Growing Controversy Over Villa Projects on Bali's North Coast Underlines the Vagaries Awaiting Foreigners Buying Land in Bali.
(9/15/2008) Bali Post reports that Bali's northern coast, stretching some 144 kilometers, is under threat of submerging below a continuous strip of commercial and private villas.
According to the newspaper, data reported from the Buleleng tax office identifies 87 villas occupying the beach front and the adjoining foothills of Buleleng – a number actually believed to exceed 100. According to Bali Post, many of these structures possess building permits for use only as private residences but are, in fact, being used as commercial villas.
Bali's leading newspaper also contends that of the 87 villas inventoried by the tax office, 65 are not paying taxes. When challenged, local officials complain that the illegal commercially rented accommodation do not maintain books and the local staff employed at the villas claim to have no information on the name or the address of the villas owners when officials come to call. In an effort to increase tax revenues the Buleleng House of Representatives passed regulations in December 2007 classifying the villas as tax objects with classifications as "pondok wisata" and "hotel melati." Putu Tastra, the Region's Chief Tourism Official, said the new taxation policy is undergoing a socialization process prior to an "enforcement phase."
The Bali Post said that a number of anomalies were uncovered in the process of taking an inventory of the 87 villas including the discovery that 20 of those villas are registered under the name of one local man, raising suspicions that those villas are being held in trust for foreign nationals. According to the report, the "illegal" villas have building permits (IMB) and land titles registered in the name of a single local citizens with, according to the Bali Post, separate "secret" agreements between the local party and the foreign "owner" held by a local notary.
Within this atmosphere of wheeling and dealing, Bali Post claims that some of the villas have also been illegally built on public property.
As reported by balidiscovery.com (See: Related Article), poorly regulated construction of private villas along Bali's north shore has become a long-festering source of conflict with local residents who, according to the Bali Post, are complaining that they are being denied public access to beach areas for recreational and religious purposes.
A North Bali Developer Responds
In response to various critical reports appearing the Bali press, Noud Kielenstijn of the Bali Beach Garden Project (PT Terus Maju Sejahtera) has issued a statement to communicate the following points:
● The developers are in the process of selling their company to a new owner.
● They claim that reports of "illegal" building and "illegal" land sales are not true. They further contend that the current problems are related to a change of village administration and a current disagreement over a single 70 square meter parcel of land that is nearing resolution. Kielenstijn insists that all other land certificates are in order or at least "being processed."
● Any issues related to building permits Kielenstijn claims are due to recent changes in the procedures for applying for building permits which have caused a backlog in the new permit process.
● On issues related to taxation, Kielenstijn stated (translated freely from the original Dutch): "Because of the media attention caused by the above 'problems,' some parties have felt the need to publish statements about rental tax issues. While the villa developer is not responsible, the developer is willing to help where possible. It has been a long standing wish for all involved to have clarity regarding taxes to be paid, but until now there is none. All are willing to pay taxes, but nobody knows the form, description or percentage of taxes."
Located on the "ownership" page of developer's website at www.balibeachgarden.com
is a detailed explanation of the comlex legal contracts used to purchase a bungalow at their project, details of the Balinese nominee in whose name bungalows are held and draft contracts/absolute powers of attorneys covering the transaction.
A Word of Caution
Balidiscovery.com urges extreme caution for foreigners undertaking property purchases in Indonesia and seeking protection of their rights and interest via the absolute powers of attorney proposed by the North Bali developer.
In the words of a leading notary in Sanur, Rainy Hendriany, not only does it remain illegal for foreign nationals to own property in Indonesia but: "As a result of a 1982 regulation of the Ministry of Home Affairs put in place specifically to deter such arrangements, Indonesian law does not recognize the use of irrevocable POA's in respect of land transactions and the POA may therefore be revoked at any time by the Indonesian 'Nominee' owner of the Hak Milik land title."