Indonesia's Diluted Expatriate Property Rule Nearly Completed

The government has backpedaled on a proposal to allow foreigners to own property in Indonesia for 90 years and will now only simplify the extension process and not change the maximum length of title from the current 70-year tenure.

The changes are contained in a new regulation which will be presented to President Susilo Bambang Yudhoyono for approval before the end of May, the Ministry of Public Housing’s Jamil Ansari said on Wednesday. The regulation is expected to take effect within two months of the president approving it, he said.

“The draft review of the regulation is almost finished and we expect it will be ready by the end of May,” Jamil said.

Currently, foreigners can hold property for 25 years. After the term expires, they may renew their property rights with the National Land Agency (BPN) for an additional 25 years and then extend it once more for 20 years, making for a total of 70 years.

Under the new regulation, foreigners will be able to renew for the additional 25- and 20-year terms at the same time, effectively meaning they will be able to renew for 45 years.

“Many foreigners find that the extension process for their property is really unpractical. Therefore, we decided to simplify it,” Jamil said.

Teguh Satria, chairman of the Indonesian Real Estate Developers Association (REI), said it would make more sense for foreigners to be able to own property outright so they did not have to go through time-consuming extensions.

Not allowing foreigners to own property meant Indonesia’s property sector was less competitive compared to Singapore and Malaysia, Teguh said.

He said there were around 83,000 foreigners living in Indonesia. If 10,000 of those foreigners bought a $250,000 apartment it would translate into $2.5 billion of foreign investment, Teguh said.