A new government
regulation scheduled for implementation in May has promised a legal
breakthrough that would allow foreigners to own property in Indonesia, albeit
restricted to condominiums only.
In the past, efforts to open the property market to foreigners were
hampered by the prohibition on land ownership, which would remain intact as
demanded by existing laws.
The upcoming regulation seeks to overcome that problem by simply
providing foreigners with the right to apply for the purchase of a Building
Ownership Certificate (SKBG) that is completely detached from land rights.
"They can own apartment units under the SKBG without having the
land," Pangihutan Marpaung, the deputy on formal housing at the Public
Housing Ministry, told The Jakarta Post recently.
Pangihutan said foreigners could hold SKBGs for 60 years with the
possibility of extending them by another 60 years, thus making condominium
ownership in Indonesia more competitive than in Singapore, which allows 90
years of ownership.
"There is a good chance for extending the certificate for another
60 years, but we are still discussing it further," he said.
Under present rules, foreigners may lease property for 25 years that
can be extended for further periods of 25 years and 20 years, or 70 years in
total. Unlike the right to lease, the SKBG can change hands and can be traded.
The opening of the domestic property market will not come without a set
of restrictions, Pangihutan said. Non-nationals will not be allowed to
participate the condominium resident associations, which according to the law
hold the right to manage condominiums as well as to communicate residence-related
issues to property developers and the government.
In addition, the upcoming regulation will also limit how many units in
a condominium tower can be owned by foreigners. According to Pangihutan, the
ministry is considering 40 percent foreign ownership at the maximum for each
tower.
Pangihutan said the regulation also sought to determine which cities in
Indonesia were allowed to have foreign ownership. So far, Jakarta, Bali and
Batam have been short-listed. More cities such as Medan in North Sumatra and
Balikpapan in East Kalimantan are still being considered.
Medan is an emerging tourism city and a gate to western parts of the
country, even more so with the construction of Kuala Namu International
Airport. Balikpapan, on the other hand, is an oil and gas rich city in the
eastern part of the country with a bustling expatriate community.
The government will also set a minimum price per square meter. So far,
the government still sticks to property worth at least Rp 2 billion
(S$276,000). However, that figure might be changed.
The Jakarta Post/Asia News Network
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