FAQ
http://www.healyconsultants.com/company-incorporation/indonesia-faqs.html
What is the minimum number of shareholders required for an Indonesian company?A minimum of two shareholders is required.
What is the minimum number of directors required for an Indonesian company?Under statutory regulations, an Indonesian company requires a minimum of two directors.
Are shareholder/director details available for public viewing?Yes.
What are the minimum capital requirements for an Indonesian PT.PMA company?
An Indonesian wholly-owned foreign company has a minimum share capital requirement of 877 million rupiah (US$100,000).
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Property Jargon
http://indonesia.angloinfo.com/housing/property-jargon/
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Useful Contacts
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How foreigners can own property in Indonesia?
http://www.baliproperty.com/own_property.html
A. TITLE
B. SOLUTION
There are 2 ways for foreigners to own the land in Indonesia:
1. Using the Nomine
The Nominee will sign four documents with the foreigner as follow:
There are a number of different types of title in Indonesia:
- Hak Milik (Freehold) is the type of title that can only be held by an Indonesian citizen.
- Hak Pakai (essentially leasehold title) and other forms of title can be held by a P.T. or PMA Company (Foreign Investment Company).
B. SOLUTION
There are 2 ways for foreigners to own the land in Indonesia:
1. Using the Nomine
The Nominee will sign four documents with the foreigner as follow:
- A Loan agreement: acknowledges that the foreigner has lent to the Nominee the purchase price of the land.
- A Right of Use agreement: allows the foreigner to use the land.
- A Statement Letter: where the Nominee acknowledges the foreigners loan and intention to own the land.
- Power of Attorney: The nominee signs an irrevocable Power of Attorney giving the foreigner the complete authority sell, mortgage, lease or otherwise deal in the land.
This way not efficiant. PMA setup is expensive.
3. Using a nominee PT or CV olabilir
Investing through an Indonesian nominee
http://indonesia.angloinfo.com/housing/buying-property/investing-in-property/
An Indonesian citizen can hold the land title as a nominee on behalf of a foreigner. To do this a number of documents are signed in front of a notary including:
1. The contract (rental or purchase) transferring the rights for the property to the nominee.
2. A Loan Agreement for the rental or purchase price between the nominee and the investor. This acknowledges that the nominee has been loaned the purchase price by the investor.
3. A "Right of Use" agreement which enables the foreign investor to use the land.
4. A statement letter in which the nominee acknowledges the loan from the investor and their intention to own and use the land.
5. A power of attorney. This allows the investor the authority to sell, transfer or dispose of the property as well as to represent the nominee in any dispute regarding it.
The notary requests that the nominee gives all the original land titles to the investor.
Investing in property in this way, although not against the law, is considered to be not strictly in the spirit of it. The law encourages foreigners to invest directly via leases.
This "Right to Rent" (Hak Sewa Bangunan) cannot be mortgaged or registered at an Indonesian land office and therefore does not exist in certificate form. There are no laws defining how long such agreements can last, and the transfer of the property depends on the terms of the original agreement drawn up between the nominee and the investor.
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Indonesia Nominee Trading Company
(To buy property via company)
http://www.healyconsultants.com/company-incorporation/indonesia-nominee-trading-company.html
An Indonesia nominee trading company is a legitimate way to conduct business in Indonesia, and is often used as a legitimate vehicle for entrepreneurs to overcome foreign investment restrictions (for example, the purchase of Indonesian property). The following information will help you determine whether an Indonesia nominee trading company is the optimum corporate structure to fulfill your business objectives:
Advantages of an Indonesian nominee trading company
1. An Indonesian nominee trading company is a legal way for foreigners to acquire property in Indonesia. To achieve this, the company buys land on behalf of the investor, and Land Title deeds are in the name of the nominee company.
2. Healy Consultants can obtain a 30-year business license for your Indonesia nominee trading company.
3. Healy Consultants can open global corporate bank accounts to support your Indonesia nominee trading company.
Disadvantages of an Indonesian nominee trading company
1. An Indonesia nominee trading company requires a minimum of two directors and shareholders, whose details appear on a public register. At least one shareholder must be an Indonesian citizen.
