In 2025, Indonesia’s real estate landscape continues to evolve, and for international investors, expats, and high-net-worth individuals, understanding Bali’s legal nuances is essential to secure both enjoyment and ROI. While foreigners cannot hold freehold titles outright, Indonesia provides structured, lawful alternatives—if approached carefully. In this refined legal guide, you’ll discover how to navigate “foreign ownership Bali,” “Bali leasehold law,” and build certainty in your real estate investments with confidence.
Legal Framework for Foreign Property Investment in Indonesia
Under Indonesia’s Basic Agrarian Law (Law No. 5 of 1960), Hak Milik (full freehold ownership) is reserved exclusively for Indonesian citizens and certain domestic entities. Foreigners, therefore, must instead access land and property via alternative rights: Hak Pakai (Right to Use), Hak Guna Bangunan (HGB) (Right to Build), or Leasehold / Hak Sewa structures.
In 2015, Government Regulation No. 103/2015 further clarified how non-Indonesians can lawfully hold or use property rights in Indonesia. These rules affirm that foreigners cannot acquire Hak Milik, but they can enter long-term leases, use rights, or obtain building rights via proper legal vehicles.
Leasehold vs. Use & Build Rights: Understanding Your Options
Leasehold (Hak Sewa)
This is the most common structure used by individual foreign buyers. Under a leasehold, you agree with a landowner to rent the land or property for a defined term (typically 25–30 years), often with one or more extension options.Leasehold is flexible and relatively straightforward—but note the diminishing residual value as the lease term shortens.
Right to Use (Hak Pakai)
Hak Pakai grants you the legal right to use the land for a certain period (commonly 25–30 years), subject to renewal, provided you maintain a valid stay permit (e.g. KITAS). It’s often used for residential houses or apartments and must be properly registered with the National Land Agency.
Right to Build (Hak Guna Bangunan, HGB) via PT PMA
For high-end or larger-scale investments, many foreigners structure their holdings through a PT PMA (foreign-investment limited liability company). A PT PMA can hold an HGB title, which allows development of land for up to 80 years (sometimes extendable). This is often regarded as the closest legal analog to freehold for foreign investors. This structure gives you more control over operations (e.g. rental business) and better tax planning (e.g. deducting expenses) than personal leasehold arrangements.
Role of PT PMA, Nominees & Common Misconceptions
What is a PT PMA, and why use it?
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is an Indonesian legal entity allowing 100% foreign ownership for certain sectors.A PT PMA can legally hold land rights (HGB, Hak Pakai, or leases) and manage operations, including leasing, development, or hospitality.
However, setting up a PT PMA is complex and capital-intensive—it requires a deed of establishment, registration with the Investment Coordinating Board (BKPM), and compliance with foreign investment regulations.
Nominee Structures: High Risk, Low Legitimacy
Some foreign buyers attempt to bypass ownership restrictions by using a local Indonesian nominee (an Indonesian citizen) to hold the title. But these “nominee arrangements” carry high legal risk: Indonesian law does not recognize them, and courts may refuse to enforce them, putting your investment at peril.
Myths vs. Reality
- Myth: You can “buy freehold” through a nominee safely.
Reality: Only Indonesian citizens or entities can hold Hak Milik, and nominee schemes are legally insecure. - Myth: A PT PMA gives you permanent land ownership.
Reality: Even HGB titles (via PT PMA) are time-limited rights—renewal subject to government regulation.
Due Diligence and Legal Red Flags
Before you commit capital, ensure robust legal due diligence:
- Title Verification
Confirm the land is free of disputes, encumbrances, or overlapping claims. Check chain of title at the National Land Agency (BPN). - Proper Licensing & Zoning
Ensure the land is zoned appropriately (residential, tourism, etc.) and that building permits (IMB / PBG) are in place or can be obtained. - Contractual Clarity
Lease agreements or sale-purchase contracts should clearly state extension rights, renewal terms, payment schedules, and dispute resolution clauses. - Legal Counsel & Notary Safeguards
Retain an experienced Indonesian property lawyer (license in Indonesia) and a reputable notary to draft and register ownership documents.
Exit Strategy
Understand your path to sell, transfer, or inherit your property interest, especially as leases expire.
FAQ: Featured Snippet Format
Q: Can foreigners own land in Bali legally?
No, foreigners cannot directly hold Hak Milik (freehold). But you can legally invest through leasehold (Hak Sewa), Hak Pakai (Right to Use), or through a PT PMA holding an HGB (Right to Build).
Q: What is a PT PMA in Indonesian real estate?
A PT PMA is a foreign-owned limited liability company that can legally hold land rights like HGB or Hak Pakai. It offers more control and tax flexibility compared to personal leasehold.
Conclusion
Investing in Bali real estate as a foreigner demands both sophistication and prudence. While freehold is off limits, Indonesia’s legal regime offers structured alternatives—leasehold, Hak Pakai, or HGB via PT PMA—that can deliver years of secure use and financial return. The key lies in structuring your investment correctly, executing diligent legal checks, and working with seasoned local experts.
Before you sign any document or commit funds, consult a top-tier Indonesian real estate attorney or advisory firm. With the right legal architecture in place, your Bali property investment can delight, appreciate, and stand the test of time.
Resources
- Indonesia Property Ownership Rules (2025 Update) – Global Property Guide
- Foreign Ownership in Bali Real Estate – Invest in Asia Property
- Leasehold vs. Freehold in Bali – Bali Realty Expert
- Setting Up a PT PMA for Property Ownership – Indonesia Investments
- Official Regulation Reference – Indonesian Agrarian Law & Ministry of Agrarian Affairs (ATR/BPN)
