HGB and the PT PMA route: the company holds it, not you

The third structure is not a right you hold. It is an Indonesian company that holds one, and everything that works and everything that fails follows from that.

The third route is not a right you hold. It is a company that holds one.

That distinction sounds pedantic and it is the whole of the structure. Under a PT PMA, an Indonesian limited company with foreign shareholding owns a land right called Hak Guna Bangunan; you own shares in the company. Everything that is good about the route and everything that goes wrong with it follows from that one fact.

What HGB is, and who may hold it

HGB is the right to erect and own buildings on land belonging to someone else. Article 36 of PP 18/2021 lists the land it can sit over — State land, hak pengelolaan land, and freehold land — and article 37(1) sets its term:

Hak guna bangunan di atas Tanah Negara dan Tanah Hak Pengelolaan diberikan untuk jangka waktu paling lama 30 (tiga puluh) tahun, diperpanjang untuk jangka waktu paling lama 20 (dua puluh) tahun, dan diperbarui untuk jangka waktu paling lama 30 (tiga puluh) tahun.

HGB over State land and hak pengelolaan land is granted for a maximum term of 30 years, extendable for a maximum of 20 years, and renewable for a maximum of 30 years.

PP 18/2021 art. 37(1)

Article 37(2) deals with the other case: HGB over freehold land is granted for a maximum of 30 years and can be renewed by a further deed of grant made between the parties. That is a different mechanism from the State-land ladder and it depends on the freeholder agreeing again in thirty years’ time — which is a familiar-sounding problem if you have read what an extension clause is worth.

The holder has to be an Indonesian citizen or an Indonesian legal entity. A foreign individual cannot hold HGB, which is why this route always involves a company.

The company is the structure

A PT PMA is an Indonesian limited liability company with foreign investment. It is a real company: it has a licensed business activity under a KBLI code, it files, it is taxed, it holds assets, and it can be wound up. The land right belongs to it.

Perka BKPM 4/2021 classifies any PT PMA as a large enterprise and imposes an investment floor. Article 12(2) requires total investment of more than IDR 10 billion, excluding land and buildings, per five-digit KBLI line per project location. That figure is the gate on this route: below it, this is not a structure you are choosing between, because it is not available.

What you get that the other routes do not give you

If the plan is a rental business, this is the route the regulations expect: foreign investment must take the form of an Indonesian PT, and investment by an individual is classed as domestic. Renting it out, structure by structure.

Three things, and they are real.

No immigration dependency. The holder is a company, so the requirement at PP 18/2021 article 69(1) for the owner to hold a valid immigration document does not apply. If your stay permit lapses, the company’s HGB is unaffected. On a long horizon this is the strongest argument for the route.

No article 186 cap. The one-parcel, 2,000-square-meter, luxury-category limits apply to a home a foreigner owns to live in. Land a company holds for a licensed business purpose is not that.

A structure for actual business. If the villa is a rental operation with staff, revenue, suppliers and tax obligations, it needs a legal person anyway. This route provides one rather than bolting a business onto a personal asset.

What it costs you that the others do not

A company is a permanent overhead and an ongoing obligation. Accounts, tax filings, investment and activity reporting, license maintenance, and a business activity that has to actually be pursued. None of that stops because the villa is empty for a season.

The land right is also not yours in any sense you can rely on personally. Wind the company up and the HGB is an asset in the liquidation. Sell your shares and the land right does not move — which is convenient when you want a clean exit and inconvenient when the buyer wants the asset and not your company’s history. Exit and inheritance works through both.

Strata units: the one place a foreigner gets something called ownership

There is an exception to all of the above, and it is worth knowing because it changes the answer for apartments. Article 67(1)(c) of PP 18/2021 lets a foreigner with the requisite permit hold hak milik atas satuan rumah susun — strata title over an apartment unit. Article 188(1) of the implementing regulation confirms that a foreigner holding a unit built on hak pakai or HGB land is granted strata title over the unit.

Article 188(2) then does something precise: where the building sits on HGB, the foreigner’s share of the common property is calculated on the proportional value ratio and excludes the common land. You own the unit. You do not own a slice of the land under it.

Article 71(2) adds a restriction that matters in Bali specifically: strata units built on hak pakai or HGB land under that limb are units in special economic zones, free trade and free port areas, industrial areas and other economic areas. Whether a given Bali development qualifies is a question about that development, and it is one to ask early rather than late.

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