The Government of Indonesia has been trying to find a way to provide more flexibility for a foreigner and foreign entity to own a property in Indonesia. One of the intentions is also to improve the property market in Indonesia. At this moment, the Government has been preparing a draft of new regulation on property ownership for foreigner and foreign entity. The type of regulation is the Government Regulation that will amend or terminate the previous Government Regulation Number 41 of 1996 on the Ownership of Residential House by Foreigner that is domiciled in Indonesia.

Definition of Foreigner and Foreign Entity

In the draft of regulation, the foreigner is defined as every individual that is not Indonesian nationality that is presence or domiciled in Indonesia. Foreign entity is defined as a private or public foreign legal entity. Private foreign legal entity means a legal entity that is established not based on Indonesian law or association or any other entities, having more than 50% of its members as foreigners. Public foreign legal entity means representative of foreign State or representative of international bodies in Indonesia.

Definition of Property

Property is a landed house and/or strata title unit. Landed house is a residential house or horizontal house that is directly established over the land. A landed house and/or strata title unit may have function as a residence, office, and/or trade, and/or social, cultural, and religion. This means that a foreigner and foreign legal entity may purchase property not only for residential purpose but also for commercial and other various functions.

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