When it comes to buying land in Indonesia, a lot of investors are still not informed about the Agrarian Law, even though it has been effective for more than 55 years. The Agrarian Law specifies several regulations with regard to the titles and rights over land in Indonesia.
These land titles and rights stipulated under the Agrarian Law are Right to Cultivate (Hak Guna Usaha), Right of Ownership (Hak Milik), Right to Build (Hak Guna Bangunan), Leasehold Right (Hak Sewa), Right to Use (Hak Pakai), Right to Collect Forest Products (Hak Memungut Hasil Hutan), Right of Land Clearing (Hak Membuka Tanah).
Cekindo would like to explain in detail the land rights and titles under the Agrarian Law in Indonesia.
1. Right to Cultivate (Hak Guna Usaha)
Right to Cultivate allows you to cultivate lands for fishing, livestock, and farming. The State government controls these lands for Right to Cultivate.
All Indonesian legal entities and individuals can obtain Right to Cultivate. The permit’s validity is 35 years for Indonesian legal entities and 25 years for individuals. This permit is extendable for another 25 years.
2. Right of Ownership (Hak Milik)
Also known as Freehold Title, the Right of Ownership allows you to use the land for any purposes and there is no expiration for the land you own.
However, only Indonesian nationals can acquire the Right of Ownership. This is the most powerful land right under the Indonesian Agrarian Law.
3. Right to Build (Hak Guna Bangunan)
With Right to Build, you are allowed to construct a building on land that is not owned by you. The Right to build is valid for 30 years and extendable for a maximum of 20 years.
This land right is given to legal entities with their incorporations done under Indonesia Law, as well as to the Indonesian citizens.
4. Leasehold Right (Hak Sewa)
Hak Sewa gives you the right to use a part of the land that is not owned by you, but by another person, for a particular period of time through the lease agreement. Under the lease agreement, you need to pay rent to the owner of the land.
5. Right to Use (Hak Pakai)
With Right to Use, you can make use of the products collected from a land that is owned by the State or another person. Foreigners, Indonesian nationals, local-owned companies and foreign-owned companies can all obtain Right to Use.
6. Right of Land Clearing and Right to Collect Forest Products (Hak Membuka Tanah dan Hak Memungut Hasil Hutan)
These two permits give the holder the rights to clear a part of the land that’s not owned by the permit holder and collect resources and products directly from the forest on the land.
When making the decision to buy or lease land in Indonesia, it is important to understand the responsibilities and legal rights. So you must do your due diligence to make sure that you make the right moves, and you won’t regret your decision in the long term.
Buying or leasing land in Indonesia is a big financial commitment. If you’re still not sure which option suits you the best, Cekindo can assist – we provide outstanding consulting services that go beyond just permit registration and application. We want you to have a fully integrated experience that can save you time and headache.
Wondering how you can buy or lease land in Indonesia? Fill out the enquiry form below and find out how Cekindo can help you.