Indonesia as a developing country is one of the investment destination for developed countries to expand their global business activities. That is why more foreigners domiciled in Indonesia to do their business. However, there are boundaries or conditions for foreigner to own a residence especially a strata title, which is going to be discuss further here.
Condominium can only be built upon land with titles of rights to own (hak milik), rights to build (hak guna bangunan), and right to use of government land (hak pakai atas tanah negara) or right to manage (hak pengelolaan) according to Article 7 paragraph (1) Law No. 16 of 1985 about Condominium (the “Law of Condominium”) and Article 38 paragraph (1) Goverment Regulation No. 14 of 1988 about Condominium (“GR No. 14 of 1988”).
Article 8 paragraph (1) Law of Condominium, states that strata title unit can be owned by an individual or a legal entity who is qualified as the owner of rights over land (hak atas tanah). The “rights over land” refers to the terms and conditions as regulated in Law No. 5 of 1960 on Principle Provisions of Agrarian (the “Agrarian Law”), such as right to own, right to cultivate, right to build, right to use of government land, et cetera. Rights over land which can be directly owned by foreigner and/or foreign corporate bodies (foreign legal entity) is a right to use of government land (Hak Pakai). This matter is regulated in Article 42 of Agrarian Law.
According to Article 41 paragraph (1) of Agrarian Law, the right to use of government land is,
a right to use, and/or to collect a yield from land that is directly controlled by the State or land owned by another individual (tanah milik) which grants authority and obligations as determined in the relevant right-granting decree by the authorized official or as determined in the agreement with the owner of the land, where the agreement is not a land-lease agreement (perjanjian sewa-menyewa) or land-exploitation agreement, given that everything is possible as long as it does not contradict the spirit and provisions of this law.
The period of time for the right to use of government land is 25 (twenty five) years and can be extended again for another 25 (twenty five) years or is given an undetermined period of time as long as the land is being used for the interest as stated in the regulation above. The period of time for the right to use of government land is regulated in Article 45 paragraph (1) of Government Regulation No. 4 of 1996 on Right to Cultivate, Right to Build, and Right to Use of Government Land.
The legal basis of strata title ownership for foreigners who are domiciled in Indonesia is Government Regulation No. 41 of 1996 about Ownership of House or Residence or Residential by Foreigner Domiciled in Indonesia (the “GR No. 41 of 1996”). Article 1 of GR No. 41 of 1996 regulates that foreigners domiciled in Indonesia who can own a residence is only those whose presence can bring benefits for the national development.
Foreigner and/or foreign legal entity who owns a representative office in Indonesia can only own a strata title unit in Indonesia which built upon lands with the right to use of government land title, as regulated in Article 2 paragraph (2) of GR No. 41 of 1996.
Thus, according to all of the explanations above, we conclude that foreigners and/or foreign legal entities which domiciled in Indonesia can own strata title units built upon lands with the right to use of government land, with certain conditions and certain period of time as stated in the regulations mentioned above.