Indonesian Property Terms Every Foreign Investor Should Know

Hak Milik

Hak Milik is Indonesia's strongest land right: full, indefinite freehold ownership under UUPA Law 5/1960. It is reserved for Indonesian citizens — a foreign individual or foreign-owned company cannot hold Hak Milik, and Article 26(2) voids transactions designed to move it to a foreigner. Foreign investors meet Hak Milik as the underlying title an Indonesian owner keeps when granting a leasehold.

Arrangements that register Hak Milik in an Indonesian nominee's name while a foreigner pays for the land are the classic trap in Bali and the Gili Islands — Indonesian courts have voided them, leaving the foreign buyer without a protected claim. See Trawaya's guide to nominee structure risks.

SHM (Sertifikat Hak Milik)

SHM (Sertifikat Hak Milik) is the land certificate that proves Hak Milik freehold title, issued by Indonesia's land office (BPN/ATR). When a listing says a villa "has SHM", it means the land is registered freehold in an Indonesian owner's name. For a foreign investor, the SHM is what a notaris/PPAT verifies before any lease or company purchase is signed — the certificate holder is the only person who can legally grant rights over the land.

Hak Sewa (Leasehold)

Hak Sewa is leasehold: a contractual right to use land or buildings for an agreed term and rent, granted by the titleholder. It is the most common structure for foreign villa buyers in Bali, Lombok and the Gili Islands, because a foreigner can hold a notarised lease in their own name. Terms are negotiated freely — commonly quoted market terms run 25–30 years with pre-agreed extension options.

A leasehold's remaining term drives its resale value, so extension mechanics, transfer rights and rent-review clauses belong in the contract from day one — not as verbal promises.

Hak Pakai

Hak Pakai is the "right to use": a registrable land right that lets the holder use state-owned or privately owned land for a defined period. Under PP 18/2021 it can be granted for 30 years, extended by 20, and renewed for another 30. It matters to foreign investors because a foreign individual holding valid Indonesian residence documentation can hold Hak Pakai in their own name for a dwelling.

Hak Pakai is one of the routes compared in Trawaya's guide to how foreigners can buy property in Indonesia, alongside leasehold and the PT PMA company route.

HGB (Hak Guna Bangunan)

HGB (Hak Guna Bangunan) is the "right to build": the right to construct and own buildings on land for 30 years, extendable by 20 and renewable for 30 under PP 18/2021. A foreign individual cannot hold HGB, but an Indonesian legal entity can — including a PT PMA foreign-investment company. HGB held through a PT PMA is the standard corporate route for foreign-owned villa and rental businesses.

SHMSRS (Strata Title)

SHMSRS (Sertifikat Hak Milik atas Satuan Rumah Susun) is the strata-title certificate for an individual unit in a multi-unit building, such as an apartment or condotel. PP 18/2021 allows foreigners to own certain strata units where the building stands on eligible land (such as HGB or Hak Pakai), subject to minimum-price and building-category rules that vary by province — verify the current thresholds before committing.

PT PMA

A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is an Indonesian limited company with foreign shareholders — the vehicle that lets foreign investors own and operate a property business in Indonesia. Licensed through the OSS system, a PT PMA can hold HGB title, employ staff and earn rental income. The investment-plan threshold is over IDR 10 billion per business line — verify current OSS rules before incorporating.

A PT PMA pays Indonesian corporate income tax at 22%, and dividends paid to foreign shareholders carry 20% withholding unless a tax treaty reduces it. Trawaya's Seraphina Isles Villa project on Gili Trawangan is structured through a PT PMA.

NIB & KBLI

The NIB (Nomor Induk Berusaha) is a company's business identification number, issued through Indonesia's OSS licensing system — the base licence every PT PMA needs to operate. KBLI codes (Klasifikasi Baku Lapangan Usaha Indonesia) classify what the company is licensed to do. A villa-rental business must carry KBLI codes matching accommodation activity; operating outside your registered KBLI codes creates licensing and tax exposure.

