CATEGORIES OF

LAND RIGHTS
Under Basic Agrarian Law
Hana Sofia
 Presentation Overview

Creating Foreign Types of Aligning the Finding the Certification

Investment Land Rights Rights to Needs Property Verification
Company and Eligiblity
Regulation

01 Law No. 5/1960

Basic Agrarian Law

02 Law.25/2007
Regarding Investment

03
Government
Regulation No. 18/2021
Regarding Land rights, Rights to
Use, and Land Registration
 Important!
"Foreign Nationals can’t
acquire freehold
certificate of
land/property in
Indonesia"

Indonesia hold the principle that only Indonesia Nationals can

have the ownership rights to land. Right to ownership cannot be
owned or transferred to foreign nationals.
Leasehold
Definition
Indonesian several right
regarding to Land.
Right to Use, Lease, Right
to Build, Right to Cultivate,
etc.
Freehold
Definition
The strongest rights a
person can hold over a
land. Hereditary and can
be only be a subject to
Indonesian national
physical or state-owned
legal entities*
Legal Entities Land Right

Right to Build (Hak Guna Bangunan)

Lease (Hak Sewa)

Right to Use (Hak Pakai)

Right to Cultivate (Hak

Pakai)
Right of Ownership
Hak Milik (HM)

Right of Ownership title are hereditary, strongest, and most valid

right that a person can own on land, this right can be
transferred to another party. The right of ownership is proven
with Certificate of Ownership (Surat Hak Milik/SHM)

Indonesian Citizens and Legal Entities* Determined by the

Government. (Art. 21 Par. (1) and (2))
*State-owned Bank, Cooperation, Religion Bodies and Social
Bodies that have been selected by the Ministry.
Important!
Using Local Nominees to
earn Freehold are Void by
Law

Using a local nominee is illegal, and the agreement made

between foreigners and the local are considered void by
law. Freehold certificate (Surat Hak Milik/SHM) are only
available for Indonesian National, therefore any kind of
agreement where a foreign national use a local nominee
name to earn SHM are not recommended as government
may confiscate the land/property and the foreign national
might be a subject of tax and criminal liability.
Rights to Cultivate
Hak Guna Usaha (HGU)

Right to cultivate the land that is directly controlled by the state,

for a maximum period of 25 years. For fishery and livestock
company. Granted on land with an area of atleast 5 ha.

State-owned Legal Entities

 Lease
Hak Sewa

A person or legal entity has the right to lease the land, if they
have the right to use the land belonging to another person for
building purposes, by paying the owner a certain amount of
money as rent.

Indonesian Nationals; Foreign National residing in Indonesia;

Indonesian Legal Entities, Foreign Entities that have Indonesian
Representative
(Art. 45 BAL)
 Right to Use
Hak Pakai
Right to use or gather from land which is directly controlled by
the the state or another person, which gives the authority and
obligations specified in the decision granted by the authorized
official or in an agreement with the owner of the land (it not a
lease agreement or land management)

Indonesian Nationals; Foreign National residing in Indonesia;

Indonesian Legal Entities, Foreign Entities that have Indonesian
Representative
(Art. 41 BAL)
 Rights to Build
Hak Guna Bangunan

Right to contructs own building or use the building on land that

is not their own, with maximum period of 30 years can be
renewed by HGB certicate on top of SHM certificate.
(Art. 37 Par. 2 GR 18/2021)

Indonesian National and Indonesian Legal Entity residing in

Indonesia in accordance to Indonesia Law,
(Art. 35 Par. 1 GR 18/2021)
 Rights to Build
Hak Guna Bangunan

State-Owned Land
Freehold Land
Land with Right to Cultivate

Right to Build (HGB) can be given up to 80 years, with 50 years

up front and extension of 30 years*

*Requirments applied
(Art. 22 Par. 2 Investment Law)
 Rights to Build
Hak Guna Bangunan
Owning a HGB Certificate will proof that the land is the FIC's
asset
Use the land in accordance to FIC's designation and
requirements stipulated in the agreement with the land
owners;

Without a HGB certificate FIC's can't build on top of the land

 *Requirements
Long-term Investment
Investment made in the long term
and related to changes in
improving the competitiveness of
Indonesia economy
Legal Investment
Investment that are legal and does
not interfere with the sense of
justice as well harmless to public
interest

Does Not Require

State-owned Land
Large Area
Investment made are using state-
owned land
Investment that doesnt require a
large area
TIMELINE
Building A Foreign
Contract Signing
investment Company

Finding suitable
Property

Certificate
Verification