Reference
Indonesian property terms explained for Australian buyers
Every term an Australian will meet buying in Bali or Lombok, in one place, in order of how often they come up. Written by Adrian Campbell from 15 years of dealing with them.
Title and ownership
SHM (Sertifikat Hak Milik). Freehold. The strongest form of land title in Indonesia and the only one with no expiry. Only Indonesian citizens can hold it. A foreigner cannot hold SHM in their own name, and any arrangement that pretends otherwise is not enforceable.
HGB (Hak Guna Bangunan). The right to build on and use land for a set period: 30 years initially, extendable by 20 and then renewable for a further 30. An Indonesian company, including a foreign-investment company, can hold HGB. This is how Kinnara Capital sells individually titled villas at Saraya.
Hak Pakai. The right to use. Foreigners who hold an Indonesian residence permit can hold Hak Pakai over a house in their own name, for 30 years with extensions, within set price thresholds that differ by region. Useful for a home to live in, less common for an investment villa.
HGU (Hak Guna Usaha). The right to cultivate, used for plantations and agricultural estates. If a beach block is HGU, it is not zoned for villas without a change of status.
Leasehold (sewa, or hak sewa). A lease over land and building for a fixed term, often 25 to 30 years, sometimes with options to extend. Legal and common for foreigners. The extension clause and the price mechanism at renewal are the parts to read twice.
Nominee. An Indonesian citizen who holds freehold on paper for a foreigner, usually under side agreements. Nominee structures are not recognised and can be set aside. Avoid them.
Girik, petok D, letter C. Old village-level land records that predate the certificate system. Much of Lombok's coastal land is still held this way. It can be converted to a certificate, but only after the ownership chain is proven. This is the slow part of Kinnara Capital's land assembly in Buwun Mas.
Companies and permits
PT PMA (Penanaman Modal Asing). An Indonesian limited company with foreign shareholders, licensed to invest in Indonesia. A PT PMA can hold HGB and employ staff. Foreign buyers often own a villa through one. PT Kinnara Capital Indonesia is a PT PMA.
PT (Perseroan Terbatas). A limited company. A PT without the PMA licence is a domestic company.
OSS and NIB. The Online Single Submission system issues the NIB, the business identification number every company needs before it can operate or hold licences.
BKPM. The Investment Coordinating Board, which oversees foreign investment licensing through OSS.
KBLI. The business classification code on a company's licence. A PT PMA that wants to develop property needs the right KBLI codes.
Planning and building
PKKPR. The zoning confirmation that states what a parcel of land may be used for. Ask for it before you ask about the finishes.
RTRW and RDTR. The regional and detailed spatial plans that set zoning. PKKPR is checked against them.
PBG (Persetujuan Bangunan Gedung). The building approval that replaced the old IMB in 2021. A building without PBG is not a legal building.
IMB. The old building permit. Buildings approved before 2021 may hold an IMB, which remains valid.
SLF. The certificate of fitness for occupation, issued once a building is complete and inspected.
Sempadan pantai. The coastal setback. Indonesia requires buildings to sit back from the shoreline, commonly 100 metres from the high-water mark. Saraya sets every building back 100 metres.
AMDAL, UKL-UPL. Environmental assessments. Large projects need an AMDAL; smaller ones file UKL-UPL documents.
Offices and people
BPN (Badan Pertanahan Nasional). The national land office, now part of the Ministry of Agrarian Affairs and Spatial Planning (ATR/BPN). It issues and records certificates. Title checks happen here, in person.
Notaris and PPAT. A notary drafts and witnesses deeds. A PPAT is a land deed official, often the same person, who can execute land transfer deeds. Use one you choose and pay.
Kepala desa, camat, bupati. The village head, the sub-district head and the regent who heads a regency such as West Lombok. Local officials whose sign-off matters at various stages. The officials in the community day photographs hold roles like these.
Dusun, desa, kecamatan, kabupaten. Hamlet, village, sub-district, regency. Dusun Pengantap is a hamlet in the village of Buwun Mas, in the sub-district of Sekotong, in the regency of West Lombok.
Contracts and payments
PPJB (Perjanjian Pengikatan Jual Beli). The binding sale and purchase agreement, signed before the land transfer can complete. Off-plan villas are usually bought under a PPJB with staged payments.
AJB (Akta Jual Beli). The deed of sale executed before a PPAT, which transfers the title.
Escrow. A third party holds buyer funds until agreed conditions are met. Adrian Campbell's rule, after the failures on the record, is that buyer funds belong in escrow or with the contracting developer, never with the marketing business.
Management agreement and rental pool. In a managed resort each owner signs a management agreement, and the villas are let as one hotel. Revenue is pooled and paid out by formula. At Saraya owners receive 60 per cent of room revenue after booking-platform fees.
Taxes and visas
PBB. Annual land and building tax.
BPHTB. The duty paid by the buyer on acquiring land or building rights.
PPh. Income tax, including the tax paid by a seller on the transfer.
NPWP. An Indonesian tax file number. A PT PMA has one; a foreign individual may need one for certain transactions.
KITAS and KITAP. Temporary and permanent stay permits. Holding one opens the door to Hak Pakai ownership.
Second Home Visa and Golden Visa. Longer-stay visas tied to investment or deposits, introduced to attract foreign residents and investors.
This glossary is general information for Australian readers, not legal advice. Rules change and vary by region. Take independent Indonesian legal advice before you sign.