA can bring investors together, hold business assets, enter operating contracts and provide continuity when shareholders change.
- The property is exposed to company debts and creditor claims.
- Shareholders must follow company governance when selling or financing assets.
- Accounting, tax filings, investment reporting and licensing create recurring costs.
- Personal use of company property needs proper accounting and tax treatment.
For a home you mainly want to live in, an eligible personal Hak Pakai arrangement or a properly drafted lease may be more proportionate. Establishing a PMA solely to disguise a private purchase can leave you with obligations the project cannot satisfy.
Step by step: acquiring property through a PMA
Define the activity and test the investment budget
Property leasing, accommodation, development and agriculture have different requirements. Select the correct KBLI and check foreign ownership before incorporation. The general PMA investment threshold is more than IDR 10 billion, normally excluding land and buildings per five-digit KBLI activity per project location; paid-up capital is generally at least IDR 2.5 billion per company.
Establish the company and its authority
Arrange the notarial incorporation deed, legal-entity approval, tax registration and NIB through OSS. Confirm directors’ authority, beneficial ownership and shareholder approvals. A PMA normally needs at least two shareholders.
Investigate before an unconditional deposit
Use an independent property lawyer and authorised PPAT. Verify title, expiry, encumbrances, boundaries, access, seller authority, building ownership, zoning, environmental restrictions, PBG and SLF.
Choose the correct acquisition route
Existing HGB, a change from Hak Milik, agricultural land intended for HGU and inbreng each create different legal and tax steps. Have the PPAT confirm the sequence with the land office before payment.
Complete documents and register the right
A PPJB should address conditions, clearance, approvals, payment stages, deadlines and refunds. The relevant PPAT deed supports registration; a preliminary agreement or receipt alone does not complete registration.
Maintain permissions and compliance
Check KKPR, environmental requirements, PBG, SLF and operational licences. Maintain bookkeeping, tax filings, corporate records and applicable quarterly LKPM reports. Calendar title expiry and renewal requirements.
Leasing through a PMA: a practical alternative
A PMA can lease property instead of acquiring a registered land right. This may reduce acquisition expenditure, although a large advance rental payment still creates substantial exposure.
- Express permission for intended commercial use, construction and subletting.
- A precise term and workable renewal pricing or formula.
- Responsibility for taxes, repairs, permits and insurance.
- Assignment rights and consequences of a landlord’s sale or death.
- Ownership or compensation for buildings when the lease ends.
- Termination, default remedies and dispute resolution.
Use an Indonesian-language agreement with an aligned translation. Have counsel review any power of attorney and the underlying owner’s authority. A lease cannot cure prohibited land use.
Tax implications: budget beyond the purchase price
When investing in property through a PMA, separate acquisition taxes, operating taxes and eventual distributions to investors.
| Item | General treatment to investigate |
|---|---|
| Seller’s transfer income tax | Ordinarily 2.5% of gross transfer value for a standard taxable property transfer; exceptions exist |
| Buyer’s BPHTB | Locally determined acquisition duty, with a statutory maximum rate of 5% applied to the relevant taxable base |
| Annual land/building tax | PBB, with treatment depending on property classification and jurisdiction |
| VAT or local business taxes | Depend on the transaction, supplier and actual business activity |
| Professional and registration costs | Separate quotes for legal work, PPAT services, surveys, land-office charges and title-change processes |
The seller’s tax and buyer’s BPHTB are separate liabilities, even if negotiations shift their economic burden. For ordinary land and building rental income, final income tax is generally 10% of gross rental value; accommodation services need their own classification. The general corporate income tax rate is 22% of taxable profits, subject to applicable facilities and special regimes.
Lombok checks that deserve extra attention
For property around Mandalika, establish whether the plot is inside the special economic zone and whether HPL arrangements apply. Proximity to the circuit does not establish the plot’s legal status.
Investigate coastal setbacks, protected agricultural land, water supply, drainage and slope stability. Confirm requirements with the land office and licensing authority responsible for the actual location.
Consider a purchase near Selong Belanak: a PMA acquires valid HGB, but the villa depends on a neighbour’s informal access road. The title does not resolve the access problem. Secure enforceable access before committing construction funds.
Avoid nominee arrangements promising foreign control of someone else’s Hak Milik. Incorporation does not retrospectively repair them.
Frequently asked questions
Can a foreign company buy land in Indonesia directly?
For HGB or HGU, the relevant route is generally an eligible Indonesian legal entity, such as a PT PMA. An offshore company does not automatically qualify.
Does the PMA give me a residence permit?
No. Company ownership, property rights and immigration permission are separate matters.
Can I sell the company instead of the property?
Potentially. A share sale requires corporate, foreign investment, tax and contractual review; buyers will also examine company liabilities.
Who should advise me before I pay?
Engage an independent Indonesian property lawyer, an authorised PPAT familiar with the relevant Lombok land office and a tax adviser experienced in foreign investment.
Can a PMA hold Hak Milik?
No. An ordinary PT PMA cannot hold Hak Milik simply because it is incorporated in Indonesia; use an eligible land right or properly structured lease.
Sources
- Basic Agrarian Law, Law 5/1960
- Government Regulation 18/2021
- Investment Ministry/BKPM Regulation 5/2025
- BKPM IIPC Sydney: investment procedures
- Hukumonline: Hak Milik changes status when acquired by a PT
- Government Regulation 24/1997 on Land Registration
- BKPM: quarterly LKPM reporting notice
- DJP: property transfer income tax
- Law 1/2022: BPHTB provisions
- DJP: land and building rental income
- DJP: corporate income tax calculation
- ITDC: business and land leasing model
Framework reviewed in October 2026. Obtain transaction-specific Indonesian legal and tax advice before committing funds.