Frequently Asked Questions

lombok island property

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Frequently asked questions regarding investment in Indonesia

Why should I invest in Lombok property?
We specialized in Lombok real estate and believe that Lombok Island has a great future as a major tourist spot in Indonesia. With the new International Airport that is already under construction and due to be fully operational by end 2010, there are many new projects also underway. Land in south of Lombok is much less expensive, in comparison to other developed areas in Lombok making this the ideal time to invest in Lombok and all it has to offer

The foriegn investors have made a big commitment in Lombok, looking to and ensuring the financial security of Lombok Island.

How can I own a property in Indonesia as a non national?
There are different ways to approach all the legalities when purchasing Indonesian property. Please contact us for more information for the exact definition of all legal terms you might encounter during the transactions.

Why should I choose your company to do business with?
We have been in the real estate business for several years, specialising in Indonesia. (See our testimonials) You can find a detailed and personal resume on our key staff via the about us page. Our experience in property sales on Lombok Island makes us second to non and our team will use all their expertise from all areas to ensure that your property purchase, on Lombok Island is a smooth as possible.

What fees will I most probably have to pay?
The nominee fee is 1% notary fee is 2% of the value of the transaction. Besides this fee, both the vendor and purchaser are obliged to pay 5% sales purchase tax on the value of land and property sales at 2.5% each. This is the Vendor Tax and the Purchaser Tax. The Mortgage Certificate costs 1% of the mortgage value.

Question: How can I convert among the different land measurement units?
1 are = 100 m2
1 acre = 40 are = 4.000 m2
1 hectare = 100 are = 10.000 m2 = 2,5 acre

Is it time consuming and expensive to organise?
It can certainly take some time as there are a number of different government offices that need to approve the application and so costs can add up. Using a lawyer to establish a PMA will shorten the process. The fee's for PMA's are usually around US$6,000 to US$8,000.

Is it a hassle running a company just to own a property?
Yes because of the reasons above. It it important that the company is run correctly with taxes being paid and proper books of accounts are kept.

What does PMA mean in terms of foreign ownership of property in Lombok?
PMA in terms of foreign ownership and property in Indonesia, is one way of acquiring land in a legal manner under the umbrella of a company. A PMA company is an Indonesian company permitted by law to have foreign shareholders. Such a company is permitted to purchase HGB (Hak Guna Bangunan) certified land only. This Title is for 30 years and is renewable for a further 30 years.

Under What circumstances should a foreigner consider using a PMA for Property Purchase?
A PMA is basically a legally recognised umbrella company used by foreigners as a means of acquiring property in Indonesia. Should a non national be contemplating establishing a business then the PMA is the option to consider. The minimum capital required for a PMA is US$250,000 so its not for small enterprises. If the purpose of the land purchase is principally for a business, such as a villa development, hotel or restaurant the this is the proper method.

What happens at the end of the 30 year "right of use"?
At the end of the original 30 year period most businesses take the option to renew for a further 30 years. This should be done before the expiry of the current 30 years.

Are there any circumstances where the legality of this method of ownership has been challenged?
There will be a possible challenge if the PMA is not active, but only acting as a landholder. Permits for such shadow companies will not be extended. This means the right to the title will be in question. There are no challenges as it is a legal form of land ownership.

What would be considered the main advantages and disadvantages?
The advantages are legal ownership if the company is actually using the land. there are no legal worries. The main advantage to using a PMA company is that the non national has a security of title via the ownership of the shares. The main disadvantage is that the PMA is subject to close scrutiny by the tax department and other regulatory bodies that may lead to increased expenses. Additionally a non national must be a resident of Indonesia (KITAS) holder to eligible to be either a director or Commissioner of a PMA company. A foreigner can be a shareholder without holding any current visa.

 

If you have any questions regarding property purchase and investment on Lombok Island please contact us. Our team is ready to take your call or email.