How to Buy Land in Indonesia Using a PT PMA

Foreigners cannot directly own freehold land (Hak Milik) in Indonesia. For foreign investors developing a villa in Bali, an eco-resort in Lombok or Sumba, or a project in Java, the standard legal route is to set up a PT PMA (Perseroan Terbatas Penanaman Modal Asing), an Indonesian company with foreign shareholders. Through the PT PMA you can acquire the Right to Build (Hak Guna Bangunan, HGB) or, in some cases, the Right to Use (Hak Pakai). This guide covers the process anywhere in Indonesia; for Bali specifically, see our guide to buying land with a PT PMA in Bali.

Step 1: Understand Indonesian Land Titles

Indonesian land law is based on the Basic Agrarian Law (Law No. 5 of 1960), and the current rules on land rights are set out in Government Regulation No. 18 of 2021. The titles you will encounter most often are:

• Hak Milik (freehold). This is the strongest title, and only Indonesian citizens can hold it. Neither foreigners nor PT PMA companies can own it.
• Hak Guna Bangunan (HGB, Right to Build). This is the right to build on and use land, and Indonesian legal entities, including a PT PMA, can hold it. HGB on state land or on land under a management right (HPL) is granted for up to 30 years, can be extended for 20 years and then renewed for 30 years, up to 80 years in total if the conditions are met. HGB granted over someone else's Hak Milik follows different rules: it lasts up to 30 years and is renewed through a new agreement with the owner.
• Hak Pakai (Right to Use). This title can be held by Indonesian entities and by foreign individuals who hold a residence permit, mainly for residential use. Its duration structure is similar to HGB. For individual foreigners it comes with extra conditions, such as regional minimum property values.

When a PT PMA buys land that currently has a Hak Milik certificate, the title is normally converted to HGB as part of the transfer. The land office (BPN) handles this, and your notary should plan for it.

Step 2: Define the Business Activity (KBLI)

A PT PMA can hold land only for the business it is licensed to carry out. Every activity is identified by a five-digit KBLI code, such as accommodation, real estate development or restaurants. Indonesia is moving from KBLI 2020 to KBLI 2025, and existing companies have to align their codes in the OSS system by 18 June 2026. Your codes determine whether foreign ownership is allowed, the risk-based licences you need, and whether the land you want is zoned for that use.

Step 3: Establish the PT PMA and Register on OSS

A notary drafts the deed of establishment. The company is then approved by the Ministry of Law and obtains its Business Identification Number (NIB) through the Online Single Submission (OSS) system. Licensing is risk-based and is currently governed by Government Regulation No. 28 of 2025 and its implementing rule, BKPM Regulation No. 5 of 2025.

Capital requirements (as of 2026)

• Paid-up capital: BKPM Regulation No. 5 of 2025 reduced the minimum paid-up capital of a PT PMA from IDR 10 billion to IDR 2.5 billion. Law firms report a 12-month lock-up on these funds unless they are used for asset purchases, construction or business operations.
• Investment value: the planned total investment is generally still expected to be at least IDR 10 billion per five-digit KBLI per project location, excluding land and buildings. According to law-firm commentary on the new regulation, land and buildings can be counted for asset-heavy sectors such as property development and accommodation. Confirm how this applies to your project with your notary.
• Residence: the capital rules for the company are separate from the IDR 10 billion shareholding threshold for an Investor KITAS. See our KITAS document checklist.

Step 4: Check Zoning (RDTR and KKPR)

Each regency's detailed spatial plan (RDTR) sets permitted uses, building coverage and height. Your project needs a spatial-use approval (KKPR). Where a digital RDTR is integrated into OSS, the confirmation (KKPR) can be issued automatically. Elsewhere, an approval (PKKPR) has to be assessed. Agricultural and protected zones, coastal setbacks and height limits have ended many projects. A building approval (PBG) is also required before construction can start.

Step 5: Due Diligence with a Notary/PPAT

Land transfers are carried out before a PPAT, an official land deed maker who is usually also a notary. A good PPAT and your advisers should:

• check the certificate at the local BPN land office for authenticity, disputes, mortgages or blocks;
• verify the seller's identity and authority to sell, including spouse or family consent where needed;
• confirm that the land has legal road access, and that boundaries and measurements match the certificate;
• check that annual land and building tax (PBB) has been paid;
• prepare a conditional sale agreement (PPJB) if conditions are still outstanding, then sign the deed of sale (AJB) and register the transfer and HGB conversion with BPN.

An architect's site feasibility study at this stage, covering buildable area, topography, access and utilities, often costs far less than discovering a problem after purchase.

Step 6: Taxes and Transaction Costs (High Level)

• BPHTB, the land and building acquisition duty, is paid by the buyer. Under Law No. 1 of 2022 on regional finance, the rate is up to 5% of the transaction value after a non-taxable allowance, and each region sets its own rate.
• Final income tax (PPh) is paid by the seller, generally 2.5% of the gross transfer value under Government Regulation No. 34 of 2016.
• Other costs include notary and PPAT fees, BPN registration and conversion fees, annual PBB, and VAT where you buy from a developer. Ask your notary for a written estimate.

Why You Should Avoid Nominee Arrangements

Buying Hak Milik in the name of an Indonesian "nominee" and protecting yourself with side agreements is still offered in some markets. The Basic Agrarian Law states that transfers of Hak Milik that directly or indirectly benefit a foreigner are void and the land falls to the state. The Investment Law (Law No. 25 of 2007) also declares nominee shareholding agreements void. In a dispute, death or divorce, the investor may have no enforceable rights. A properly structured PT PMA gives you a recognised legal position that you can develop, operate, finance and eventually sell.

Disclaimer

This article is general information based on regulations and professional sources available as of 2026. It is not legal or tax advice. Rules change frequently and vary between regions. Always use a licensed notary/PPAT and qualified legal and tax advisers before you set up a company or buy land.

How Our Studio Supports Land Investors

We do not provide legal services, but we work alongside your legal team. Our studio helps foreign investors with site feasibility, zoning-aware concept design, budgeting and construction management across Bali, Lombok, Sumba and Java. See our services and our guide to building a luxury villa in Bali.

If you are evaluating a plot or setting up a PT PMA for a development, contact us for an early feasibility review before you commit.