Legal Overview on Land Investment in Lombok
Some foreign investors may find the nominee route unacceptable due to third party ownership. Certain publicly quoted companies, trusts or multi-nationals may be precluded from third party ownership by their memorandum and articles. Those parties looking to purchase a large site and subsequently divide the site into small parcels that are individually sold, may also wish to utilise a PMA company. A PMA company is a form of Indonesian PT, which allows foreign investors to directly hold 98% of the shares and the remaining 2% by stock proxy. This type of Limited
Liability Company is referred to as a PMA PT or PMA Company. PMA stands for Penanaman Modal Aising which loosely translates as Foreign Direct Investment.
When utilising a PMA for the purposes of land acquisition, one should also understand that the land title can only be Hak Guna Bangunan (HGB) - This is a type of leasehold title that includes land with the right of construction. This form of title is available to Indonesian individuals. Indonesian Companies and Indonesian
Companies controlled by non nationals, known as PMA's. This type of title must be renewed every 30 years by payment of an HGB tax. The level of this taxation is based on the change of value of the land, but as the level of taxation is not fixed and is at the discretion of the local government it is often the subject of much argument and frustration.
Please bear in mind that all PMA entities are highly regulated and must submit semi annual comprehensive
reports on the status of the company including payment of taxes, all asset acquisitions and changes in ownership to BKPM, the central administering authority for PMA companies in Indonesia.
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(This is a guide only. It's recommended that you seek the expert guidance of an appropriate legal representative)
Extract taken from Hot Property