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Can a foreigner actually own property in Bali? Yes, you can. However, it must be done through a company structure known as PT PMA Indonesia.
In this guide, we’ll break down everything you need to know about setting up a PT PMA in Bali, including the benefits, step-by-step setup, legal requirements, and how much the PT PMA Bali costs.
Let’s dive in!
Contents
Key Takeaways
- PT PMA (Foreign Investment Company) is the only legal way for foreigners to own property in Bali by setting up a company that holds the title.
- Benefits of PT PMA include full ownership rights via HGB (right-to-build), legal protection, and flexibility to use the property for residential or business purposes.
- Setting up a PT PMA requires a minimum total investment of ~USD 700,000 and involves multiple steps, including company registration, permits, and opening a local bank account.
- Working with local experts (lawyers, notaries, and real estate agents) is crucial to ensure compliance and a smooth investment process.
Explore Investment Options: Available Bali Villas for Sale – Leasehold and Freehold
What is PT PMA?
PT PMA stands for “Penanaman Modal Asing,” which is Indonesian for “Foreign Investment Company.” It’s a special company that allows foreigners to own property in Indonesia.
Here’s how it works: Instead of buying property directly, you set up a PT PMA company in Indonesia. Then, the company buys the property. This way, you own the company that owns the property.
What Perks Does PT PMA Give You?
Here are the benefits of a PT PMA:
- Ownership Rights: Your PT PMA can fully own property, unlike other options where you might only lease.
- Legal Protection: It offers better legal security for your investment.
- Flexibility: You can use the property for various purposes, like a home, a rental, or a business.
Key Points About PT PMA
Before setting up your own company in Indonesia, there are several main things you need to know about PT PMA. These points will ensure you navigate the process effectively:
1. Legal Entity Setup
Establishing a PT PMA is the first step for foreign investors aiming to engage in the Indonesian property market.
This involves complying with the investment regulations set by the Indonesian government, including meeting the PT PMA minimum capital and business field restrictions.
For example, an Australian investor wants to enter the Indonesian market by setting up a PT PMA to develop a resort in Bali.
They must register the PT PMA with the Indonesian Investment Coordinating Board (BKPM) and ensure they meet the minimum capital requirement, which could be around IDR 10 billion (approximately USD 700,000), depending on the business sector.
Read More: Breaking into the Bali Real Estate Market: A Beginner’s Guide
2. Understanding HGB (Hak Guna Bangunan)
Foreign investors should know that a PT PMA allows them to acquire property through the right-to-build (HGB) title.
This is the closest ownership to a freehold agreement, allowing them to construct and operate the villas for up to 80 years or more, providing a long-term investment opportunity.
3. Compliance with Indonesian Law
Investors must ensure their PT PMA and subsequent property acquisition through HGB comply with all relevant Indonesian laws and regulations. This includes being mindful of foreign ownership and investment laws, zoning regulations, and building codes.
To know more about the four main land zoning in Bali, check out our post on Bali Land Zoning: The Surprising Reason Why Your Investment Could Be Illegal.
4. Engagement with Legal and Real Estate Professionals
Establishing a PT PMA and acquiring HGB requires expertise in Indonesian law and real estate practices.
Acquiring a PT PMA can be a complex process. For instance, it requires at least two shareholders—either individuals or legal entities. One of the individuals must be an Indonesian citizen residing in Indonesia.
Working with reputable legal advisors, notaries, and real estate professionals is a great idea to ensure all processes are conducted legally and smoothly.
5. Strategic Investment Planning
Investors should approach property acquisition in Bali with a clear strategy, considering the location, type of development, target market, and long-term investment goals.
Bali’s property market offers opportunities in both commercial and residential sectors, but success requires careful planning and market analysis.
Conduct a market analysis to understand the area’s tourism trends, competitors, and target market preferences.
6. Financial Planning
Once you decide to start a PT PMA Indonesia, you’ll need a taxpayer ID (NPWP), a Business Identification Number (NIB), and other permits.
