Indonesian Land Law

In accordance with the basic Indonesian land law #5, 1960 (UU 5 / 1960) or UUPA (Undang-undang Pokok Agraria) title to land may be divided in two categories: Primary and Secondary. The present law cancels the old laws, provisions and regulations of the unified system of title to land parcels in the whole of Indonesia.

Primary Tittle to Land

The primary title to land is certified by and registered in the National Agency (BPN Office).

TITLE

DEFINITION

OWNERSHIP RIGHTS HOLDER

VALIDITY PERIOD

TRANSFER RIGHTS

HAK MILIK or FREEHOLD

Unconditional ownership right in Indonesia is an equivalent of the freehold ownership in the Western legal systems.

Only an Indonesian citizen and some specific legal entities like state banks, religious foundations and social agencies may possess the ownership right.

Does not have a validity period.

May be sold, given away as a gift, exchanged and bequeathed. May serve as a security guarantee in mortgage programs (Hак Tanggungan).

HAK GUNA BANGUNAN (HGB)

The owner has the right for construction of buildings and other structures of his own on the land parcel within a certain period of time. This right of ownership is the most common for residential and commercial projects.

May be owned by Indonesian citizens and Indonesian legal entities, including a foreign limited liability company (РТ. PMA).

Is regulated by Investment Law (Law #25 2007) and may be granted for the period of 80 years (30 years of the initial period plus 20 years of the extended period with additional 30 years renewal period).

May be sold, given away as a gift, exchanged and may serve as a security guarantee in mortgage programs (Hак Tanggungan).

HAK GUNA USAHA (HGU)

The right for farminggives the owner to use the state land in agriculture, in particular for planting, fishing or cattle raising.

May be issued to Indonesian citizens and legal entities crated in accordance with Indonesian legislation and registered in Indonesia.

Is granted for the period of 25 or 35 years (when certain conditions are observed) and may be extended for another 25 years if the land is managed and used in a proper way.

May be sold, given away as a gift, exchanged and/or bequeathed.

HAK PAKAI

The right of use the owner of which has the right to use and/or harvest crops from the land that is owned by the state or a private person based on the agreement with the landowner.

The ownership right holders may be both foreign private persons and foreign legal entities, Indonesian citizens as well as Indonesian legal entities.

This right is granted for the period up to 25 years and may be extended for another 20 years.

May be sold, given away as a gift, exchanged and/or bequeathed.

Secondary Title to Land

Secondary title to land is granted by the primary ownership right holder based on the contract.

TITLE

DEFINITION

OWNERSHIP RIGHTS HOLDER

VALIDITY PERIOD

HAK SEWA or LEASEHOLD

Tenant right gives its holder the right to construct and/or use buildings on the land owned by the primary ownership right holder during some fixed period of time.

The ownership right holders may be foreign private persons and foreign legal entities, Indonesian citizens as well as Indonesian legal entities.

According to the government provision #41 of 1996 on Residential Property for Foreigners Living in Indonesia the period of lease is 25 years with the maximum extension period of 25 years.