The Complexity of Land Acquisition in IDN: Bridging Traditional Land Documentation & Legal Certainty скачать в хорошем качестве

The Complexity of Land Acquisition in IDN: Bridging Traditional Land Documentation & Legal Certainty

Indonesia has long been an attractive destination for foreign investors, offering growth opportunities across industries ranging from manufacturing and energy to property development. One of the most common entry points is through the establishment of a Foreign Investment Limited Liability Company (PT PMA). Naturally, one of the first questions foreign investors ask is “Can a PT PMA own land in Indonesia?” The short answer is yes, but not without conditions. PT PMAs can acquire land rights, although the scope and nature of ownership are strictly regulated. Understanding these restrictions, as well as the practical risks involved in land transactions, is essential for ensuring that your investment is not only legally sound but also secure in the long run. (For related guide, see our article: “Buying Land in Indonesia: Key Steps Every Investor Must Know.”) The Challenges of Land Acquisition Land acquisition is often one of the most sensitive aspects of doing business in Indonesia. Many promising projects stall or even collapse because of land-related disputes. Negotiations can drag on, legal claims may emerge unexpectedly, and administrative hurdles often lead to costly delays. Investors commonly encounter inflated compensation demands from landowners, disputes over zoning regulations, or disagreements about compensation for existing structures and crops. Sometimes the problem lies deeper—questions about underground or above-ground rights, or simply unclear administrative fees that burden the process. Without proper management, what should be a straightforward transaction can quickly escalate into a legal and financial challenge. Risks Every Investor Should Be Aware Of Even when all appears in order, the Indonesian land market comes with risks that foreign investors must approach cautiously, buying land in Indonesia shall require careful due diligence and local expertise to avoid costly surprises. Ownership disputes, for example, are not uncommon—land may be claimed by multiple parties, or heirs may contest inheritance rights. Documentation can also pose problems: forged certificates, missing records, or inconsistencies between the registered size of a plot and its actual boundaries are frequent issues. Furthermore, some land is still encumbered by mortgages, meaning it is pledged as collateral to banks, while other parcels turn out to violate zoning rules that restrict future development. Taxes left unpaid by the previous owner can suddenly become your burden, and in some unfortunate cases, fraudsters have sold land they never owned in the first place. Transition from Traditional Land Documents Adding another layer of complexity is the fact that not all land in Indonesia is supported by modern certificates. Many parcels are still tied to traditional documentation such as girik (old tax receipts), Letter C (village registers), Petok D (historic tax records), or even colonial-era tax documents. However, to bring greater clarity and reduce disputes, the government now requires these traditional proofs to be converted into formal land certificates known as Sertifikat Hak Milik (SHM). Under Government Regulation No. 18 of 2021, this conversion must be completed by 2026. After that, traditional documents will no longer be recognized as proof of ownership, leaving landowners vulnerable to disputes—or even the risk of losing their property altogether. For investors, this means that any land acquisition must take into account not only the present documentation but also whether the land has been—or will be—properly certified in compliance with the new regulations. Read more, click at https://schinderlawfirm.com/blog/the-... Follow our social media platforms: LinkedIn: https://www.linkedin.com/company/schi... Twitter:   / schinderlf   Instagram:   / schinderlf   Facebook:   / schinder.slf   Visit our website https://schinderlawfirm.com/ #SchinderLawFirm #IndonesianLawyers #LegalServicesIndonesia #JakartaLawyers #LegalUpdateIndonesia #JakartaLawPractice #Regulation #Schinder #LawFirmJakarta