The PT PMA minimum capital includes:
- Paid-Up Capital: At least IDR 2.5 billion (approx. USD 175,000)
- Total Investment Plan: Typically more than IDR 10 billion (approx. USD 700,000)
These are general PT PMA requirements, and the exact amount may vary based on your business type.
7. Renewal and Extension of HGB
Being aware of the renewal and extension process for HGB is essential for long-term planning.
Investors should track key dates and requirements to maintain uninterrupted legal rights over their property. For instance, it’s recommended to begin the extension process around ten years before the HGB expires—or as agreed between you and the property owner.
You’ll need to apply for the extension at the local land office, making sure all required documents are prepared and any updated regulations are met to extend your land rights for another 30 years.
How to Set Up a PT PMA?
Now that you understand the basics, here’s what the setup process looks like (in USD):
1. Choose a Business Name
Pick a unique name for your company.
- Cost: Free, but you should check the Indonesian Ministry of Law and Human Rights website to ensure the name is not already in use.
2. Prepare Documents
Gather your identification and other necessary documents.
- Required Documents:
- Passports of all shareholders
- Proof of domicile (like a utility bill)
- A detailed business plan
- Articles of Association
- Cost: Minimal, usually just copying and notarization fees (around $50 – $100).
3. Register the Company
Submit these documents to the Indonesian Investment Coordinating Board (BKPM).
- Process:
- Apply online via the OSS (Online Single Submission) system.
- Pay the registration fee.
- Cost: Registration fee varies but is generally around $100 – $300.
4. Get Approvals
Obtain various permits and licenses needed for your company.
- Permits and Licenses:
- Principle License (Izin Prinsip)
- Business License (Izin Usaha)
- Cost: Each permit/license can cost between $500 – $1,000.
5. Open a Bank Account
Open an Indonesian bank account for your company. Choose a bank and submit the required documents. The initial deposit required varies by bank but is usually minimal (under $100).
6. Start Operating
Once everything is approved, your PT PMA can start doing business. Now you can purchase property, sign contracts, and start any planned operations like renting out properties or developing land.
Initial Investment Requirement
For PT PMA, the Indonesian government requires a minimum initial investment. Here’s a breakdown:
- Total Investment Plan: At least USD 700,000
- Paid-Up Capital: Minimum of USD 250,000, to be deposited in your company’s local bank account
These requirements apply to most sectors and affect the overall PT PMA Bali cost.
Pro Tip: Hiring a local expert, like a lawyer or consultant, is helpful. They can guide you through the process and make things easier.
What’s Your Next Step?
Setting up a PT PMA is a smart way for foreigners to own property in Bali. But as you’ve learned, setting up a PT PMA isn’t as simple as buying a house back home.
There are quite a few things to manage, like tracking finances, paying taxes, and reporting your company’s activities to the government. You’ll need help from lawyers and local experts to make the process smoother.
Don’t worry, because, our team is here to help you anytime! Book a free call by clicking the button below, and let’s talk about your next steps—whether you’re buying a property for personal use or starting a rental business.
FAQ
1. What is a PT PMA?
A PT PMA (Foreign Investment Company) is a limited liability company established under Indonesian law that includes foreign capital—either fully foreign-owned or in partnership with local investors.
2. What are some examples of PT PMA companies in Indonesia?
Some examples of PT PMAs operating in Indonesia are PT Nihon Seiki Indonesia, PT Uni-charm Indonesia Tbk, and PT Indonesia Stanley Electric.
3. Can a PT PMA own land in Indonesia?
Yes, setting up a PT PMA is the legal way for foreign investors to hold land rights in Indonesia.
4. What taxes apply to a PT PMA in Indonesia?
PT PMAs are subject to corporate income tax on business profits, currently set at 22%. Companies must also submit annual tax reports (SPT) based on net taxable income.
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