BASIC REQUIREMENTS TO APPLY BUSINESS VISA

1. Business visitors must have a residence and an employer outside of the host country and must be traveling to the foreign country for a defined limited period of time
2. Business visitors may not receive compensation from the host country, however incidental expenses such as accommodation, cost of travel and meals may be paid by the host
3. Business visitors must have proof of adequate funds to defray expenses while on the business visit
4. Business visitor must have specific, realistic and pre-set plans for his/her stay in Indonesia
5. The period of intended stay must be consistent with the intended purposes of the trip
6. Business visitor must be the guests of the director of the company in Indonesia and may not hold themselves out as working for the Indonesian company. Activities such as signing letters on the Indonesian company’s letterhead, having a temporary office, being listed in the Indonesian company’s phone directory or having business cards indicating affiliation with the Indonesian company are prohibited

MOST COMMONLY REQUESTED DOCUMENTS AND PROCESSING TIME

Please note that the Indonesian Consulate and/or authorities reserve the right to request additional information and/or documents.

1. Application form in duplicate
2. Two passport style photographs
3. A company letter of support stating the purpose of the trip, that the company assumes full financial responsibility for the applicant(s) during their stay in Indonesia and requesting a multiple entry visa
4. Original passport of each applicant
5. Itinerary and the airline tickets
6. Proof of available funds
7. Application fee

Normal processing time : 3 – 5 business days to complete

Cost : Multiple business visa ( 1 year ) : IDR 3,2 Million or USD 360

INVESTING IN BALI

Why just visit Bali when you can own a piece of paradise? Investing in Bali is easy, economical and profitable…. If you follow proper regulations and have the right advises and counsel. Land has been appreciating every year in Bali. Limited land availability, increased tourism from easy international travel, instant Internet communication adds up to increasing pressure on the price of land. Bali land is forecast to grow at the rate of 20-25% yearly in value according to leading real estate publications that monitor land sales.

Couple that figure with a construction cost far below most western prices AND a rental value exceeding western prices, all adds up to one of the better real estate investments found anywhere. Many people from around the world have purchased land and built rental villas for the purpose of investment, positive cash flow and having a place to enjoy “free” lodging while vacationing, not to mention the possibility of retirement. Some villas, if built right and marketed properly, can spin of $25,000 - $50,000 U.S. Dollars in annual positive cash flow. After expenses!!

“How foreigner can own property in Indonesia”

A. TITLE
There are a number of different types of title in Indonesia:
1. Hak Milik (Freehold) is the type of title that can only be held by an Indonesian citizen.
2. Hak Pakai (essentially leasehold title) and other forms of title can be held by a P.T or PMA Company (Foreign Investment Company).

A non-Indonesian citizen cannot own land in Indonesia. However a foreigner can acquire a leasehold title to a building – almost the same as a strata title except that the title lasts only for 25 years with an extension of 30 years for a maximum of 55 years and then reverts to the original owner (lessor).

B. SOLUTION

There are 2 ways for foreigner to own property in Indonesia:
1. Using the Nominee
The Nominee will sign four documents with the foreigner as follow:
a. A Loan agreement : acknowledges that the foreigner has lent to the Nominee the purchase price of the land.
b. A Right of Use agreement: allows the foreigner to use the land.
c. A Statement Letter : where the Nominee acknowledges the foreigners loan and intention to own the land.
d. Power of Attorney : Nominee sign an irrevocable Power of Attorney giving the foreigner the complete authority sell, mortgage, lease or otherwise deal in the land.

2. Using the PMA
The most significant change in Indonesian investment law came in 1997 when the government introduced the PMA (Penanaman Modal Asing or Foreign Investment Company). This allows foreign investors to set up a company in Indonesia, without having to have Indonesian partners. The PMA can be 100% owned by the foreign investor. PMA companies are allowed to own the title of the property for a period 25 years and have to be renewed by the government.

