Glossary of Land Title & Key Terms

Are

Basic unit of land area in Indonesia (standard metric system), equal to 100 square metres . Its multiple, the hectare (equal to 100 ares), is the principal unit of land measurement for most of the world.

1 Are = 100 m2
1 Hectare (ha) = 100 ares = 10,000 m2

Hak Milik (Freehold Title)

Hak Milik (Freehold title) is the strongest form of land title in Indonesia of an unlimited term. Only individuals who are Indonesian citizens are entitled to own land under Hak Milik title. Foreigners cannot acquire land under Hak Milik title. Foreigners may, however, acquire other forms of entitlements over land. This land right can be sold, transferred, bequeathed or hypothecated (mortgaged).

Hak Guna Bangunan (Right to Build)

Right to Build (Hak Guna Bangunan or HGB) title gives the title holder the right to construct and develop buildings on land and to possess land for a specific period of time.  Granted for a maximum initial period of 30 years and extendable for another 20-year period, with a possibility for renewal. Can be held directly by Indonesian entities or foreign joint venture companies. This land right can be sold, exchanged, transferred, bequeathed or mortgaged.

Hak Pakai (Right to Use)

Hak Pakai (Right to Use) title gives the holder the right to use a parcel of land (including, subject to permitting requirements, the right to construct buildings). Right to Use title may be held by any legal entity established under Indonesian law or by foreigners who are residents or domiciled in Indonesia. 
 

Hak Sewa (Leasehold Right)

Hak Sewa (Leasehold Right) over land and buildings is widely used in Indonesia to acquire an interest in property, especially by
foreigners who, under law, are not eligible to hold Freehold title (Hak Milik). Leasehold Right title can be granted over land currently held under Freehold title, Right to Build title (Hak Guna Bangunan or HGB), or Right to Use title. The lease term generally cannot exceed the term of the underlying land title (e.g. 30 years for a lease granted over Right to Build land since the term of Right to Build under Indonesian law is generally limited to 30 years, plus another 20-year extension and potentially 30-year renewal right subject to certain conditions). 

Holding property under a Foreign Investment Company

Right to Build title can be owned by an individual who is Indonesian citizen or by a legal entity established under Indonesian law that has its domicile in Indonesia, including a PMA (Perusahaan Penanaman Modal Asing) company. Under certain conditions and subject to approval by the investment coordinating board (BKPM), a PMA company may be owned by foreigners up to one hundred percent.

Note: Right to Build title is not available to foreign individuals.

List of acronyms:

HM : Hak Milik or Freehold Title
HGB : Hak Guna Bangunan or Right to Build
IMB : Ijin Mendirikan Bangunan or Building Construction Permit
BPN : Badan Pertanahan Negara or National Land Office
BKPM : Badan Koordinasi Penanaman Modal or Capital Investment Coordinating Board
VAT : Value Added Tax or Pajak Pertambahan Nilai
PMA : Penanaman Modal Asing or Foreign Investment Company
AJB : Akta Jual Beli or Sale and Purchase Deed
AMDAL : Analisis Mengenai Dampak Lingkungan or Environmental Impact Assessment
PPAT : Pejabat Pembuat Akta Tanah or Land Deed Official

Disclaimer:

The information contained in this section is not legal advice and it is intended for general information purposes only. Those considering any investment should seek specific and professional legal advice or assistance.