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Land matters except for mining
and forestry are under the jurisdiction of the National
Land Agency (Badan Pertanahan Nasional) formed to administer
all matters relating to the Basic Agrarian Law of 1960
such as the registration of land rights and the granting
of rights and various permits to use the land. There
are currently only two categories of land rights:
a) Adat land (customary
land) where the land is not registered with the relevant
land office. There are 2 individual rights and 6 community
rights in this category. All rights held under this
category will eventually be converted to certified titles.
b) Certified land,
the title to which is governed by the Basic Agrarian
Law of 1960 and is registered at the local land office.
There are five principle types of land rights held under
the Agrarian Law. These are:
Right of Ownership
(Hak Milik)
This refers to absolute ownership of land and corresponds
to a fee simple or freehold title in common law jurisdictions.
This right can only be held by an Indonesian citizen,
not a corporate entity whether local or foreign. Certain
legal entities designated by the government, such as
State Banks, agricultural cooperatives, religious bodies,
and social foundations may hold this right subject to
certain restrictions. This right of ownership is held
in perpetuity. It can be sold, transferred, bequeathed,
and hypothecated (mortgaged).
Right to Build
(Hak Guna Bangunan - HGB)
This is the right to construct a building on land for
a period of 20 or 30 years (renewable for another term
of 20 years). This right can be sold, exchanged, transferred,
and mortgaged, and can be held directly by any corporate
entity whether it is a local company or a government
approved PMA company.
Right to Rent
(Hak Sewa Bangunan)
This is the right to use land owned by another private
party (the lessor) for building purposes. The right
cannot be registered at the land office and therefore
does not exist in certificate form. The law does not
stipulate a period for such lease agreements and whether
this can be transferred or not depends on the original
agreement between the parties.
This right may be held by a foreigner permanently domiciled
in Indonesia or a foreign legal entity having a representative
office in Indonesia. It cannot be mortgaged.
Right of Use
(Hak Pakai)
This is the right to use State-owned or other land by
public or private persons or entities for a specific
purpose for a definite period or occasionally for an
indefinite period. This land right cannot be sold, exchanged
or transferred unless explicitly provided in its grant
or agreement and normally for a period not exceeding
10 years.
This right may be held by an Indonesian individual or
entity or foreigner permanently domiciled in Indonesia,
or a foreign legal entity with a representative office
in Indonesia such as foreign banks, embassies, etc.
Right of Exploitation
(Hak Guna Usaha)
This is the right to exploit State-owned land for agriculture,
fishery or husbandry purposes for a period of up to
35 years with a possible 25 years extension.
This right can be held by Indonesian individuals/entities
as well as government approved PMA companies. The certificate
can be mortgaged.
RENEWAL OF RIGHTS
Renewal or extension of rights on expiry of the initial
term is via an application to the National Land Agency
and is subject to payment of a fee. An application must
be submitted one year before expiry of the term. Although
the law is silent in regard to the period after the
expiry of the extended term/s, the consensus is that
a land right can be extended if there has been no infringement
of the conditions attached to its usage.
Procedures for Property
Acquisition
All transactions of land rights must be via deeds executed
before a land deed official at the local office of the
Pejabat Pembuat Akta Tanah (PPAT) where the land is
located and must be registered in the regional office
of the National Land Agency. The PPATs are privately
managed offices (usually run by a notary) authorised
by the National Land Agency to handle land acquisition
matters.
Although there is
no regulation that contracts have to be in Indonesian
language, we recommend having contracts and agreements
always drawn up and executed in Behasa Indonesia to
prevent later arguments that the local partner did not
fully understand the content.
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