The Smart Way to Own Land in Bali: 7 Crucial Steps to Acquire Property Using a PT PMA Bali

Introduction: Why You Can’t Just “Buy” Land in Bali

Bali’s natural beauty, booming tourism, and laid-back lifestyle have made it a magnet for foreign investors and dream-home seekers. But many are shocked to discover that foreigners cannot legally own land in Indonesia. According to national agrarian law, only Indonesian citizens have the right to hold freehold land (Hak Milik). While some foreigners try to bypass this restriction by using local nominees or "borrowed names," this approach is legally risky and may result in the loss of property rights or criminal consequences.

Fortunately, there is a secure and legal way to hold property in Indonesia as a foreigner: establishing a PT PMA Bali (a Foreign-Owned Limited Liability Company registered in Bali). This company structure allows foreign investors to own the “Right to Build” (Hak Guna Bangunan or HGB) on land, which is a recognized title under Indonesian law. With an HGB title, your PT PMA can legally acquire, develop, and lease property for business purposes.

Understanding how to correctly acquire land and buildings through a PT PMA Bali is essential for anyone planning long-term investment in Bali’s real estate market. From stunning beachfront villas to commercial properties, securing the right legal structure not only protects your investment—it ensures you're operating within Indonesia’s legal framework.

In this article, we’ll break down the key steps to acquiring property using a PT PMA Bali, covering everything from company setup and due diligence to building permits and ongoing compliance. Whether you’re looking to build a resort, run a co-living space, or invest in a rental villa, this guide will help you navigate the process legally and strategically.

What is a PT PMA Bali and Why It’s Legal for Property Ownership

A PT PMA Bali (Perseroan Terbatas Penanaman Modal Asing) is a foreign-owned limited liability company officially registered in Indonesia. It is the only legal structure that allows foreign nationals to acquire certain land rights and operate business activities—such as real estate development, hospitality, or tourism—in Indonesia.

Under Indonesian law, a PT PMA Bali can legally hold property through a Right to Build (Hak Guna Bangunan or HGB) land title. This title permits the company to build, use, and lease property for up to 30 years, with options to extend for an additional 20 years and renew for another 30. Although it doesn’t offer "full ownership" in the traditional freehold sense, it provides long-term, renewable rights that make it highly suitable for business and investment purposes.

To understand how this works, it's important to distinguish between two common land titles in Indonesia:

• SHM (Sertifikat Hak Milik / Freehold) – Only Indonesian citizens or entities specifically allowed by law can hold SHM titles. Foreigners cannot legally own SHM land, even via a nominee.
• HGB (Hak Guna Bangunan / Right to Build) – A PT PMA Bali can legally obtain this title. HGB allows the foreign company to build and utilize structures on the land, with rights that can be extended and renewed.

By acquiring land through a PT PMA Bali, you are ensuring that the asset is held under a legally recognized corporate structure—providing both legitimacy and protection. The land becomes part of the company’s asset portfolio and is subject to standard corporate governance, including asset reporting and transparency. This protects foreign investors from nominee fraud, informal arrangements, and disputes that often arise from unclear ownership.

For serious investors looking to develop or manage property in Bali, PT PMA Bali remains the safest and most compliant route to access real estate and infrastructure for long-term projects.

Step 1 – Establishing Your PT PMA Bali

The first step to acquiring property in Indonesia as a foreigner is setting up a legally recognized PT PMA Bali (a foreign-owned limited liability company). This corporate structure is essential, as Indonesian law prohibits direct land ownership by foreigners.

To begin, register your PT PMA Bali through:

• BKPM (Indonesia’s Investment Coordinating Board)
• OSS-RBA (Online Single Submission system)

You’ll need to select relevant KBLI codes based on your intended business activities—commonly:

• Real estate development
• Property leasing or villa rentals
• Hospitality or tourism services

A capital investment plan is also required. The minimum is IDR 10 billion (~USD 650,000), but this amount can be realized in stages—not upfront. You must report this plan to regulatory authorities.

