Law of Investment in Indonesia - Land rights, immigration service and import licensing facility

Mariske Myeke Tampi

Law of Investment in Indonesia: Land rights,

immigration service and

import licensing facility

Land right permit may be given, extended and renewed inadvance simultaneously and may be further renewedupon request of investors in 3 (three) form of right:

a. Hak Guna Usaha (Leasehold)b. Hak Guna Bangunan (Building Rights)c. Hak Pakai (Right of Use)

(Article 22 paragraph (1) of Law Number 25 of 2007)

Land Rights

Hak Guna Usaha (Leasehold) is a right to work on landdirectly controlled by the state for a period of time whichfor use by an agricultural, fisheries or animal husbandrycompany.

(Article 28 of Law Number 5 of 1960)

Hak Guna Usaha (Leasehold)

Hak Guna Usaha (Leasehold) may be given for 95 (ninety-five) years and simultaneously renewed in advance for 60(sixty) years, and it may be further renewed for 35 (thirty-five) years.

(Article 22 paragraph (1) point a of Law Number 25 of 2007)

Hak Guna Usaha (Leasehold)

Hak Guna Bangunan (Building Rights) is a right toconstruct and posses buildings on land which is not one’sown.


Hak Guna Bangunan (Building Rights)

Hak Guna Bangunan (Building Rights) may be given for 80(eighty) years and simultaneously renewed in advance for50 (fifty) years, and it may be further renewed for 30(thirty) years.

(Article 22 paragraph (1) point b of Law Number 25 of 2007)

Hak Guna Bangunan (Building Rights)

Hak Pakai (Right of Use) is a right to use, and/or to collect producefrom land directly controlled by the state or land owned by anotherindividual (tanah milik) which grants authority and obligations asdetermined in the relevant right-granting decree by the official whois authorized to grant it or as determined in the agreement with theowner of the land, whereas the agreement is not a land-leaseagreement (perjanjian sewa-menyewa) or land-exploitationagreement, given that everything is possible as long as it does notcontradict the spirit and provisions of this act.


Hak Pakai (Right of Use)

Hak Pakai (Right of Use) may be given for 70 (seventy)years and simultaneously renewed in advance for 45(forty-five) years, and it may be further renewed for 25(twenty-five) years.

(Article 22 paragraph (1) point c of Law Number 25 of 2007)

Hak Pakai (Right of Use)

In Indonesia, only Indonesian citizens can have a hak milik(right of ownership). A hak milik (right of ownership) isthe inheritable right, the strongest and fullest right onland which one can hold. Though, a hak milik (right ofownership) can be transferred to other parties in aparticular conditions.


Why foreigners may not apply for Hak Milik(Right of Ownership)?

A foreigner acquires a hak milik (right of ownership) byinheritance without a will or by joint ownership ofproperty resulting from marriage.


Can foreigners acquire a hak milik (right of ownership) in a particular condition?

As long as one who has Indonesian citizenshipconcurrently holds foreign citizenship, he/she cannothave land with the status of a hak milik (right ofproperty).


Can one who has two citizenships (Indonesian citizenship and another one) acquire a hak milik

(right of ownership) in a particular condition?

Service and/or licensing convenience forimmigration facility may be granted for:a. Any investment requiring foreign workers for realising the

investment;b. Any investment requiring workers whose nature is temporary

for repairing machinery, other production supports, and post-sale service;

c. Any prospective investors making inquiry in investment.

Immigration Service Facility

a. Limited residential permit for 2 (two) years for foreigninvestors;

b. Change of status from limited residential permit intopermanent residential permit for foreign investors after livingIndonesia for 2 (two) consecutive years;

c. One year re-entry permit will be granted for several trips to anyholders of limited residential permit that will apply for 12(twelve) months starting from the day such limited residentialpermit is granted;

Facilities Granted For Foreign Investment

d. Two-year re-entry permit will be granted for several trips to anyholders of limited residential permit that will apply for 24(twenty-four) months starting from the date such limitedresindential permit is granted; and

e. Re-entry permit will be granted for several trips to any holdersof permanent residential permit that will apply for 24 (twenty-four) months starting from the date such permanentresidential permit is granted.

The granting will be done by the Directorate General ofImmigration based on recommendation of theInvestment Coordinating Board.

Facilities Granted For Foreign Investment

a. Any goods so long as it does not violate the law governingmerchandise trade;

b. Any goods that have no negative impact on the safety, security,health, environment, and moral of the nation;

c. Any goods for plant relocation from abroad to Indonesia; andd. Any capital goods or material for production demand of its

own.

Granted Import Licensing Facility

Law Number 25 of 2007 Concerning InvestmentLaw Number 5 of 1960 Concerning Basic Agrarian Principles

Recommended reference:Government Regulation Number 40 of 1996 Concerning Leasehold,

Building Right and Right of Use

References