Place of business

(strategic, rent or price, and ownership)

For a strategic place for business or not, it depends on the business that the investor will build, so there is no standard for that. It is necessary to know in advance the needs of investors, then it is concluded that this place is a strategic place to invest or not.

For the cost of renting a building or price of land, this varies depending on the location chosen. As an overview, at the time of writing this article, the reference prices are (prices are subject to change at a later date):

For buildings that will be used as company offices, if in Jakarta there are many online references that you can see, ranging from USD 5 until USD 50 per square meter. Meanwhile, in other cities/regencies in Indonesia, you can even rent a building measuring 10×20 meters at a cost of around USD 2,000 – USD 10,000 per year. Again depending on the location and condition of the building.

For investors who plan to buy land with the aim of building production facilities, if in an area not too far from the center of Jakarta, the price for industrial land is around USD 100 to USD 1,000 per square meter. However, for land in other regencies or cities in Indonesia that is destined for industrial activities, the price even ranges from USD 10 to USD 150 per square meter.

However, if the land price is so, then perhaps the next question is, can foreign investors have land rights (buy land in Indonesia)?. So to answer this, it is necessary to understand the types of ownership or control of land in Indonesia in general.

Land rights in Indonesia are generally divided into:

1. Individual Ownership (Hak Milik);
2. Cultivation Rights (Hak Guna Usaha / HGU);
3. Building Use Rights (Hak Guna Bangunan / HGB); and
4. Management Rights (Hak Pengelolaan).

Only Indonesian citizens can have Individual Rights, while for HGU, HGB, and Management Rights, apart from being owned by individual Indonesian citizens, they can also be owned or controlled by Indonesian Legal Entities such as Limited Liability Companies (PT) or foundations. HGU and HGB are not actually the right to own, but the land rights to manage the land are temporary (can be up to 70 years).

So if a foreign investor wants to own (read: control) land in Indonesia to be used as a place of business, then the step is, the foreign investor establishes a business entity in the form of a Limited Liability Company (PT), in which foreign investors are the shareholders, then the PT buys land in the form of HGB or HGU for later use within a certain time.

Thus, foreign investors cannot obtain the right to own land in Indonesia, but can obtain the right to manage it.

The Indonesian government provides consulting services for potential investors in Indonesia through the BKPM, so that foreign investors can take advantage of these services by contacting the BKPM directly or find out local consultant for your business interest.

Regards