The Government of Indonesia has been trying to find a way to provide more flexibility for a foreigner and foreign entity to own a property in Indonesia. One of the intentions is also to improve the property market in Indonesia....
Read More
Background In December 1960, Indonesian Government declared the Law Number 5 of 1960 on the...
Read MoreBatam has a strategic geographical location as the closest island to Singapore and Malaysia, which strategically located in the international shipping route. As the special zone for multinational trade area, Batam has a special treatment from the Government of Indonesia. This specialization can be seen from the several regulations on Batam status, which are as follows:
Batam Island as the business area of Bonded Warehouse regulated in the Presidential Decree of Republic of Indonesia Number 41 of 1978 as amended lastly by the Presidential Decree of Republic of Indonesia Number 25 of 2005.Batam, Rempang and Galang (which also declared as an Industrial area), is developed to serve several main functions, namely: industrial, warehouse, trade, and transshipment.
Free Trade and Free Port Zone regulated in the Government Regulation Number 46 of 2007 on the Free Trade Zone and Free Port Zone Batam.Batam has been determined as a Free Trade Zone (“FTZ”) and Free Port Zone (“FPZ”) which it gives the guarantee and the protection for all investors to conduct their business in Batam.
Tax liberation regulated in the Government Regulation Number 2 of 2009.Batam was not only determined as place of warehousing, but also for place of processing with the liberation for Import Duties (Bea Masuk), Customs and Excise (Bea Cukai), Value Added Tax (PPN), and Luxury Goods Tax (PPnBM) which can be enjoyed by the entrepreneur who has obtained permission in Batam.
Economic Cooperation regulated in Joint Statement by the President of the Republic of Indonesia and the Prime Minister of the Republic of Singapore.On June 25, 2006, the President of Republic of Indonesia and the Prime Minister of Republic of Singapore committed the joint statement of the Framework Agreement on Economic Cooperation between the Government of the Republic of Indonesia and the Government of the Republic of Singapore in the Islands of Batam, Bintan and Karimun.
The stipulations of Batam in becoming a free trade area have been attracting the investors both of foreign and local investors. A large amount in the investment flows on Batam also gives a large impact in some businesses in Batam. With regards to the development of Batam island as a FTZ and FPZ, Batam would need a high-quality infrastructure for supporting the investment development; such as residential, entertainment facilities and other supporting facilities. Furthermore, one of the potential businesses in Batam is in the property area.
The great amount of business opportunities in Batam invites many entrepreneurs to establish their business in Batam. There are new properties projects in Batam, with many types and segmentation, such as:
1. Very low-class and middle-class housing development;
2. Low-class houses;
3. Middle-class apartment;
4. The trade center;
5. Luxurious trade center and a high-class apartment in the certain location;
6. Condominiums.
In order to maintain the local and foreign investment in Batam, the Government always assures the legal certainty in the use of property services. There are a several Government Regulations to support the investment itself, which are as follows:
The Government Regulation Number 46 of 2007 on Batam Free Trade zone and Free Port Zone On the Management and the Usage of Land in the Industrial Area of Batam Island;In this regulation, the Government gives the authority to Free Trade Zone and Free Port Zone Management Body (Badan Pengelolaan Kawasan Perdagangan Bebas dan Pelabuhan Bebas) for developing investment, including regulating the allocated land permit or business permit.
The Government Regulation Number 40 of 1996 on Right to Cultivate, Right to Build and Right to Use of Land and the Government Regulation No. 41 of 1996 about residences ownership by foreigners who are domiciled in Indonesia;
Regulation of State Minister of Agrarian/Head of National Land Authority No. 8 of 1996 about changes on Regulation of State Minister of Agrarian/Head of National Land Authority No. 7 of 1996 about the conditional residences ownership by foreigners who are domiciled in Indonesia.
Circular letter of State Minister of Agrarian/ Head of National Land Authority No. 110 –2871 of 1996 about the implementation of Government Regulation Number 41 of 1996.
The Government determines the rights of land which can be owned by foreigner who wish to stay in Batam in order to maintain and manage their investment.
All of these things reflect the commitment of the Indonesian government to fully support the development of Batam island. The development of Batam Island as FTZ and FPZ also make Batam one of a strategic investment area on property and real estate projects in Indonesia.
