About The Property Laws in The Republic of Indonesia

All property matters, except for those pertaining to the mining and forestry sectors fall under the jurisdiction of the national land agency (Badan Pertanahan Nasional, or BPN for short), which was formed to administer all matters relating to the basic "Agrarian Law of 1960", such as the registration of the use of land. The Indonesian land legislation is based on the basic Agrarian law number 5 of 1960.

PROPERTY TITLE IN INDONESIA
There are a number of different types of land title in Indonesia:

These rights all authorize the use of land. The differences lie in the duration of validity and nature of utilization and the opportunities for obtaining a mortgage. The right of ownership is an inheritable right that can be held only by Indonesian citizens.

1. Hak Milik/Freehold Title/Right of Ownership
   This refers to absolute ownership of land and corresponds to freehold title in common law terms. This right can only be held by an Indonesian citizen, not a corporate entity whether local or foreign. Certain legal entities designated by the government, such as a state bank, agricultural cooperatives, religious bodies, and social right of ownership is held in perpetuity. It can be sold, transferred, bequeathed, and mortgaged.
    
2. Hak Guna Bangunan/ Building Use Right
   Better known by its abbreviation, "H.G.B.", this is the right to construct a building/s on a plot of land for a period of 20 or 30 years, and which can be renewed on consideration of policy of the regional government. This right can be sold, exchanged, transferred, and mortgaged, and can be held directly by any corporate entity whether it is a local company or a government approved PMA (joint venture) company.
   
   If a joint venture company needs a land for a factory, storage, employee housing or whatever, the company can be granted building use right (HGB) in accordance with existing regulations.
    
3. Hak Pakai/Leasehold Title/Land Use Right
   This is the right of use over state-owned (crown land) or property owned by public or private persons/entities for a specific purpose for (generally) a finite period and occasionally for an indefinite period. This land right may not be sold, exchanged or transferred unless explicitly stated in an agreement.
   
   Hak Pakai may be held by an Indonesian individual or entity. or foreigner permanently domiciled in Indonesia, or a foreign legal entity with a representative office in Indonesia such as foreign Banks, embassies, etc.