eNewsletter

The Indonesian government recently announced that it will review its policy on foreign property ownership in the country. This move has come at the urging of the national Indonesian Real Estate Association (REI), which argues that relaxed property ownership laws will increase direct foreign investment in the country by as much as US$2.5 billion.

Under current regulations on foreign ownership enacted in 1996 in Indonesia, foreigners may hold a lease on property in the country for a maximum of 25 years. This term may technically be renewed for two more periods of 25 and 20 years each, but local experts say that the renewal process can be complicated and excess paperwork discourages many expats from taking the route of local ownership. REI has suggested that the government remove the renewal process and extend the ownership leasing rights to at least 70 years. This would be in line with similar programs in nearby Singapore, Malaysia and Thailand. Malaysia recently implemented the “My Second Home” program, which encourages foreigners to purchase property in the country. Thailand has a similar “Long Stay Program.”

Foreign companies doing business in Indonesia have consistently found it difficult to attract foreign talent to take top-level executive positions in the country. Most foreigners who are willing to relocate to Indonesia only want to stay for one or two years on full expat assignments that include rental apartments and cars with drivers. Being able to purchase property for living and long-term investment in Indonesia will be one step in the direction of making the country more attractive to foreigners.