The Indonesia government is still pondering on a bill that allows foreigners to buy properties in Indonesia on a longer lease that range from 70 to 90 years lease. This is to boost the demand on the property market especially on major cities in Indonesia such as Jakarta, Bandung and Surabaya. Allowing foreigners to buy on a longer lease period will increase the revenue of the government through tax and investment.  The current status is that foreigners are not allowed to buy land or landed properties, and also not allow to buy any building or apartment build on freehold land. I think this status will remain in force with the exception of apartments build on leasehold land.

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Does this bill look attractive to foreign investors? In a way it is a beginning of a process to liberate the property market in Indonesia. It would be better if the leasehold period is 99 years instead of the maximum 90 years lease. That will make it look more attractive to foreigners. The bill should also make it easier for foreigners to borrow money from local Indonesian banks up to a maximum of 70%  from the purchase or valuation price of the property. This will help to boost the business of the local banks as well. Laws with regard to rights of foreign ownerships to the purchased properties, taxes and duties, the right to resell and transfer should also be made transparent and clear. The problem with Indonesia is that it is a country with too many loose laws and by-laws, making it so confusing for foreigners and even local Indonesians. Foreigners purchasing these apartments should also have the right to lease it out immediately, the right to resell and the properties should be free from emcumbrances.

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Gradually the Indonesian government should looked into the ownership of freehold property by foreigners. They could start by imposing strict restriction in terms of rights to resell only after say 10 years from the date of purchase, capital gain tax ( to prevent speculation ) and restriction such as allowing foreigners to purchase only high end properties – such as properties above US$300,000.