Issuance of GR 18/2021 as Indonesia’s Property Business Incentives

Issuance of Government Regulation 18/2021 as Indonesia’s Property Business Incentives

To overcome various bureaucratic and regulatory barriers that impede the economic and business growth in Indonesia, President Joko Widodo issued Law No. 11 of 2020 on Job Creation (Omnibus Law“), covering amendments to various laws and regulations, including the pre-existing regulations regarding land. To implement the Omnibus Law, the government on the 2nd of February later issued several implementing regulations, and among them was Government Regulation No. 18 of 2021 on Right to Manage, Land Rights, Multi-story Housing Units, and Land Registration (“GR 18/2021”). The amendments to land regulations consolidates regulations pertaining the use of (i) Right to Cultivate (Hak Guna Usaha), Right to Build (Hak Guna Bangunan), and Right to Use over Land (Hak Pakai), (ii) Multi-story Housing Units, (iii) Ownership of Residential or Residential Houses by Foreigners Domiciled in Indonesia, (iv) Rights to Overground Space and Underground Space, and (v) Electronic-Based Land Registration.

The issuance of GR 18/2021 contains several new provisions which are essential for business owners to take note. In the case of Rights to Overground Space and Underground Space regulation, it scopes for business activities of mass rapid transit, underground shopping centers, and underground crossing facilities. Pursuant to Article 77 of GR 18/2021, these overground space or undergound space can be granted Right to Manage, Right to Build, or Right to Use by the Minister of Agrarian Affairs and Spatial Planning / National Land Agency. As for the rights period, each right period consists of a different time length. Right to Manage (Hak Pengelolaan) has no specific period as the right is valid for as long as the land is used for the performance of the business activities. Rights to Build is granted for a maximum period of 30 years, extendable for a maximum period of 20 years, and renewable for a maximum period of 30 years. Rights to Use is granted for a maximum period of 30 years, extendable for a maximum period of 20 years, and renewable for a maximum period of 30 years. Furthermore, each right of overground space and underground space that has been granted must be registered on the Land Office and be given a certificate as a proof of ownership.

In regard to Multi-story Housing Units, under Law No. 103 of 2015 on the Ownership of Residential or Residential Houses by Foreigners Domiciled in Indonesia, expatriates are not allowed to obtain Ownership Rights. However, pursuant to GR 18/2021, it is now allowed for expatriates to own an apartment with Ownership Rights. Under GR 18/2021, expatriates who are allowed to own a place to live must own immigration documents which include visa, passport, or residence permit issued by the government of Indonesia in accordance with the provision of laws on regulations. Furthermore, ownership of property for expatriates are granted with limitations of minimum price, land area, number of land parcels or apartment units, and designation for residential.

To accelerate the Land Registration program, GR 18/2021 further regulates the Electronic-Based Land Registration. Aside from a conventional land certificate, the result of electronic information and data of land registration and/or the printed result is a valid legal evidence according to the procedural laws in Indonesia. Pursuant to Article 87 of GR 18/2021, this regulation also emphasizes that the implementation of land registration must be carried out systematically. Hence, if the owner of the land right does not follow the systematic land registration, they are obliged to register the land sporadically.

The activity of electronic-Based Land Registration includes the collection and processing of physical data (measurement and mapping), proof of rights and bookkeeping, issuance of certificates, presentation of physical and juridical data, and filing of general lists and documents in the form of data, electronic information, and / or electronic documents that are created through the Ministry of Agrarian Affairs and Spatial Planning / National Land Agency’s system. The systematic land registration process takes 14 calendar days. Meanwhile, the sporadic land registration will take 30 calendar days. Moreover, once the land has been registered, the information shall be announced on the Ministry of Agrarian Affairs and Spatial Planning / National Land Agency’s website. GR 18/2021 provides access for expatriates to invest in Indonesia. This regulation also improves the land registration regime in Indonesia by adopting the latest technological developments. Thus, along with the Omnibus Law, the new government regulation is expected to bring a stimulus to drive the country’s property business, both in the short and in the long term.

By: Nabila Roselano

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