Want control and Value? Go PT PMA
A PT PMA (Penanaman Modal Asing) is a foreign-owned limited liability company in Indonesia, designed for foreign investors to conduct business or invest in assets, including property, under Indonesian law. Here’s a simple explanation in the context of Bali property ownership:
- What it is: A PT PMA is a legal entity that allows foreigners to own a company in Indonesia, which can then hold property titles like Hak Guna Bangunan (HGB) or other rights resembling freehold for a set period (up to 80 years).
- Purpose in Property: Since foreigners cannot directly own freehold (Hak Milik) land, a PT PMA is used to legally acquire and manage property, offering a way to invest in Bali’s real estate market with more control than leasehold.
- How it works:
- You establish a PT PMA with the help of a legal professional, registering it with Indonesia’s Investment Coordinating Board (BKPM).
- The company requires at least two shareholders, a director, and a commissioner (some can be nominees or locals, but you retain majority control).
- The PT PMA can then purchase property under HGB or other titles, giving you long-term rights to use, develop, or lease the land.
- Requirements:
- Minimum investment of around IDR 10 billion (~USD 650,000, as of 2025), though not all needs to be paid upfront.
- Must comply with Indonesia’s Negative Investment List, which restricts certain sectors, but real estate in Bali is generally open for PT PMA.
- Annual reporting and tax obligations.
- Pros:
- Allows foreigners to legally hold property with long-term security (similar to freehold).
- Full control over the property for development, rental, or resale.
- Can be used for other business activities in Indonesia.
- Cons:
- Complex and costly setup (legal fees, capital requirements).
- Ongoing compliance (taxes, audits, renewals).
- Risk of regulatory changes affecting foreign ownership.
- Bali Context: In Bali, a PT PMA is popular for foreigners buying villas or land for investment, as it bypasses the restrictions on direct freehold ownership. However, it requires careful legal structuring to ensure compliance and protect your investment.
Advice: Always work with a reputable notary or lawyer in Bali to set up a PT PMA and ensure all property transactions are secure and compliant with Indonesian law.