To set up a PMA, you will be required to:
1. Submit the detailed business plan.
2. Operate in a business environment that adds value to Indonesia in terms of foreign skills, employment and environmental benefit.
3. Make an appropriate cash deposit in an Indonesian based Bank. The amount varies and is calculated from the capital employed in the business.
4. Show the property investment as an asset of the company.

The process takes approximately 3 or 4 months and once its completed; the company can apply for work permits for the foreign directors, 3 permits in the first year of operation.
The cost to setting up the PMA is between IDR 30 to IDR 40 Million or equivalent with USD 4,500..

C. BUYER FEES
1. Notary : 1% - 1.5% of the transaction.
2. Seller Tax & Buyer tax : seller and buyer pay 5% ( each ) from Value added Tax ( VaT )

Overview of Indonesian Land Laws and Recommended Structure

A foreign investor wishing to secure usage rights to a Villa and the underlying Hak Milik land may utilize any of the following structures:

Hak Milik / Freehold title
Freehold title, which means full ownership of land and villa, can be held by an Indonesian individual.

Nominee – Hak Milik structure for non-Indonesian buyers
This structure consists of a series of contractual agreements between a foreigner and the Indonesian national who the foreigner nominates to hold the Hak Milik title.

This structure should consist of a Notarized load agreement and mortgage in favor of the foreigner together with an agreement granting the foreigner secured rights to occupy the property. The mortgage will prohibit the nominee selling the property without the discharge of the mortgage by the foreigner.

Occupation rights should be granted by way of a notarized lease to complete the structure.

Leasehold
This is a contractual agreement between the Hak Milik / Freehold land owner and the foreigner which grants leasehold rights to the foreigner for the terms of the lease.

This structure offers reasonable security provided that the lease agreement is executed before an Indonesian Notary in Notarial Deed form in the Indonesian language.

The leasehold interest is an unregistered interest in the land so the foreigner’s leasehold rights do not appear on the Hak Milik certificate of title as an encumbrance. However, the unregistered leasehold interest will take priority over subsequent encumbrances on the Hak Milik title.

While the actual term of a lease is not regulated under Indonesian lay, Notaries in Bali will generally grant leases to foreigners in terms of 25 years times 3 terms so that the lease term accords with the government decreed 25 year term of the Hak Pakai title available to a foreigner as a registered interest in Hak Milik land.

Hak Pakai / equivalent freehold title for non-Indonesian buyers
The leading ownership structure now permitted by the Notarial Land Agency in Bali is known as the Hak Pakai over Hak Milik title.

The Hak Pakai title is the government sanctioned method for foreign purchasers to acquire the exclusive right of use over Hak Milik land which is registered in a separate certificate of title issued in the name of the foreigner.

The Hak Pakai title differs from a lease in that it is a registered proprietary interest in the Hak Milik land rather than an unregistered interest. A foreign purchaser is permitted to hold one Hak Pakai title in Indonesia at any time.

The title can be mortgaged and is freely transferable to another foreigner, an Indonesian National or an Indonesian company. At the election of the purchaser, the freehold Hak Milik owner will grant the purchaser a Hak Pakai title of an initial 25 year term with three prepaid twenty-five year renewals thus providing one hundred years of secure ownership tenure to the villa and land package.

Hak Guna Bangunan / Corporate ownership
A foreign investment limited liability company in which the foreigner owns or controls 100% of the shares is commonly known as a PMA company. These companies are permitted to hold a certificate of title known as Hak Guna Bangunan (HGB) meaning the right to own and use buildings on the land.

The initial term of the HGB is 30 years and the terms of extensions and renewals are dependent on whether the HGB is established over Hak Milik land or over State land.

The PMA Company has ongoing taxation and reporting requirements to Indonesian government authorities and must engage in a single purpose business. As a result of the PMA companies corporate and tax compliance obligations, it may be viewed as not being the most appropriate vehicle to hold a single, relatively small villa investment.

Source: Public Notary Officer / PPAT
Eddy Nyoman Winarta, SH