There are many questions about how to invest my money in Indonesia for property field, especially for foreigner to us. Most are still confused, how foreigners invest property or own property in Indonesia, as well as procedures and letters. With economic growth and accelerated development, it is still promising benefits from property investment in the coming years, especially strengthened the fact that property prices in Indonesia always increase rapidly every year. Here, we summarize some ways for foreigners to invest in property in Indonesia.
In general, the application of how to invest my money in Indonesia can be done at Indonesian Representative Offices overseas, Investment Coordination at the central level, Provincial Investment Board, and Investment Institution in regency / municipality. Potential investors may choose to apply for investment proposal in one of the above places.
Then the proposal will be reviewed in relation to various aspects. Once the proposal is approved by the Indonesian Representative overseas, the Head of the Investment Coordinating Board, or Head of the Capital Investment Board, the investment approval will be issued. Potential investors must complete several requirements needed to invest their capital.
The Foreigner’s Way to Invest Property in Indonesia
There are a number of ways for foreigners to how to invest my money in Indonesia for property fields, among others:
Investment through Foreign Investment (PMA)
For PMA, fill out Form I PMA (Foreign Capital Investment) model which is equipped with:
- Certificate of incorporation establishment
- Photocopy of passport if an individual
- Photocopy of Taxpayer Identification Number) PMA (Foreign Capital Investment)
- Letter of Power Attorney
- Description of process description of production / business activities (flowchart)
Foreign Investment Affairs (PMA) in Indonesia is governed by the Investment Coordinating Board. This method is the recommended way because it has a permanent legal force and in accordance with applicable law in Indonesia. But this way is not practical. In addition to forming a business entity that can take a monthly time, the property is also not owned entirely by foreign investors.
Foreign nationals are granted only 20-30 years of Building Use Rights with a 20 year extension. The law also provides that such property may only be used by the enterprise until its lease expires (20-30 years). During the time of the lease, the property cannot be traded to other parties.
The plot is like this: foreign citizen (money owner) -> set up a business entity -> register at the Investment Coordinating Board -> buy / rent property
Investing Through Indonesians Directly
Indonesian citizens may become direct owners or represent on behalf of foreign nationals. To do this a number of documents signed in front of a notary include:
- Letter of Contract (Lease or Sale-Purchase) which becomes proof of ownership of property.
- Letter of Loan Agreement for rental price or purchase price between prospective owner of Indonesian citizen with investor / foreign citizen. This letter contains information that Indonesian citizens have borrowed money from foreign nationals to rent or buy property.
- Building Permit Letter, an agreement that allows foreign investors to use the related property.
- Statement Letter that Indonesian citizens borrow or receive loans from foreign citizen investors and their intention to own and use the property.
- Power of Attorney from Indonesian citizens to foreign nationals, to be able to sell or rent property to other parties, as well as to represent Indonesian citizens in any dispute regarding it.
All the above letters will be held by foreign nationals. This second way is the most practical and most foreign citizens choose this way. In contrast to the first way, where a foreign investor must establish a business entity, register it to the Investment Coordinating Board and then be able to buy or lease the property. The time required is also relatively short and foreign citizens do not have to bother.
But the second weakness of this way is that there is no law governing the problems that may arise between Indonesian citizens as buyers / tenants with foreign citizens. In addition, foreign nationals have no proof of ownership of the property so it will be difficult if they want to be reinvested.
The plot is like this: foreign nationals (money owners) -> lend money to Indonesian citizens -> WNI buy / rent property.
Levies are calculated as 1% of the multiplication of 6 (six) building coefficients with the standard price of the building. Time taken for processing your investment is about fifteen (15) business days. Basically investment procedure in Indonesia especially in Investment Coordinating Board Center can be done much simpler and standardization of permit.
In the future, it is expected that the 3-hour investment permit service procedure is not only applied to investments worth at least 100 Billion rupiahs, but can also be applied for investments that are under the value of100 Billion rupiahs. This is to realize Investment as the main support of Indonesia’s economic growth
From both options how to invest my money in Indonesia there are weaknesses and advantages. You should consider the best by looking at the risks.