Can a PT PMA Own Land in Indonesia? Understanding Property Ownership Rules for Foreign Investors

Indonesia, especially Bali, has become one of the most attractive destinations for foreign investors and entrepreneurs. Its thriving tourism industry, growing economy, and stunning landscapes make it a hotspot for business and property investment. However, one of the most frequently asked questions by foreign investors is: Can a PT PMA own land in Indonesia?

As a professional law service based in Bali, The Bali Lawyer is here to provide clear and detailed guidance on this topic. Understanding the laws surrounding property ownership for foreign entities in Indonesia is essential before investing. This article will explain what a PT PMA is, how it operates, and what property rights it holds under Indonesian law.

Understanding PT PMA in Indonesia

PT PMA stands for “Perseroan Terbatas Penanaman Modal Asing”, which translates to Limited Liability Company with Foreign Investment. This type of company is the only legal entity in Indonesia through which foreigners can directly invest and conduct business activities.

The PT PMA structure is regulated by Indonesia’s Investment Coordinating Board (BKPM) under the Investment Law No. 25 of 2007. It allows foreign individuals or corporations to establish and operate a company in Indonesia either independently or in partnership with local investors.

For many foreigners, forming a PT PMA is the first step toward owning and managing property for business purposes in Indonesia.

Can a PT PMA Own Land in Indonesia?

The direct answer is yes — but with limitations. A PT PMA can legally control land in Indonesia under specific land titles, but it cannot hold freehold land (Hak Milik). The Indonesian Constitution restricts freehold ownership rightsonly to Indonesian citizens.

However, a PT PMA is eligible to hold other land rights that provide long-term use and control, including:

  1. Right to Build (Hak Guna Bangunan – HGB)

    • This right allows the PT PMA to build and own structures on land for a fixed period.

    • It is granted for an initial term of up to 30 years, extendable for another 20 years, and renewable for an additional 30 years.

    • The HGB is the most common land title used by PT PMAs for commercial and business purposes, such as hotels, villas, resorts, and office buildings.

  2. Right to Use (Hak Pakai)

    • Hak Pakai allows the company to use land owned by the state or an individual for a specific purpose, such as residential or commercial use.

    • It can be granted for up to 25 years, extendable and renewable.

  3. Right to Lease (Hak Sewa)

    • Although not a form of ownership, PT PMAs can lease land from local owners or the state for business or residential use.

    • Leasing is flexible and often used for shorter-term projects.

In short, while a PT PMA cannot own land under Hak Milik (freehold), it can legally own and control land through Hak Guna Bangunan (HGB) or Hak Pakai.

Why PT PMA Is the Best Option for Foreign Property Investors

For foreigners who wish to invest in real estate or run a business in Indonesia, forming a PT PMA is the most secure and transparent route. It offers legal protection under Indonesian law and allows for business ownership, profit repatriation, and long-term property control.

Here’s why a PT PMA is ideal for property-related investments:

  • Legal and Compliant Ownership: Unlike nominee arrangements (which are risky and discouraged), PT PMAs comply with Indonesian property and investment laws.

  • Long-Term Control: Through HGB or Hak Pakai titles, PT PMAs can control land and buildings for several decades.

  • Business Flexibility: A PT PMA can buy, lease, or develop property for commercial use, including hotels, restaurants, villas, and offices.

  • Repatriation of Profits: Profits earned by a PT PMA can be legally transferred overseas.

  • Foreign Management: The company can be fully or partially managed by foreign directors and shareholders.

These advantages make the PT PMA structure not only legal but also practical for sustainable business and property operations in Indonesia.

Land Titles Available for PT PMAs

Understanding land titles in Indonesia is essential for foreign investors. Below is an overview of the main land rights available for PT PMAs:

1. Hak Guna Bangunan (HGB)

This title grants the right to build and own structures on land for a fixed period. PT PMAs often use this for commercial developments such as hotels, resorts, villas, or warehouses.

