Land Ownership in Indonesia

Land ownership in Indonesia is an important aspect of company establishment in the country. If you decide to do business in Indonesia, there is a high chance that you will purchase land at some point. Having a land purchased and registered under your name could be very useful, since you can use it to build offices, workshops, or even factories to support your business operations.

What is Land Ownership?

Land ownership is a system that regulates and clarifies that a certain area of land is owned by an individual or group. In Indonesia, land ownership is an essential matter because rightful owners have special rights to use the land according to the type of ownership.  Land ownership in Indonesia is formulated in a written form and acknowledged by the law in the form of certificates that are issued by the Badan Pertanahan Nasional (BPN).

What is the Importance of Land Ownership?

According to Government Rule Number 24 of 1997 concerning Land Registration, land ownership is important for several reasons. First it gives legal certainty and protection for the lawful owner. Should there be any dispute in the future, they can prove themselves as the rightful owner by having land ownership. Furthermore, land ownership is also important to provide information to the government. This is necessary in order to help them create records and other administrative matters. 

Types of Land Ownership in Indonesia

Land ownership in Indonesia consists of several types based on the usage of the land. There are several types of land ownership in the country, such as:

1. Hak Milik

Hak milik is the type of ownership that belongs in the civil aspect. Furthermore, it has a strong legitimacy that can be passed through generations with no expiry. Specifically, Hak milik is written in the form of a certificate named Sertifikat Hak Milik (SHM). Consequently, an SHM can be used as collateral or for other financing processes

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2. Hak Guna Bangunan

Hak Guna Bangunan (HGB) is a type of ownership right that allows the holder to construct a building on top of a land owned by other parties for a maximum of 30 years with a possibility of an extension for 20 years. If the period runs out, the holder can apply for another 30 years. HGB is transferable among individuals. However, it is important to note that HGB is written in a document named Sertifikat Hak Guna Bangunan which can only be obtained by Indonesian citizens. 

3. Hak Guna Usaha

Hak Guna Usaha (HGU) is a type of ownership rights that allow the holder to use state-owned land for business purposes. Specifically, the business sectors are specified to agriculture, fisheries, and livestock. A HGU is active for a maximum of 25 years, with the possibility of another 25 years extension. However, HGU is only eligible for Indonesian citizens or legal entities.

4. Hak Pakai

Hak Pakai is a type of ownership right that allows the holder to use state-owned land or lands owned by other parties for business purposes. Moreover, it is special because it is not only eligible for Indonesian citizens, but also for foreign citizens who reside in Indonesia. This type of ownership right is active for a maximum of 25 years, with the possibility of a 20-year extension.

How can Double M help?

Land ownership in Indonesia gives legal protection for the rightful owners. With Double M’s assistance, we will manage your land ownership matters efficiently.