Essential documents for your PT PMA Bali include:

• Notarial Deed of Establishment
• Ministry of Law and Human Rights approval
• NPWP (Tax ID), NIB (Business ID), and domicile letter
• Any required sector-specific permits (e.g., tourism license)

Once completed, your PT PMA Bali can legally acquire land under the Right to Build (HGB) title and begin operating. This legal route protects your investment and ensures compliance with Indonesian land and business laws.

Setting up a PT PMA Bali isn’t just a box to check—it’s your foundation for secure, long-term property ownership and operational success in Bali.

Step 2 – Land Due Diligence & Title Verification

After establishing your PT PMA Bali, the next critical step is conducting thorough land due diligence. This ensures your future property is legally viable, properly zoned, and free from disputes.

1. Zoning Verification

Before committing to a land purchase, confirm the zoning aligns with your intended business activity. A PT PMA Bali involved in hospitality, for example, must operate on land zoned for tourism or commercial use. Purchasing land with the wrong zoning can prevent you from obtaining permits and operating legally.

2. Land Certificate Type

There are three common land title types in Indonesia:

• SHM (Freehold) – For Indonesian citizens only.
• HGB (Right to Build) – The only title a PT PMA Bali can legally hold.
• Hak Pakai (Right to Use) – Sometimes permitted, usually for personal or temporary use.

Make sure the land either already has an HGB title or can be converted to HGB. Work with a licensed notary to manage this process.

3. Legal Due Diligence

Before purchase, check that the land:

• Has no ongoing disputes or overlapping ownership
• Is not collateralized or under any lien
• Has no unpaid taxes or regulatory issues

Engage a certified land surveyor and a legal consultant to conduct a full title check and issue a Due Diligence Report.

Skipping this phase is one of the biggest risks foreign buyers face. Verifying zoning and ownership protects your PT PMA Bali and lays a secure foundation for future business.

Step 3 – Purchase Agreement and Transaction Process

After your PT PMA Bali has completed land due diligence and confirmed zoning and title suitability, the next step is the formal purchase process. This stage is where legal ownership is transferred through a structured and regulated method involving a licensed notary (notaris/PPAT).

1. AJB – Sale and Purchase Deed
The property transaction is finalized through a Notarial Sale and Purchase Agreement (Akta Jual Beli or AJB). This legally binding document transfers the land from the seller to your PT PMA Bali and must be executed in front of a registered notary/PPAT who handles land transactions. The AJB must reference the PT PMA's company details and include the correct HGB title or title conversion terms.

2. Payment Structure
Transactions typically follow this process:

• Deposit payment to secure the property, usually 10–20%.
• Signing of the AJB in front of a notary.
• Final payment upon notarization, after which the notary will process the title transfer.

3. Taxes & Fees
Property acquisition in Indonesia comes with several taxes:

• BPHTB (5%) – a buyer’s tax based on the transaction value.
• Seller’s tax (2.5%) – typically handled by the seller but negotiated case by case.
• Notarial and government fees, usually 1–2%.

4. Use of Escrow
To protect both parties—especially foreign buyers—funds are often held in an escrow account managed by a legal firm until all documents are verified.

Executing the purchase through your PT PMA Bali ensures legal ownership and avoids risky nominee structures. With proper handling, this process leads to fully compliant and secure property acquisition.

Step 4 – Registering HGB Under Your PT PMA Bali

After finalizing the purchase, the next essential step is registering the land under your PT PMA Bali using a Hak Guna Bangunan (HGB) title—the only long-term legal landholding option for foreign-owned companies in Indonesia.

1. Why HGB Matters

HGB (Right to Build) allows a PT PMA Bali to legally hold land for 30 years, extendable for up to 80 years. Unlike nominee setups or leaseholds, HGB offers secure ownership through a corporate structure, fully recognized under Indonesian law.

2. Legal Ownership via Company

The land is held by the PT PMA Bali, not by the individual foreigner. As a shareholder, you control the asset via share ownership. This setup also enables easier inheritance and resale—by transferring shares instead of property deeds.

3. Title Registration Process

To register HGB, your legal team must:

• Submit the AJB (Sale and Purchase Deed) along with company documents to ATR/BPN
• Complete land survey and mapping
• Pay applicable registration and conversion fees

4. Advantages of HGB

• Eligible for bank financing
• Fully legal, bank-recognized title
• Extendable and transferable
• Ideal for long-term development and resale

Registering the land under your PT PMA Bali with an HGB title ensures full compliance and protects your investment with a scalable, future-ready legal foundation.