NPWP

The NPWP (Nomor Pokok Wajib Pajak) is Indonesia's tax identification number, issued to individuals and companies. A PT PMA must hold one to file returns, pay corporate tax and withhold tax on payments. Foreign individuals with Indonesian tax obligations — rental income, for example — also register. Rental income from land and buildings is taxed at a final 10% of gross rent (PPh Final, Article 4(2)).

KITAS / KITAP

A KITAS (Kartu Izin Tinggal Terbatas) is Indonesia's limited-stay residence permit; a KITAP (Kartu Izin Tinggal Tetap) is the permanent-stay permit. They matter to property investors because holding Hak Pakai as a foreign individual generally requires valid Indonesian residence documentation, and because a PT PMA can sponsor an investor-category KITAS for its foreign shareholders or directors. Immigration categories change — verify current requirements with an immigration specialist.

Pondok Wisata

A pondok wisata is Indonesia's small-scale homestay licence — the permit category under which many private villas in Bali and Lombok are legally rented short-term. In most regions it is issued to Indonesian citizens operating accommodation at their own residence, with limits on room count — meaning a foreign investor usually cannot rely on it directly. A PT PMA licenses rental activity under commercial accommodation categories instead.

Renting without the correct licence risks fines and closure. Trawaya's guide to rental licensing in Indonesia explains which permits apply to which ownership structures.

NJOP & PBB

The NJOP (Nilai Jual Objek Pajak) is the government-assessed taxable value of land and buildings, set regionally and usually below market price. PBB (Pajak Bumi dan Bangunan) is the annual land-and-building tax calculated from the NJOP. Every owner — including a PT PMA — pays PBB each year; rates and assessment practice vary by regency, so verify locally.

NJOP also acts as a floor value in transfer taxes: BPHTB and the seller's final tax are assessed on the higher of the transaction price and the NJOP-based value. See Trawaya's guide to property taxes for foreign investors.

BPHTB

BPHTB (Bea Perolehan Hak atas Tanah dan Bangunan) is the buyer's acquisition duty on land and building transfers: 5% of the taxable value above the regional NPOPTKP tax-free threshold. It must be paid before the AJB transfer deed can be signed before a PPAT. The seller's counterpart is a final income tax of 2.5% on the transfer value.

PBG & SLF

The PBG (Persetujuan Bangunan Gedung) is Indonesia's building approval, which replaced the old IMB permit under the 2021 Cipta Kerja reforms; the SLF (Sertifikat Laik Fungsi) certifies that a completed building is fit for its approved function. Off-plan buyers should confirm the developer holds a PBG before construction starts and expect the SLF at handover — a building missing either has a legality gap.

Notaris / PPAT

A notaris is an Indonesian public notary who drafts and authenticates legal deeds; a PPAT (Pejabat Pembuat Akta Tanah) is a land-deed official authorised to execute land-transfer deeds and register them with the land office (BPN). Many professionals hold both licences. Every legitimate property transaction — lease, sale or PT PMA purchase — runs through a notaris/PPAT, and buyers can and should appoint their own rather than defaulting to the seller's.

AJB (Akta Jual Beli)

The AJB (Akta Jual Beli) is the deed of sale executed before a PPAT — the document that actually transfers a registered land right from seller to buyer, after which the PPAT registers the change with the land office. Taxes must be settled first (BPHTB for the buyer, the 2.5% final tax for the seller), and Indonesian law requires the transaction to be settled in Indonesian rupiah under the Currency Law.

Sources

• UUPA Law 5/1960 (Basic Agrarian Law) — Indonesian government legal database
• PP 18/2021 on land rights (Hak Pakai, HGB, strata units)
• OSS — Indonesia's online single submission licensing system (NIB, KBLI, PT PMA)
• Direktorat Jenderal Pajak — Indonesia's tax authority (NPWP, PPh, PBB)