Land ownership rights in Indonesia are directly tied to company type. Choosing the wrong structure can mean limited property rights, higher costs, or outright legal exposure. This guide covers the corporate entities available and explains why PT PMA is the standard for foreign property investment.
PT — local limited liability company
A PT (Perseroan Terbatas) is the standard Indonesian LLC. It requires 100% Indonesian shareholders — a minimum of two citizens or entities. Minimum authorised capital is IDR 50 million with 25% paid up. The key advantage: a local PT can hold Hak Milik (true freehold) as well as HGB. But because foreign ownership is not permitted, this structure is only relevant to Indonesian entrepreneurs.
PT PMA — foreign investment company
The PT PMA (Penanaman Modal Asing) is the only legal corporate structure that allows direct foreign ownership in Indonesia. It is governed by the Investment Law (No. 25/2007), the Company Law (No. 40/2007), and the Omnibus Law (2020), along with implementing regulations including the OSS licensing system.
Foreign investors can hold up to 100% of a PT PMA in most sectors. The company requires a minimum of two shareholders — both can be foreign individuals or entities. No Indonesian partner is necessary in most cases. Nominee arrangements are illegal and unenforceable in Indonesian courts.
Capital requirements
The minimum investment value is IDR 10 billion (approximately EUR 580,000). This is the total investment commitment, not just cash. It includes cash capital injected, land and property value, building and construction costs, equipment, and working capital. For most property investments, the land and building value forms the largest portion.
If the PT PMA operates multiple business activities (each with a separate KBLI code), the IDR 10 billion threshold applies per activity.
Land rights under PT PMA
A PT PMA cannot hold Hak Milik (true freehold). When acquiring land from Indonesian owners who hold Hak Milik, the right must be converted to HGB upon transfer — BPN handles this as part of the transaction process.
Available rights: HGB (Right to Build) for up to 80 years, and Hak Pakai (Right to Use) for up to 70 years. For commercial property — villas, hotels, rental investments — HGB through PT PMA is the standard structure.
Advantages
Legal foreign ownership with clear beneficial ownership. Bankable — Indonesian banks accept PT PMA assets as collateral. Fully transferable — shares can be sold to other parties. Limited liability protects shareholders from company debts. The company can conduct commercial operations and collect rental income legally.
Disadvantages
No access to Hak Milik. Higher capital threshold than a local PT. Ongoing regulatory compliance including quarterly LKPM reports to BKPM. Some sectors carry foreign ownership restrictions. Establishment takes longer — typically 2–4 weeks for basic setup, 1–3 months for full operational readiness.
Other structures (and why they do not apply)
CV (Commanditaire Vennootschap) — a limited partnership reserved for Indonesian citizens. Cannot hold land rights in the company name. Not suitable for foreign investors.
PT Perorangan — an individual limited company introduced by the Omnibus Law (2020). Limited to micro and small enterprises. Not available to foreigners.
Representative Office (KPPA/KP3A) — allows foreign companies to establish a liaison presence without a separate legal entity. Cannot conduct commercial activities or own property.
Comparison at a glance
| Feature | PT (Local) | PT PMA | CV | Rep Office |
|---|---|---|---|---|
| Foreign ownership | No | Up to 100% | No | N/A |
| Hak Milik (freehold) | Yes | No | No | No |
| HGB rights | Yes | Yes | No | No |
| Minimum capital | IDR 50M | IDR 10B | None | None |
| Commercial activity | Yes | Yes | Limited | No |
| Bank financing | Yes | Yes | Difficult | No |
The bottom line
For European investors purchasing property in Kuta, Lombok — whether for personal use with rental income or as a pure investment — PT PMA with HGB is the only structure that provides legal foreign ownership, bankability, transferability, and commercial flexibility. All Horizen villa purchases are structured this way.
This article is for general informational purposes only and does not constitute legal, tax, or investment advice. Indonesian regulations change frequently. Always consult qualified Indonesian legal and tax professionals before making investment decisions.