Potential changes to foreign ownership laws in Indonesia could carry wide-reaching benefits to well-organised overseas investors, according to Lombok-based property brokerage Invest Islands. 

The Straits Times reported last month that Indonesia’s Minister of Agrarian and Spatial Planning, Sofyan Djalil, told Indonesian property tycoons during a July 23 webinar that new rules providing foreigners similar ownership rights to nationals were set to be ratified into law by the end of August.

According to the Times, the plan is part of a nationwide strategy to help Southeast Asia’s biggest economy recover from the economic effects of the COVID-19 pandemic.

Invest Islands co-founder Jack Brown told WILLIAMS MEDIA an update of the regulations could have a "monumental" impact on the Indonesian real estate industry.

The view from Lombok in Indonesia. Source: Invest Islands

"We’ve had a lot of interest in recent months from people who love Indonesia and would ideally have their dream home here but were put off by the current ownership structures, which are mainly based on leasehold titles,” he said.

“If this law passes, it will open up the Indonesian property market to a much, much wider audience and stimulate competition among purchasers throughout Indonesia, especially in places such as Lombok and the proposed new capital, East Kalimantan.”

Current regulations only allow foreigners who are resident in Indonesia to own property under a Hak Pakai (right to use) title.

This can easily be converted back to Hak Milik (freehold) should an Indonesian national purchase.

Click here to read Invest Islands' How to Own Property in Indonesia Legal Guide

Fellow Invest Islands co-founder Kevin Deisser told WILLIAMS MEDIA it could be time to loosen these clauses of ownership.

“Indonesian President Joko Widodo has been a massive driving force in improving regulations across the board in terms of foreign investment in Indonesia,” he said.

North Lombok, Indonesia. Source: Invest Islands

“The existing system has been working well for 10 years, but this would be a huge improvement and provide enormous opportunity for overseas investors."

Of particular interest to Invest Islands is the Mandalika Project in Lombok - a US$3 billion government-backed special economic zone covering 1,175-hectares of coastal land and set to eventually be home to more than 16,000 hotel rooms, a waterpark, 27-hole golf course, 1,500 villas, and an international-standard motor-racing circuit.

Officials from the Indonesian Tourism Development Corporation said earlier this year that work has not slowed despite the global pandemic, and the circuit — scheduled to host a round of next year’s MotoGP World Championship — will be ready on time. 

Mr Brown said while Invest Islands had so far "weathered the storm pretty well", a new law on foreign ownership could provide the property sector with a timely boost.

"Pushing this new law through will not only ensure people employed in the real estate sector remain in work, but also provide the entire industry with an injection right when it’s needed most," he said.

Founded in Indonesia during 2015, Invest Islands primarily helps foreigners navigate the red-tape associated with purchasing land in the country. 

Catering mainly to overseas investors, it has headquarters in Lombok and offices in Hong Kong, while also planning to open sales branches in both Singapore and Australia by next year.

Click here for more information about Invest Islands.

The views and opinions expressed in this article are o Invest Islands and readers should rely on their independent advice in relation to such matters. 

THIS IS A SPONSORED FEATURE ARTICLE

Similar to this: 

Mandalika: The Indonesian myth soon to be a reality

Get to know Invest Islands co-founder Jack Brown

Why now could be the right time to land bank in Lombok