Leasehold is not automatically cheaper, and PT PMA + HGB is not automatically more expensive.
Buying or investing in property in Bali can involve several different ownership and land-use structures. For foreign buyers, two of the most common options are leasehold and holding HGB through a PT PMA.
Understanding the difference can help you choose the structure that best suits your investment, intended use and long-term plans.
What Is Leasehold in Bali?
A leasehold gives you the right to use a property for an agreed period under a lease agreement with the landowner.
Foreigners who are legally domiciled in Indonesia can hold certain lease rights under Indonesian land law.
Benefits of Leasehold
- Can be held without purchasing an Indonesian land title.
- Lease terms can be negotiated directly with the landowner.
- Extension options can be included in the lease agreement.
- Can be suitable for private villas, holiday homes and investment properties.
- May provide a simpler structure depending on the intended use of the property.
The value of a leasehold depends heavily on the lease price, remaining term and extension conditions, so leasehold should not automatically be considered cheaper than other property structures.
What Is a PT PMA?
A PT PMA is an Indonesian limited liability company established for foreign investment.
Foreign investors commonly use a PT PMA when establishing and operating a business in Indonesia. Indonesia’s OSS system manages the licensing process for foreign-investment companies and other business entities.
Depending on the property and business structure, a PT PMA may be able to hold an HGB land title.
What Is HGB?
HGB stands for Hak Guna Bangunan, commonly translated as Right to Build.
HGB is a registered Indonesian land right that allows the holder to use land and construct and own buildings on it for the period of the HGB title.
For applicable HGB land, Indonesian regulations provide for an initial period of up to 30 years, followed by a possible 20-year extension and a further 30-year renewal, subject to the applicable requirements.
This can provide a long-term structure for property investment and development.
Is HGB the Same as Freehold?
No.
In Indonesia, Hak Milik is the form of land ownership most closely associated with true freehold, and Indonesian law places restrictions on who can hold Hak Milik.
A foreign-owned PT PMA does not simply become the Hak Milik owner of land.
Instead, the PT PMA may hold HGB, which is a separate registered land right.
Because HGB can provide long-term, registered rights over land, it is sometimes informally described as a freehold-style structure for foreign investors, but legally it is not the same as Hak Milik.
Leasehold vs PT PMA + HGB
Leasehold Benefits
- Suitable for many foreign buyers.
- No need to acquire the underlying land title.
- Lease duration and extension terms can be negotiated.
- Can offer flexibility for personal or investment use.
- May involve a simpler structure depending on the transaction.
PT PMA + HGB Benefits
- The PT PMA holds a registered land right.
- Can provide greater long-term security for commercial investment and development.
- Suitable for qualifying foreign-owned businesses operating in Indonesia.
- HGB can potentially provide a long-term land-right structure through extension and renewal.
- Particularly relevant for buyers planning to develop or operate a commercial property through a PT PMA.
Which Option Is Cheaper?
There is no simple answer.
Leasehold is not automatically cheaper, and PT PMA + HGB is not automatically more expensive.
The total cost depends on factors including:
- Land or property price
- Lease duration
- Lease extension terms
- PT PMA establishment and operating costs
- Taxes and transaction costs
- Notary and legal fees
- HGB registration, extension and renewal costs
The best comparison should therefore be based on the specific property and proposed transaction, rather than the ownership structure alone.
Which Option Is Right for You?
The right structure depends on your individual situation.
A leasehold may suit a buyer looking for the right to use a property for a clearly defined period.
A PT PMA + HGB structure may be more appropriate for investors looking to establish a business, develop property or secure a registered long-term land right through an Indonesian company.
Before proceeding, buyers should have the land title, zoning, proposed use, lease documentation and company structure reviewed by qualified Indonesian legal and notarial professionals.
Buying Property in Amed, Bali
At Goland Amed Real Estate, we help international buyers understand the different options available when buying or investing in property in Amed and the surrounding areas of East Bali.
We can guide you through the process and connect you with our trusted notary and professional adviser team to help determine the most appropriate structure for your property purchase or investment.
Whether you are considering Bali leasehold property, purchasing land for development, or exploring a PT PMA and HGB structure, our team can help you understand the process before you commit.
