President Widodo has signed a new regulation revoking a 1996 policy
Foreign investors living in Indonesia are now legally allowed to purchase “right-to-use” property titles for 30 years, with a possible extension of up to an additional 50 years, following President Joko Widodo’s signing last week of a revised regulation easing foreign investment policies.
According to the Wall Street Journal, the new policy is intended to increase the flow of foreign investment capital in Indonesia, which is facing sluggish economic growth at this time.
The 1996 ruling that it replaced only allowed foreigners residing in Indonesia to purchase “right-to-use” titles for 25 years, per Bloomberg.
Taking effect last 28 December 2015, the new regulation also enables expat title holders to transfer the ownership to alien heirs with valid residency permits.
Overseas foreigners, however, are still not permitted to buy property in Indonesia without a residency permit.
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In addition to the property sector, the Indonesian government will now also permit 100 percent ownership in large-sized local e-commerce businesses to boost the economy.
Opening up foreign investment in Indonesia had been one of Widodo’s major platforms since assuming office in 2014, and many industries have been in favour of it.
“The industries that have grown the most in Indonesia are those that have opened up to foreign investment,” John Riady, a director of the Lippo Group, an Indonesian conglomerate with interests in property, shopping malls, e-commerce and hospitals, told the Wall Street Journal.
Another proposal that is being pushed by the Indonesian investment agency is to allow 80-100 percent foreign ownership of cinemas, as well as full foreign ownership of all types of hotels, according to a report by The Australian. At present, full ownership by foreign entities is only available for five-star hotels, while there is a limit of 51 percent for other hospitality properties.
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Real estate analysts had been hoping a total revamp in foreign ownership rulings to allow non-resident aliens to buy homes similar to Singapore.
“People expected a regulation that would allow foreigners to buy property without having to live in the country,” commented Ferry Salanto, Indonesia associate director for commercial real estate at Colliers, in an interview with Thai broadsheet The Nation.
But insiders are positive that Widodo’s latest policy changes will open more doors in the future for foreign investors.
“It is better than it was before,” Eddy Hussy, chairman of the Indonesian Real Estate Developers Association, told Bloomberg. “It is a more relaxed regime now.”
Source : property-report.com
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