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The Right of Use on Land for Foreign Citizens in Indonesia

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Since a long time ago, foreign citizens have been living in Indonesia. They come from different places, have different visiting purposes, and also stay within different durations. Some of the foreign citizens in Indonesia stay only for days, however, some of them stay for years. As normal human beings, they need places for staying. Thus, they may be living in a wide range of choice of apartments or houses, by paying rent of them or by owning them. Legally speaking, in accordance with the Indonesian Government Regulation Number 103 of 2015 regarding Ownership of House or Place of Living by Foreign Citizen in Indonesia (“GR 103/2015”), foreign citizens in Indonesia may own houses or places of living under certain circumstances.

Article 2(1) of GR 103/2015 explains that a foreign citizen in Indonesia may own a house or a place of living based on a certain right, which is the ‘Right of Use’. Referring to Article 41(1) of Indonesian agrarian law (Law Number 5 of 1960):

Right of use is a certain right to use and/or to collect yields from a land, which land is directly controlled by the State or other person’s land. Right of Use emerges based on an authorized officer’s decree or through an agreement with the land’s owner, which agreement is not a lease agreement or land cultivation agreement.”

Article 42 of Indonesian Agrarian Law mentions those who can hold the right of use, which are:

  1. Indonesian Citizen;
  2. Foreign Citizen in Indonesia;
  3. Indonesian Legal Entity; or
  4. Foreign Legal Entity who has a representative in Indonesia.

Well, to start with, these are the criteria of foreign citizens in Indonesia under the relevant regulations regarding this topic:

  1. Settling in Indonesia, foreign citizens in Indonesia who stay for a long duration of time in Indonesia. This is proved by having a Permanent Stay Permit (“KITAP”);
  2. Not settling in Indonesia, foreign citizens in Indonesia who stay for a shorter period of time compared to the above and only stay in Indonesia in a ‘come and go’ manner. This is proved by having a Temporary Stay Permit (“KITAS”), visiting permit, or any other immigration permits.

The GR 103/2015 stipulated the requirements regarding owning houses or places of livings by foreign citizens in Indonesia, they are as follow:

  1. Domiciled in Indonesia, proved by the ownership of KITAS or KITAP;
  2. Has to be a single house (the wall of the house is not integrated to the wall of the house besides) or a flat (apartment);
  3. New unit of single house or flat (apartment) as stipulated in Article 5;
  4. The place of living cannot be used for any business purposes; and
  5. The minimum price of the house or flat has to be in accordance with the Regulation of the Chief of BPN (National Land Body) Number 29 of 2016 (“PerKa BPN 29/2016”).

In accordance with Article 6 and 7 of GR 103/2015, the Right of Use may expire after 30 years. However, it is open for a 20 years extension. After the extension expires, it will be open for a 30 years renewal. The mentioned extension and renewal can be done as long as the relevant foreign citizen still has a permit to live in Indonesia.

Under the scenario that the relevant foreign citizen is no longer living in Indonesia, referring to Article 10 of GR 103/2015, his/her Right of Use on a house or place of living has to be transferred to other party who fulfills the criteria. This transfer of right has to be done within a 1 year deadline. If the relevant foreign citizen cannot meet the 1 year deadline, thus the following consequences may apply:

  1. If the Right of Use is on a state-owned land, thus the property will be auctioned by the state’s authority and the outcome which usually in the form of money will be given to the relevant foreign citizen; or
  2. If the Right of Use is on a land with a Right of Ownership, thus the property will be owned by the person who holds the Right of Ownership of that land.

Detailed stipulation regarding this matter will be stipulated under the relevant minister’s regulation regarding immigration.

In conclusion, a foreign citizen in Indonesia (who has a permit) may own a property or even many properties in Indonesia. The ownership is based on the Right of Use. Since it is based on the Right of Use, this means the foreign citizen may own the property but not the land. A Right of Use prevails for 30 years, open for 20 years extension, and after that is open for another 30 years renewal. If the relevant foreign citizen is not staying in Indonesia anymore, then the Right of Use has to be transferred to other party who fulfills the criteria under the prevailing laws and regulations within a 1 year deadline. There will be consequences if the relevant foreign citizen fails to meet the deadline, the consequences depends on who holds the right of the land on which the property stands.

Reference
1. Article 41(1) of Indonesian agrarian law
2. Indonesian Government Regulation Number 103 of 2015

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