The "new" (2004) foreign ownership Bali villa real estate lie / con

In a never ending need to tell semi-plausible lies in order to con foreigners out of their money in return for a commission check / cheque, Bali low life expatriate crooks on the run from other countries now abuse a "new" (2004 they say) law; be warned, it is a total con.

This civil code they abuse comes from the Indonesian Minister for Land Registration (“Agraria”) No. 7 of 1996 (RMA 7/96): Article 1(1) which states that "a foreigner whose presence in Indonesia gives opportunities for national development" may own a property under Hak Pakai, and Article 1(2) says such a foreigner is one who "has and maintains an economic interest in Indonesia by implementing an investment in the ownership of (that property)”.

The apparent ambiguity in the above and a letter from the same former Minster for Agraria which accompanied the civil code (as a separate letter it is not in itself legally binding in the courts) way back in 1996 has given rise to claims by the villas sales fraternity that any foreigner can “own” or rather have right of use ownership of a villa in Bali. For balance and clarity here is what the element of the letter said relating to foreign ownership aspects of the civil code, “a foreigner will qualify for Hak Pakai even if he is in Indonesia only from time to time".

However in reality other Indonesian laws contradict what the villa sales people say, in that any foreigner who is Indonesia for more than 2 months in any 12 month period has to register for taxes (Law Number 17/2000). In addition only Indonesian citizens and private Indonesian companies (of which all directors have to be Indonesian) can realistically and legally apply for operational permits for single unit villas intended to be rented out; Public companies which can include minority foreign shareholder directors can also obtain operational permits, but the cost and effort in setting up a publicly listed company in Indonesia just for a villa is a practical nonsense.

The term "national development" in RMA 7/96 (“a foreigner whose presence in Indonesia gives opportunities for national development”) is clearly defined within Indonesian government’s strict guidelines on what foreign expertise is required for the development of the country under the RPTKA "Expatriate Placement Plan" (covers specific positions which foreigners can be employed in plus what experience and qualification minimums they are required to have in order to qualify for KITAS work permits); villa “ownership” / investment and / or operation needless to say is not included in these. Even without the legally defining RPTKA, it is clear "national development" would necessitate some distinct form of commercial or educational benefit to the nation, but this also therefore excludes rental villas because operational permit regulations required to operate these are not available to foreigners.

Although KITAS work and IKTA residency permits are currently fairly easily obtained by villa sales companies for their customers; this is done by way of false declarations on the application form plus a bribe to immigration officers (corruption); these visas are therefore invalid and their holders may be liable for criminal charges for falsifying their applications. KITAS applications require foreigners to be qualified for the position for which they are intending and that no Indonesian is readily or easily available to perform those duties. The qualification is nothing to do with investment; it is to do with a real job being available which no Indonesian is available to perform and where the foreign applicant has the employment history to qualify them for the position. There is absolutely no aspect of single domestic or rental villa operations which would qualify a foreigner for a KITAS and therefore for property right to use.

What about the retired and / or well off? Do they legally benefit from / qualify under RMA 7/96? No! Residency permits do not allow the holder to work in Indonesia, so they can not benefit from RMA 7/96 on the basis of villa investment alone. Retirement visas are different and do not allow the holders to work or conduct business in Indonesia; so they are also are not able to benefit from RMA 7/96.

It is clear regarding RMA 7/96 therefore that;
a) Only foreigners who are registered in Indonesia for tax (which means declaring and paying income tax on their worldwide earnings) qualify under RMA 7/96.
b) Only foreigners of working age who legally meet the KITAS visa criteria (which can not legally include anything to do with the villa itself) qualify under RMA 7/96.
c) No foreigner, even if they meet the above 2 criteria can rent their villa out as a holiday let when they are not using it themselves.

The way that villa sales companies present RMA 7/96 is therefore fraudulent. What makes it worse is their fraudulent acts get comical when you consider just how many Bali real estate sites talk about the "New 2004 Hak Milak law allowing foreigners to own / have right of use to a villa". You then read on to find out they are in fact referring to RMA 7/96 of 1996 but do not explain what it is because they do not know! The reason for these false 2004 statements is that a court in Bali upheld a foreigners claimed right to use a property after his greedy Balinese girlfriend tried to take over the villa. How much money was paid to the judge to get this unlawful ruling no one knows or is saying! But even if the decision was not corruptly made it does not affect the law as there is no case law in Indonesia, which means the decision of one court case in Indonesia can not be used to influence another. At any rate, there was absolutely no new law in 2004 regarding this in Bali and in fact certain limited regional controls (regarding agreement duration) over Hak Milak agreements have since been removed by Jakarta. If anything, Hak Milak is tighter now than before 2004.

Do not let the Bali real estate fraudsters fool you; Balinese villa ownership is not possible for everyday foreigners and will ultimately likely only bring you tears of sorrow, not joy. The only method which can give you legal rights over a villa in Bali are described here: ABN Method.