2. An Indonesian nominee trading company requires an initial share capital of 50 million rupiah (US$5,400).
3. An Indonesian nominee trading company is obliged to submit an annual tax return and audited financial statements.
4. An Indonesian nominee trading company requires a registered office and company secretary. Healy Consultants Indonesia office will act as your registered office and company secretary.
Healy Consultants fees for an Indonesian nominee trading company
Healy Consultants' fees to establish an Indonesian nominee trading company start at US$17,950 in Year 1 and US$10,450 from Year 2 onwards, depending on corporate structure and range of professional services required.
Other Information
Healy Consultants fees to act as nominee director to support your Indonesia nominee trading company amount to US$5,950 per annum (together with a one time refundable deposit of US$2,450). When closing down your Indonesia Company, our de-registration/liquidation fees amount to US$3,450.
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The Cost of Starting a Business in Bali
http://www.baliadvertiser.biz/articles/business_builder/2013/business_cost.html
Over a warming cup of Earl Grey tea during a blustery evening downpour, a friend was complaining about the cost of doing business here. She was in the process of converting from a CV to a PT company to maintain her KITAS and had been quoted $10,000 for the process.
I blinked a couple of times and suggested something must have been lost in translation, but she was quite definite that that was the price. So I offered to send her some information about actual costs and you can see these below. Note we are talking here about a local PT. PMDN and not a PT. PMA that can be foreign owned. (PT stands for Perseroan Terbatas and is a limited liability company.)
World Bank in its Doing Business project. The information shown below relates specifically to Denpasar.
You can read the full World Bank report on Indonesia at http://www.doingbusiness.org/data/exploreeconomies/indonesia/starting-a-business/.
I have added a couple of additional items that the World Bank does not include. For example:
• Before you can get any business operating licences you must submit a valid Building Certificate (IMB) for your place of business. Either you or your landlord would have this, if there is one. They are still unusual particularly for older buildings. Don’t sign a lease unless you have a copy of a current IMB, or are prepared to pay the cost of obtaining one for the place of business.
• You need to have a deposit slip for funds in your business bank account representing your issued and paid up shareholder equity before you will have your Deed of Establishment approved. The Paid in Minimum Capital Requirement is Rp 12.5 million or 25% of minimum Capital of Rp 50million. To open the bank account in your business name you will need a letter from the Notary saying the business application is in process, plus your NPWP number.
There are other licencing requirements not listed here for specific types of business, for example: restaurants, hotels and industrial (production). Some Regencies in Bali can be a little different in times and costs for local documents, and there are also some major differences for a PT.PMA, which I am not covering here.
There are three key elements involved in the cost structure:
• Actual registration fees – these are mostly set by law and regulation, either nationally or within a regency.
• Notary service fees.
• Agent service fees.
By law, the Notaris (public notary) is the only profession with access to the new computerized system for non-tax state revenue payments which is tied to electronically registering a business name. So the Notaries have a monopoly. But they are also limited by law to a maximum fee of 1.5% of the cost of the transaction.
In practice, notary associations set a fee and I have no problems with paying Rp 8 million (including all the relevant registration fees) to the Notary for effectively pulling together the first stage of the process.
Not all Notaries are created equal.
I’m sure you have your own horror stories or have heard of them; my first CV here was supposed to define my activities as business training but what came though was specifically training people for work on boat crews such as cooks and stewards. It took nearly 6 months to get over the inertia caused by the embarrassment of the notary staff to get it changed. So find yourself a Notary whose knowledge base extends past transacting land deals.
Agents are in Business Too
Agents are free to charge whatever they like. I don’t have a problem paying around 10 million for the service offered by a good agent for the time and effort it saves me, but over that I will object. The creation of One Stop Shops has significantly reduced workload and effort for obtaining the related documents.
Be Active in the Process.
No matter how good your Agent and Notaris, they can’t perform for you if you don’t support them. Make sure you have the required documents ready to go, and be available to sign documents as required. Your agent will advise you on these needs.