  • Valid for up to 30 years

  • Extendable and renewable

  • The most preferred option for foreign-owned companies

2. Hak Pakai (Right to Use)

This title allows the holder to use land owned by the state or individuals for specific purposes. It’s typically used for residential or mixed-use purposes.

  • Granted for 25 years, extendable and renewable

  • Suitable for residential and limited commercial use

3. Hak Sewa (Right to Lease)

A lease agreement can be made between a PT PMA and a local landowner. Although it doesn’t confer ownership rights, it allows the company to use the land legally for business or housing.

  • Duration depends on contract terms

  • Provides flexibility for temporary or smaller-scale projects

How a PT PMA Acquires Land in Indonesia

The process for a PT PMA to acquire land in Indonesia is regulated and formal, ensuring transparency and legality. Below is a simplified overview:

  1. Establish the PT PMA

    • The company must be registered through BKPM (Investment Coordinating Board).

    • Legal documents include Articles of Association, Deed of Establishment, and business licenses.

  2. Obtain Land Title (HGB or Hak Pakai)

    • Apply to the National Land Agency (BPN) for land registration.

    • The agency grants the title based on the company’s business license and intended use.

  3. Land Registration and Certification

    • Once approved, the land is registered under the PT PMA’s name.

    • The company receives an official land certificate (Sertifikat HGB or Sertifikat Hak Pakai).

  4. Building and Development Permits

    • Additional permits, such as IMB (building permit) or PBG (building approval), may be required for construction.

Each step requires compliance with Indonesian legal procedures, making it crucial to have a reliable legal advisor like The Bali Lawyer to ensure proper documentation and guidance.

Important Legal Considerations

Foreign investors must be aware of several important legal aspects before proceeding with land acquisition through a PT PMA:

  • Foreign Ownership Limits: Certain business sectors may require partial local ownership as per Indonesia’s Negative Investment List.

  • Zoning Regulations: The land’s zoning must match the business purpose (e.g., tourism, residential, commercial).

  • Renewal Requirements: PT PMAs must renew their HGB or Hak Pakai titles before expiration to maintain ownership rights.

  • Tax Obligations: Land and property ownership come with tax responsibilities such as BPHTB (land acquisition tax) and PBB (property tax).

With expert legal advice, these procedures can be navigated efficiently, ensuring compliance and protecting your investment.

Common Misconceptions About Foreign Ownership

There are many misconceptions about foreign property ownership in Indonesia. Some of the most common include:

  1. Foreigners can buy freehold property directly – This is false. Only Indonesian citizens can hold freehold land (Hak Milik).

  2. Using a local nominee is legal – While common in practice, nominee structures carry legal risks as the property remains in the Indonesian citizen’s name.

  3. PT PMA ownership is temporary – Not true. PT PMAs can legally control land for decades through renewable rights.

By establishing a PT PMA, foreign investors can avoid legal uncertainty and maintain secure, long-term control over their assets.

Why Choose The Bali Lawyer

The Bali Lawyer is a professional law service based in Bali that specializes in property law, business setup, and investment consultation for foreigners. We guide investors through every legal aspect of forming a PT PMA and acquiring land under Indonesian law.

Our services include:

  • PT PMA formation and registration

  • Land acquisition and due diligence

  • Legal document preparation and verification

  • Land title registration (HGB or Hak Pakai)

  • Tax and compliance consulting

Our goal is to ensure your property investment in Bali or elsewhere in Indonesia is secure, transparent, and fully compliant with the law.

While foreigners cannot own freehold land in Indonesia, they can legally control and own land rights through a PT PMA structure. The PT PMA provides a legitimate way for foreign investors to acquire property, run businesses, and develop real estate projects in Indonesia with legal protection and flexibility.

Understanding the nuances of land ownership laws, including HGB, Hak Pakai, and Hak Sewa, is essential before making an investment decision. Partnering with a reliable legal advisor like The Bali Lawyer ensures every step—from company formation to land registration—is handled professionally and in compliance with Indonesian law.

For expert guidance on PT PMA setup and land acquisition in Bali, contact The Bali Lawyer today. We are here to help you establish your business and property investment legally and confidently in Indonesia.