Grace Tobing
Read MoreThe purpose of the Government Regulation No. 41 of 1996 (the “GR No. 41”) is to give a legal certainty for foreigners who own property in Indonesia. Foreigners who are domiciled in Indonesia are foreigners who give benefits for national development.
The requirements of property ownership by foreigners who are domiciled in Indonesia are as follows:
1. Property which is built on a land:
Having a Right to Use (Hak Pakai) over a state land;
Having a Right to Use which based on an agreement between the foreigner and the holder of rights over land (for example: Rights to Own or Rights to Build)
2. Strata title units which are built on a land with Right to Use over a state land.
The agreement between foreigner and the owner of the land must be made in writing, with a deed made by a land official (Pejabat Pembuat Akta Tanah), registered in the book of land (Buku Tanah) and certificate of Right to Use. According to the Law of Principles of Agraria, the agreement between foreigner and the owner of the land is not a lease agreement or cultivated agreement. The agreement is made with the terms agreed by the parties but shall not exceed 25 (twenty five) years time period. The term of the agreement can be extended with a new agreement which shall not exceed another 25 (twenty five) years time period, provided that the foreigner is still domiciled in Indonesia.
If the foreigner is no longer domiciled in Indonesia, in a period of one year, the foreigner must release or transfer their rights over the property to other who is eligible. If the foreigner did not release or transfer it, then the state will take over and sell it through a tender. For property which is built over a land owned according to an agreement with the owner of the land, then the property will belong to the owner of the land. The results from the tender of house and land held by the Government will be returned to the foreigner after deducted by tender fee, stuffs and other fee.
Handy Samot
Read MoreBuildings are made to support people’s need of spaces. Building has many functions such as work space, business place, education place, recreation place and many more. In developing countries, especially for small countries, building is used to maximize the use of spaces.
In Indonesia, building is regulated in the Law No. 28 of 2002 on Building (“Law of Building”). According to Law of Building, the definition of building is a physical form of construction works which integrate with the land it stands on, partly or wholly stands over and/or under ground or water, having a function as a place for people to do their activities, either for residence or place to live, religious activity, business activity, sosial activity, culture or any specific activity.
Construction of building is held with the principle of utility, safety, balance, also the harmony between building with its environment. The regulation for building is intended for:
1. Materializing a functional building and suitable with the construction building order which is harmonious and balance with its environment;
2. Materializing an orderly execution of building that ensures technical reliability in terms of safety, health, comfort, and convenience.
3. Materializing a legal certainty in the execution of bulding.
As for building function, according to Paragraph 1 of Article 5 Law of Building, building functions consist of residential function, religious, business, social and cultural, as well as special function. Paragraph 7 of Article 5 stipulated that one building can have more than one function.
Basically, Law of Building is regulating the requirements of a good and fully functional building. As for the implementing regulation of Law of Building is Government Regulation No. 36 of 2005 on Implementing Regulation of Law No. 28 of 2002 on Building (“GR No.36 of 2005”).
The purpose of GR No. 38 of 2005 is to materialize the implementation of orderly buildings, both administratively and technically, in order to materialize a building that is functional, reliable, which ensures safety, health, comfort, and ease of use, and balance and in harmony with its surroundings.
Some of the provisions in GR No. 38 of 2005 still need guidance and technical standard as the guidance to construct buildings. To do so, Minister of Public Works issued the Minister of Public Works Regulation No. 29/PRT/M/2006 on Guidance on Building’s Technical Conditions (“Minister Regulation”). This regulation includes everyone so that every party, person, legal entity and also government body, in constructing building shall fulfil the technical conditions set out in the Minister Regulation.
Retno Anggraeni
Read More
For the last 15 years, our members have written many articles that have been published in various blogs that we manage, including Indonesia Real Estate Law blog and Hukum Properti blog. Our members have also participated in various directories and websites within and outside our firm's blogs, including different legal topics outside real estate-related topics. Thus, this blog is set up as a portal of all of our articles and materials that our members have written to date, within and without our firm's blogs. This blog covers a wide-array of topics, different from specialized topics as in our previous two blogs, Indonesia Real Estate Law and Hukum Properti. We build this blog to be a main source for the readers to understand the vast legal knowledge of our firm and which our firm will continue to share.