A Must-Read for Investing in Indonesia: A Comprehensive Breakdown of the Land Purchase Process
As the largest economy in Southeast Asia, Indonesia has become a popular investment destination for Chinese enterprises due to its abundant natural resources and market potential. However, the country’s land transaction system is significantly different from that of China, with the complexity of the process and legal risks posing major challenges. Based on Indonesia’s Land Law and practical experience, this article systematically reviews the key steps in the transaction process and the key points for risk control.
一、Indonesian Land Ownership System
According to Indonesia’s Land Law, foreign-invested enterprises need to obtain land development rights in the form of usage rights, which are mainly divided into the following four types:
Core Restrictions:
1. Foreign-invested enterprises are prohibited from directly holding land ownership rights (Hak Milik).
2. If the land obtained through HGU (Hak Guna Usaha) or HGB (Hak Guna Bangunan) is not developed within five years, the government has the right to reclaim the usage rights.
二、Key Tax Considerations in Transactions
The main taxes involved in land transactions need to be paid at the relevant stages:
三、Core Transaction Process
- Confirming Land Ownership
– Verify the land certificate (through the BPN official website).
– Due diligence focus: mortgage status, legal disputes, environmental compliance. - Pricing and Negotiation
– Assess the land value.
– Sign the Land Purchase Agreement (SPPJB), specifying the payment method. - Paying Taxes and Fees
– See the above section on taxes. - Transfer and Registration
– Submit documents to BPN (agreement, tax payment receipts, company documents).
– After BPN approval, a new land certificate will be issued. - Notarization and Filin
– Complete the registration and notarization procedures with the land office.
