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In accordance with the new Investment Law No. 25 Year 2007, foreign investor who wants to invest and venture into business in Indonesia will receive some facilities from the Government, including rights over land for their business development.
The new investment law recognizes three types of rights over land. Details of the rights are as follows :
Right of Land Cultivation, known as Hak Guna Usaha/HGU
Right of Land Cultivation will be provided for a period of 95 (ninety five) years. This right can be granted and extended in advance for a period of 60 (sixty) years and after that can be renewed for a period of 35 (thirty five) years. Companies and investors wishing to establish business on agriculture and plantation, cattle farm and fisheries or aquaculture are relevant to this right.
Right of Building on Land, known as Hak Guna Bangunan/HGB
Right of Building on Land will be provided for a period of 80 (eighty years). This right can be granted and extended in advance for a period of 50 (fifty) years and after that can be renewed for a period of 30 (thirty years). This right is one of the most popular right for investors who run their business in Indonesia. This right mostly related to the business on tourism industry such as hotels and resorts, apartments, villas and also airports, office buildings and factories.
Right of Use on Land, known as Hak Pakai/HP
Right of Use on Land will be provided for a period of 70 (seventy) years. This right can be granted and extended in advance for a period of 45 (forty five) years and after that can be renewed for a period of 25 (twenty five) years. This right has more limited function with regard to land utilization and validity of time compared with the above rights. This right is commonly used to build houses for residential purposes.
After having an initial investment approval from the BKPM, investor should proceed to the Regency or Municipality office where the investment project is supposed to be held to obtain appropriate land rights.