Step 5 – Building Permit (PBG) & Business Licensing

After registering land under your PT PMA Bali, the next essential step is obtaining the required permits to begin construction and operate legally.

1. From IMB to PBG

The old IMB (Izin Mendirikan Bangunan) has now been replaced by PBG (Persetujuan Bangunan Gedung), or Building Approval. This document is mandatory before starting any construction project. Whether your PT PMA Bali intends to build a villa, co-living space, or resort, a valid PBG ensures your structure complies with local spatial plans and building codes.

2. Usage Matters

The PBG must reflect your intended usage—whether commercial, residential, or tourism-related. For instance:

• A private villa requires a different designation than a rental property.
• Hospitality operations must be zoned and permitted for tourism.

Make sure your land zoning aligns with your business goals, or your PBG application could be denied.

3. Environmental Assessment

Depending on the project size and location, your PT PMA Bali may also need an Environmental Impact Assessment—either an AMDAL (for large-scale developments) or a UKL-UPL (for medium/small-scale projects). These are required to ensure sustainable development and prevent environmental harm.

4. Business Licensing

After securing PBG and environmental approvals, your PT PMA Bali must apply for a commercial operating license relevant to your business activity. This may include:

• SIUP (Business License)
• TDUP (Tourism Business Registration)
• NIB (Business Identification Number via OSS)

Each sector has different licensing needs, so proper classification during PT PMA setup is crucial.

Ongoing Compliance: Taxes, Reporting & Local Engagement

Owning property through a PT PMA Bali doesn’t stop at acquisition and development—it comes with long-term responsibilities that are essential for legal operation and reputation management.

1. Investment Reporting (LKPM)

All PT PMA Bali entities must submit LKPM (Laporan Kegiatan Penanaman Modal) reports either quarterly or biannually, depending on their investment phase. These reports show the government your company’s progress in fulfilling its business and investment commitments. Failure to report can result in sanctions or difficulty renewing licenses.

2. Tax Obligations

Once operational, your PT PMA Bali is subject to several taxes:

• Corporate Income Tax: 22% of net profits.
  
  
• Rental Income Tax: If leasing out property or villas.
  
  
• PBB (Pajak Bumi dan Bangunan): Annual local property tax.
  It's highly recommended to hire a local tax consultant to ensure you remain compliant with Indonesian tax law and avoid penalties.

3. Community and Banjar Relations

Equally important is fostering good relations with the local Banjar (traditional community group) and nearby residents. Engaging with them from the beginning—through employment, CSR activities, or community donations—can significantly reduce resistance and ensure smoother business operations.

4. Coordination with Local Authorities

Respecting local culture and maintaining transparency with village leaders, subdistrict officials, and regional government agencies is vital. A well-regarded PT PMA Bali will find it easier to expand, renew licenses, and gain local support in the long run.

Mistakes to Avoid When Acquiring Property

Acquiring property through a PT PMA Bali can be a secure and profitable investment—but only if done correctly. Many foreign investors make avoidable mistakes that can lead to serious legal and financial setbacks.

1. Buying Through a Nominee

One of the most common (and dangerous) errors is using an Indonesian nominee to purchase land on your behalf. This setup is illegal under Indonesian land law and can result in the loss of your property with no legal protection. Only a PT PMA Bali structure allows you to legally hold land under the HGB (Right to Build) title.

2. Skipping Due Diligence

Failing to conduct proper zoning and land certificate checks can trap you with unusable land or legal disputes. Always verify the land’s zoning aligns with your business plan, and ensure there are no overlapping claims, unpaid taxes, or encumbrances.

3. Underestimating Timeframes

Permits such as the PBG (building permit) and sector-specific licenses take time—often several months. Rushing the process or cutting corners may lead to delays, penalties, or construction halts.

A well-structured PT PMA Bali setup, supported by professional guidance, is your safest path to building a legally sound and sustainable property investment in Bali.

‍