How to buy property in Bali as a foreigner | PMA VS NOMINEE
The commonly used nominee structure is illegal and places the investors capital at risk. The safest legal structure a foreigner can have for example to buy land in Lombok or in Bali, permitting property ownership rights is through a foreign investment company.
The PT PMA alternative is a highly regulated and vetted entity by the BKPM. It involves paid-up capital, created for daily business activities in Indonesia, as well as high-level reporting requirements that must be fully compliant with international investment standards.
Certain companies do offer an alternative solution – using this PT PMA license scheme.
How do they do this?
Company such as Invest Islands or Paradise Property Group hold a PMA specifically for the real estate sector. This license enables these companies to acquire, sell and develop land in Indonesia. It also allows to provide a legal platform from which foreigners can purchase land and property in Indonesia without the need for a local nominee.
In summary, the only legal structure available to foreigners for investment purposes is an HGB title through establishing a new or using an existing Foreign Investment Company structure (PT PMA).
A foreigner can’t own land in Indonesia, but a company can and using this approach, the investor becomes a bona fide owner of that company. Through a company, you get direct rights over the land and property and it is the closest a foreigner can get to a freehold, without involving a local nominee.
The widespread customary use of the nominee structure was created for married couples, not for foreign investment. Although nominee structures are common practice, many foreigners have had land and property taken away from them during disputes. Holding the deeds for a PMA company both removes this risk and complies with Indonesian law.
For foreign investors, the best solution in terms of the legality, cost and peace of mind is to purchase land through an existing PMA.