Indonesia welcomes foreign investment in property, but it does not allow foreigners to hold freehold land. Instead there are three clear, legal structures. In the Mentawai Islands there is an extra layer — customary clan land and coastal setbacks — which is why buying here should always start with proper due diligence.
The three ownership options
| Leasehold | PT PMA + HGB | Hak Pakai | |
|---|---|---|---|
| Held by | You, personally | Your Indonesian company (foreign-owned) | You, with a valid stay permit |
| Term | By contract, often 25–30 yrs + extension | 30 yrs, +20 extension, +30 renewal | 30 yrs, +20, +30 |
| Commercial use | Own use (rental needs a licensed business) | Yes — resort, rental, hotel, F&B | No — residential only |
| Upfront cost | Lowest | Highest (company + capital) | Medium |
| Best for | Private villa, first investment | Resorts, rental villas, surf camps | Your own home |
Leasehold (Hak Sewa)
A leasehold is a long-term rental agreement with the Indonesian landowner, signed before a notary. It is the simplest and fastest route, and you hold it in your own name. Terms of 25 to 30 years are common, with an option to extend. A good lease spells out the extension price, your right to build and to transfer or sublease, and what happens to buildings at the end of the term.
PT PMA with HGB title
A PT PMA is an Indonesian limited company that is partly or wholly foreign-owned. It can hold Hak Guna Bangunan (HGB, Right to Build) title — 30 years, extendable by 20 and renewable for another 30 under Government Regulation 18/2021. This is the standard structure for resorts, rental villas, hotels, restaurants and surf camps, because the company can also hold the business licences needed to operate.
- Capital: minimum paid-up capital of IDR 2.5 billion under BKPM Regulation No. 5 of 2025 (in force since October 2025), with a total investment plan generally above IDR 10 billion. For accommodation and property businesses, land and buildings can count towards the investment value.
- Business line: the company’s KBLI codes must match what you will operate; some small-scale accommodation categories are reserved for local businesses. We check this before you commit.
- Ongoing duties: quarterly LKPM investment reports, tax filings and company administration — all services our Padang team already provides to foreign-owned companies.
Hak Pakai (Right of Use) for residents
Foreigners who hold a valid stay permit (such as a KITAS or KITAP) can own a residential house under Hak Pakai. The rules set a minimum purchase price by region, one plot per person or family, and a maximum of 2,000 m². It suits investors who plan to live in the islands, rather than run a business.
We never use nominee arrangements. Putting land in an Indonesian friend’s name and signing side agreements is void under the Basic Agrarian Law and leaves you with no enforceable rights. Every structure we set up is in your own name or your own company’s name.
Due diligence: what is different in Mentawai
Most land problems in the islands are avoidable. Before any offer, we document:
- Customary (clan) land. Much of Mentawai belongs to clans (suku/uma). We identify the rightful members and obtain their written consent, witnessed by village and customary leaders.
- Certificate check. The certificate (SHM/HGB) is verified at the Mentawai land office (BPN), including encumbrances and disputes; uncertified land is first registered.
- Zoning. The regency spatial plan (RTRW) and a KKPR spatial-conformity check confirm what can be built.
- Coastal setback. National rules set a coastal border zone (sempadan pantai) — in principle at least 100 m from the highest tide line, adjusted by local regulation. It shapes where buildings can sit on a beachfront parcel.
- Forest and park boundaries. We confirm the parcel is outside protected forest and Siberut National Park.
- Access and hazards. Legal road or sea access, and natural-hazard siting (the islands are seismically active), so the building can be designed accordingly.
Taxes and transaction costs
Typical costs, for planning purposes:
| Item | Typical amount | Paid by |
|---|---|---|
| Land & building acquisition duty (BPHTB) | 5% of transaction value (above a regional allowance) | Buyer |
| Seller’s final income tax (PPh) | 2.5% | Seller |
| Tax on lease payments (PPh 4(2)) | 10% | Landowner (often withheld) |
| Notary / PPAT fees | Usually around 0.5–1% | As agreed |
| Due diligence, survey & legal | Fixed fee, quoted upfront | Buyer |
| PT PMA set-up (if used) | Fixed fee, quoted upfront | Buyer |
Rates follow current national and regional regulations and are confirmed for each transaction.