Nominee Land Ownership in Bali: The Law Finally Catches Up

Nominee Land Ownership in Bali: The Law Finally Catches Up The Chief Justice of the Indonesian Supreme Court has described the practice of foreigners buying land through nominee arrangements as a “circumvention of the law” (penyelundupan hukum). The Governor of Bali has gone further – both Indonesians and foreigners involved can now face criminal charges. I have been warning clients about this for over twenty years. In 2003, I wrote that “nominee agreements for land between Indonesian citizens and foreign persons are legally very weak, and will not hold up to legal challenge.” The Investment Law of 2007 (Article 33) made it explicit: such agreements are null and void. Yet the practice continued – driven by property agents who were, as I noted at the time, “very fast and loose with the truth.” The scale is staggering. Research by K3NI estimates ~50,000 foreign nationals control land in Bali through nominee schemes – an estimated 10,500 plots worth USD 10.4 billion, including ~7,500 villas with no legal standing. The risks have always been real: nominees die (and their heirs inherit YOUR property), nominees refuse to cooperate, creditors seize the land, and Indonesian courts overwhelmingly favour the Indonesian party when the foreigner’s claim rests on a void agreement. Legitimate alternatives have always existed – PMA companies with HGB title, Hak Pakai for individuals, properly structured leaseholds. None of these are exotic. They are the standard legal mechanisms. The era of tolerance is ending. If you hold property in Bali through a nominee: get proper legal advice now. Not from the agent who sold you the scheme. Full article: https://lnkd.in/gyRY2WV6 #Indonesia #Bali #PropertyLaw #ForeignInvestment #NomineeLand #IndonesianLaw #RealEstate #LegalCompliance #InvestmentLaw #OkusiAssociates

Exactly, thanks for sharing. When we invested we did it through the long process but proper PT. PMA structure. I know other pathways are possible as well, cheaper certainly, but for us this made the best sense longterm, and follow the local Bali rules and Indonesian law and still keep flexibility also when selling since the PT. PMA can be the vehicle for the transaction if it’s foreigners buying. It makes easy and hassle-free access to a great country, beautiful Island and high ROI property market.

Brilliant to finally hear!! Abusing the law and people for financial gain has gone on far too long, to the detriment of a beautiful island. I hope this can bring about overdue change, returning the flows and beauty that attracted many to Bali. This crack down has been flagged before, I hope this happens sooner!

Important reminder, Gary. Legal clarity around nominee structures has long been needed, and this development should encourage more transparent and compliant investment approaches in Bali’s property market.