Not all Businesses are the same
One of the key reasons we need a business registered, apart from making a profit, is to hold our KITAS. There have been a number of agents advising people that they can get their KITAS as a Komisaris. This may be true but it rather limits your capacity to actually work, as the duties of a Komasaris are pretty much restricted to ensuring the Directors are performing properly! You can just as easily be deported for performing functions that are not represented by your business card (and your business card title has to conform to your KITAS title) – as you can be for not having a KITAS at all. Depending on the type of company charter you nominate it is quite possible that the titles and functions available to you might be restricted to marketing specialist, business development specialist and quality control specialist. Personally, I always nominate as quality control specialist as this allows me to do anything at all in the process of checking the quality of processes, systems, lifting weights, safety and so on.
Getting a Director for Your Business
Your local-type PT business can only be owned by Indonesians and so you need to exercise care in the choice of the person who is nominally in charge of and actually owns your business. There are steps you can take to minimize the risk involved, and it’s prudent to plan for the worst when things are going well.
Keep in mind that this risk management is a two-way street. If you cause major problems in non-compliance with regulatory requirements then your Director will be the one who is fined and sent to jail. In those conditions you should not be surprised if your company director declares that either you are fired, or your position is no longer required, or worse. Please share your experiences or any contrary advice.
Is there an aspect of developing a successful business you would like me to write about?
Email:Graeme@stevens.com.au
Copyright © 2013 Graeme Stevens
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Frequently Asked Questions (FAQ) About Legal Aspects Of Land Foreign Ownership In Indonesia:
Many foreign investors don't understand the laws in Indonesia that rule the order or process of the property investment. Here we write some questions that are often asked in the form of Q (Question) and A (Answer).
How is the rule to purchase property in Bali?
Q : May foreigner owns a land in Indonesia individually?
A : The Land Code states that any individual foreigner can own a land in Indonesia with status of Hak Pakai (Rights of Usage) or through leasehold. The Hak Pakai can be applied to either government land or Hak Milik (Freehold) land. Only Indonesia citizen may own land (property) with the title of Hak Milik (Freehold Title). If foreign investor insist to own a freehold property, he/she can use Indonesian as a nominee, with numbers of contracts and other documents which must be prepared by and signed in front of a qualified notary. These include the Purchase or Rental Contract for the property transferring the rights from the previous owner to the nominee; a Loan Agreement for the purchase/rental price between the investor and the nominee; and an irrevocable and transferable Power of Attorney to sell, transfer or otherwise dispose of the property and to represent the nominee in any dispute regarding the property, given from the nominee to the investor. The nominee will also be asked to hand over all original land titles to the foreign investor.
A : The Land Code states that any individual foreigner can own a land in Indonesia with status of Hak Pakai (Rights of Usage) or through leasehold. The Hak Pakai can be applied to either government land or Hak Milik (Freehold) land. Only Indonesia citizen may own land (property) with the title of Hak Milik (Freehold Title). If foreign investor insist to own a freehold property, he/she can use Indonesian as a nominee, with numbers of contracts and other documents which must be prepared by and signed in front of a qualified notary. These include the Purchase or Rental Contract for the property transferring the rights from the previous owner to the nominee; a Loan Agreement for the purchase/rental price between the investor and the nominee; and an irrevocable and transferable Power of Attorney to sell, transfer or otherwise dispose of the property and to represent the nominee in any dispute regarding the property, given from the nominee to the investor. The nominee will also be asked to hand over all original land titles to the foreign investor.
Q : Is Hak Pakai similar with leasehold?
A : Leasehold is a purchasing directly between purchaser and the land owner by the lease agreement validated by the notary but it is not registered in land affairs. Hak Pakai is a right obtained from releasing of a certain right on the government or Hak Milik land. Therefore Hak Pakai can be registered in the land affairs then a certificate will be under the purchaser's name.
A : Leasehold is a purchasing directly between purchaser and the land owner by the lease agreement validated by the notary but it is not registered in land affairs. Hak Pakai is a right obtained from releasing of a certain right on the government or Hak Milik land. Therefore Hak Pakai can be registered in the land affairs then a certificate will be under the purchaser's name.
Q : How long does the application of Hak Pakai over the land?
A : The government regulation states that the Hak Pakai over government land may be applied for 25 years and can be extended. However, after the time period was over you should renew (not extend) it by the notary. You may ask an advance renewal before purchase the land by our company and the staffs will be pleased to assist you.
