About PMA?

Majo

Hi, I bought some land in Lombok some years ago (using nominies), and are now thinking of starting a small restaurant on one of the plots. Ive been reading about the legal aspects of setting upp a business, but i still have som questions about PMA companies. Does somebody here have some experiences and thoughts about advantages and disadvantages about setting upp a PMA? As i understand it a PMA company just "leases" the land for 25-30 yrs. At the end of that period you can extend the lease for another period. Right? BUT, from WHO does the PMA lease the company? From the owner of the land? Does that mean that if the lease expires the land goes back to the owner? Or what happens? If the PMA leases the land from a local, can you then buy some land, using a nominie, and then let the PMA lease the land from him (yourself)? And what happens if you are running an restaurant with a PMA (which "own´s" the land) and after, lets say 10 years, want to sell the land to a person who wants to use the land for a private villa (no business)? Can you turn the land back from Hak Pakai to a Hak Milik? And; can you start upp a PMA for a couple of years, then move back to Europe (Sweden i my case) and let some local/westerner take care/lease of the business? Or do you need to LIVE in Indonesia full time to keep the PMA? Regards Majo

spicyayam

PMAs are expensive to set up and ongoing fees, I doubt that it is really necessary. You could just put the licences in your nominee's name.

Fred2

Hi All, I have recently started a fully western owned company called Lombok Solutions. I specialise in selling and purhasing land, villa construction, villa management, staff recruitment and certification of land and buildings. If you are looking for land to buy as investment or retirement contact me and see if i can help you. [email]lomboksolutions@gmail.com[/email] Regards, Callum

Balilombok

Majo, Unfortunately i wont have the material time to discuss the pros and cons of creating a PMA. In a nutshell, with a PMA you are better protected (than w a nominee) but you will have more paperwork. My reason for posting is to answer your point about 30 year lease. NO this is a clear misconception!! You don't need to lease!! (And as you correctly asked: lease from who?!!) Your PMA will own the land (outright and forever), but as for every moral entities including all PTs (and PMA, which is a PT =Perseoran Terbatas= Limited liability), the SHM =Sertifikat Hak Milik = Freehold certificate of your land will be mutated in 30 years HGB (renewable 30 + 20 years = 70 years). If your PMA sells one day its land to an individual, the land will be reverted automatically to SHM. Happy new year and all the best w your project

Fred2

LEGAL ASPECT Foreign Investment Law No. 1 of 1967 Foreign Direct Investment (FDI), further referred to as PMA (Penanaman Modal Asing-Foreign Investment), is governed primarily by the Foreign Investment Law No. 1 of 1967, as amended. A PMA company is granted a period of 30 years to operate after its legal formation and can be expanded for another 30 years. Share Ownership A PMA company is general established as a joint venture between foreign and Indonesia partners. The partnership may involve legal entities (Corporations) or individual persons. A joint venture entity shall take the form of a Limited Liability company, which is subject to Indonesian Company Law (No. 1, year 1995), denoted as PT (Perseroan Terbatas) and its implementary Regulation. A PMA company may be established as a straight investment, namely with 100 % foreign ownership. E. LAND AND BUILDING Indonesian land legislation's do not recognize the concept of free hold land rights. To foreign investors, the following three main rights are significant: - The Land Cultivation Right (Hak Guna Usaha, abbreviated HGU) - The Right of Building on Land (Hak Guna Bangunan, abbreviated HGB) - The Right of Use on Land (Hak Pakai, abbreviated HP) These rights authorize the use of land in some ways, and their differences are mainly on the duration of validity, the nature of utilization, the opportunity to mortgage, and proof of tittle: The Land Cultivation Right (HGU) is the right to use state owned for the purpose of agriculture namely plantation, fishing or cattle raising. By law the title is granted for a maximum period of 35 years, but may be extended to 25 years if the land is properly use and managed. This title of right is given to Indonesian partner(s) or legal entities domiciled in Indonesia including PMA companies. It can be used as a collateral or transferred to a third party with the government's approval. The Right of Building on Land (HGB) is the right to construct and own buildings on a piece of land that one has purchased. The title is granted for a maximum period of 30 years which can be extended for a maximum period 20 years. The title is granted to Indonesian Individual(s) and/or legal entities domiciled in Indonesia, including PMA companies, and can be used as collateral or transferred to a third party. The Right of Use on Land (HP) id the right to use land for any purpose for period of 25 years, it can be extended for 20 years. It has no collateral value to the owners and not transferable.

SHoggard

I'm a bit confused:

Balilombok wrote My reason for posting is to answer your point about 30 year lease. NO this is a clear misconception!! You don't need to lease!! (And as you correctly asked: lease from who?!!) Your PMA will own the land (outright and forever),

I'm with you so far, the PMA Company owns the land & puts it through the books as an asset (hopefully an appreciating one)

Balilombok wrote but as for every moral entities including all PTs (and PMA, which is a PT =Perseoran Terbatas= Limited liability), the SHM =Sertifikat Hak Milik = Freehold certificate of your land will be mutated in 30 years HGB (renewable 30 + 20 years = 70 years).

Now you've lost me.... are you saying that after 30 years the PMA will give up the right to [I]own the land (outright and forever), [/I] and basically revert to an Hak Pakai (renewable 30 + 20 years = 70 years)

If your PMA sells one day its land to an individual, the land will be reverted automatically to SHM.

Or is the instance you're giving specific to the OP's instance in which he already has a SHM, now wants to put the land in the name of a PMA and run a business on it.... therefore the 'nominee held land' is effectively leasing it to the PMA? Or is the instance you're giving applicable to all PMAs which seems to contradict the statement [I]"Your PMA will own the land (outright and forever),"[/I] Or could the foreign owner's PMA not just buy-out the nominee & keep the land as an HM [I]"Your PMA will own the land (outright and forever),"[/I] As you see, confused!

Roswen

shogg, when you are confused, you'd better close half of your eyes and let the other open. cheers! :eagerness:

SHoggard

Well its my ears I'm worried about - so many barrack-room lawyers falling over themselves to give contradictory advice.... who to listen to? Yes, you're right, a 'real lawyer' - thanks. BTW: You gave me the contact of andika.riyandi - is he in Jakarta? I have a business trip planned there later this month.