Three structures, one that actually works
Foreign buyers in Indonesia encounter three structures in practice: Hak Pakai (a right-of-use for individuals), nominee arrangements (an Indonesian national holds title on your behalf), and the PMA — a foreign-owned Indonesian company that holds leasehold land rights.
Nominee arrangements are fast and cheap on paper. They are also unenforceable under Indonesian law if contested. The legal literature is consistent: a nominee holds the land, not you, and disputes have historically not been resolved in the foreign buyer's favour.
Hak Pakai works for a single residential property held personally. PMA works for any investment case — rental, multi-asset, or corporate — and is the structure we use across every Avantia mandate.
What a PMA actually is
A PMA (Penanaman Modal Asing — "foreign capital investment") is a standard Indonesian limited-liability company, with at least one foreign shareholder. It has an NPWP (tax ID), an NIB (business identifier), directors, commissioners, and annual filings.
The PMA holds the leasehold on the land. You hold the shares in the PMA. Your ownership in Indonesia therefore flows through an Indonesian corporate vehicle — which has consequences for taxation, repatriation of funds, and cross-border estate planning.
Set-up timeline and cost
PMA set-up runs 6–10 weeks with a competent corporate law firm. Budget €3,500–€6,000 in set-up fees, plus minimum paid-in capital. Annual compliance (accounting, tax filings, licence renewals) runs €3,000–€5,000 per year.
These numbers sound high against a single residential purchase. Against an investment case — rental income, future re-sale, multiple assets — they are recurring overhead that scales with the portfolio rather than the transaction.
Leasehold mechanics
Under the PMA, the land lease is typically 25–30 years, with contractual extension options that can bring total tenure to 50 or 80 years. The lease is a bilateral contract between the Indonesian landowner and your PMA — so the economic value is contingent on the extension clause being well-drafted.
Read the extension clause carefully. "Subject to mutual agreement" is not an extension; "extension at the same terms, at the option of the lessee" is.
What HGB means and when you need it
HGB (Hak Guna Bangunan — "right to build") is a separate land-right that can be held by an Indonesian company, including a PMA. It is held for a term (typically 30 years), and can be extended. For built assets that the PMA operates commercially — villas for short-term rental, hospitality operations — HGB is the right-to-build that sits on top of the lease.
In most residential-investment cases, you will see both: a leasehold (right to the land) plus HGB (right to build and operate the structure on it). Both are held by the PMA.
The tax layer
A PMA files Indonesian corporate tax (22% at the time of writing) on its net operating income. Rental income, less operational deductions, is taxed at that rate. Dividend distribution to foreign shareholders incurs withholding tax (10% under the Netherlands–Indonesia tax treaty, 20% otherwise).
The Netherlands–Indonesia treaty is an important detail for Dutch buyers: check residency status before assuming the treaty applies to your specific case.
Succession and exit
A PMA's shares are inheritable — which matters, because the leasehold plus HGB are held at the company level, not the shareholder level. This simplifies succession planning compared with individual Hak Pakai.
Exit is handled by assigning shares (or selling the PMA outright) rather than transferring the lease. The practical consequence: buyers in a resale acquire the PMA, so your PMA's compliance history matters for the eventual resale price.