A : The government regulation states that the Hak Pakai over government land may be applied for 25 years and can be extended. However, after the time period was over you should renew (not extend) it by the notary. You may ask an advance renewal before purchase the land by our company and the staffs will be pleased to assist you.
Q : What should I do if I want to secure the land by a company?
A : The Land Code states any local company that established comply with the Indonesia law and/or foreign one that has representative in Indonesia region may own land and has a right to land in the form of Hak Guna Bangunan (right to erect a building) over government land or Hak Milik land. Therefore, you need to set up a foreign direct investment company in Indonesia (Penanaman Modal Asing /PMA) first to obtain and secure the land.
A : The Land Code states any local company that established comply with the Indonesia law and/or foreign one that has representative in Indonesia region may own land and has a right to land in the form of Hak Guna Bangunan (right to erect a building) over government land or Hak Milik land. Therefore, you need to set up a foreign direct investment company in Indonesia (Penanaman Modal Asing /PMA) first to obtain and secure the land.
Q : Now, What is a Hak Guna Bangunan?
A : Hak Guna Bangunan is a right to erect building on a particular land. It can be applied on government or Hak Milik land. It also can be registered to the Land Affairs, and they will issue the certificate on a name of the company.
A : Hak Guna Bangunan is a right to erect building on a particular land. It can be applied on government or Hak Milik land. It also can be registered to the Land Affairs, and they will issue the certificate on a name of the company.
Q : How long does the application of Hak Guna Bangunan over the land?
A : The Hak Guna Bangunan over government land may be applied for 30 years and can be extended. It is also over Hak Milik land with the same time period and renewable. The advance one may be obtained before purchasing by our company.
A : The Hak Guna Bangunan over government land may be applied for 30 years and can be extended. It is also over Hak Milik land with the same time period and renewable. The advance one may be obtained before purchasing by our company.
Q : Can individual foreigner get the Hak Guna Bangunan?
A : Individual foreigner may not own land with Hak Guna Bangunan status, but the one with Hak Pakai. The Land Code states it is only for Indonesia citizen or company that complies with Indonesia law and established in this region.
A : Individual foreigner may not own land with Hak Guna Bangunan status, but the one with Hak Pakai. The Land Code states it is only for Indonesia citizen or company that complies with Indonesia law and established in this region.
Q : Let me know which status is safe for foreigner to own land
A : It depends on the needs. When the purchasers are two people or more the Hak Guna Bangunan is the best but setting up a PMA company is a must, without this one the status only Hak Pakai. But it will be useful when the land is wide enough to be sub-divided. It is also the best status if the purchaser is a single person. However both statuses are safe for foreigner.
A : It depends on the needs. When the purchasers are two people or more the Hak Guna Bangunan is the best but setting up a PMA company is a must, without this one the status only Hak Pakai. But it will be useful when the land is wide enough to be sub-divided. It is also the best status if the purchaser is a single person. However both statuses are safe for foreigner.
Q : It means that the Hak Pakai or Hak Guna Bangunan may only be applied to the land of the Indonesia citizen with Hak Milik status.
A : Yes it is, since the Hak Milik is a title given only to Indonesia citizen. The best way to secure your property is by Hak Pakai or Hak Guna Bangunan, because with those Haks the land owner has released his/her title to the one.
A : Yes it is, since the Hak Milik is a title given only to Indonesia citizen. The best way to secure your property is by Hak Pakai or Hak Guna Bangunan, because with those Haks the land owner has released his/her title to the one.
Q : Should the land owner provide specific document to secure my property?
A : Yes. You yourself purchase the land in reality. Since the foreigner has no title to the land in Indonesia then the owner's Hak Milik should be transfer into Hak Pakai or Hak Guna Bangunan by several legal mechanisms.
A : Yes. You yourself purchase the land in reality. Since the foreigner has no title to the land in Indonesia then the owner's Hak Milik should be transfer into Hak Pakai or Hak Guna Bangunan by several legal mechanisms.
Q : Does the bank accept both rights if I will mortgage the land?
A : Most banks in Indonesia accept both rights, although there may be some different policy between one and the other.
A : Most banks in Indonesia accept both rights, although there may be some different policy between one and the other.
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