Global Business Guide Indonesia

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Business Guide | Agricultural Land – Right to Cultivate

Articles 28-34 of The Agrarian Basic Act 1960.

For investors in the agricultural sector, foreign companies (PMA) can obtain a leasehold on land under Right to Cultivate or Hak Guna Usaha on state owned or private land. Right to cultivate permits the use of the land for estate or plantation purposes only. It is normally issued for a maximum of 35 years with the possibility to extend for a further 25 years.

PMA companies are required to obtain a location permit in order to carry out activities involving acquiring land. The permit is issued by the local regency government of where the land is situated and on obtaining the permit must relinquish the land from the existing owner within 12-36 months. The need to lease land must also be included in the investment permit application to BKPM to ensure that the business license covers the provision of land.

Ownership of the land must be registered with the local Land Office and National Land Agency Badan Pertanahan Nasional. The Hak Guna Usaha land title can be sold and transferred to a third party through a sale and purchase agreement in the form of a notarial deed and then registered with the Land Office.

Authorised Land Conveyance Officer (Pejabat Pembuat Akta Tanah or “PPAT“) exclusively have the authority to draw up deeds and land transaction certificates. In regions where a PPAT is not available, the head of the municipality may have the authority to carry out the transaction.

Global Business Guide Indonesia - 2012

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Indonesia Snapshot

Capital: Jakarta
Population: 259 million (2016)
Currency: Indonesian Rupiah
Nominal GDP: $936 billion USD (IMF, 2016)
GDP Per Capita: $3,620 USD at Current Prices (IMF, 2016)
GDP Growth: 5.0% (2016)
External Debt: 36.80% of GDP (BI, Q2 2016)
Ease of Doing Business: 91/190 (WB, 2017)
Corruption Index: 90/176 (TI, 2016)