You may or may not be aware of a speech held recently in Bandung by the new Agrarian Minister in which he announced that his Department will "soon survey and inventory land owned by foreigners in Indonesia"  with the aim to make sure that property is not held directly or indirectly by foreigners.
His comments are now creating concerns by many who acquired property through a local nominee or name holder, to hold land for the foreigners use.

These concerns range from "oh no,- not again", to "will I loose all my investment and eventually my good Bali lifestyle?".

As always, it is essential to know as much as possible about any such proposed development and if needed, know how to react without instantly hitting the panic button.
Negative news travel much faster than reports of positive developments, which explains part of the present hype over that report.

First, please let me tell you this, - our office has spoken with legal advisers and Notaries to get their view on the issue.

They all said that it is

 a) not certain that such review will indeed take place, because the possible consequences would include affecting future private foreign investment in all of Indonesia, which would not be going well with the Ministry for Finance and 

b),  if such a review is undertaken, this becoming such a complex and time consuming task, that the action may possibly be stalled due to the unforeseen circumstances.
Just imagine, any and all local landowners would need to be screened about their property purchase transaction. Who is qualified to detect possible foreign involvement in the Land Department's files? 
A well established Notary's comment, right before I sat down to write this to you, was: "It is impossible to create a precise report, the project will meet too many hurdles, it is simply not feasible."

However, I am not suggesting to put the head in the sand. I encourage you to keep contact with trusted legal professionals and as an affected foreigner myself, I will faithfully report any news to you as soon as they come in. Now let us look at some facts -

We all know that direct land ownership is not available to foreigners in Indonesia.  For decades local nominees were used by us foreigners to enjoy living on and using property in Bali.
For those years the practice was obviously tolerated by the Land Department and the judicial system. However, in several cases of dispute between the nominee and the foreign owner, the courts  were clear in saying that the foreigner has no rights to the land in question.  Rulings were then looking at the right of the foreigner to receive the property value back from the nominee, which usually involves selling of the same.  We as property agent have only via hearsay knowledge of a few such cases. It appears that the foreigner who could successfully prove that he/she made the payment for the nominee to purchase, got the rights awarded to have the investment returned.
However, these conflicts are thankfully infrequent and have little to do with today's issue. (e.g. UbudProperty has not experienced a single such dispute in it's 10 years of operation).

You may be thinking: Do I have to take this serious? Can I wait with any action until more details emerge?  The answer is:  'Who really knows right now?". I guess not even the Land Departments themselves are informed as yet.

There is another reason to relax a little. I refer to the Minister's comment in the same interview where he also said: 'if a foreigner is married to an Indonesian wife, land ownership would be reverted to the Indonesian wife'.  This is clearly contravening the agrarian law and shows that the freshly appointed Minister was not well prepared in his comments, which again leads to assume that there is no set plan in existence yet.

Let us believe for the sake of prudence that such a plan would indeed be executed.  What are your options? 
Firstly, seeking independent legal advice from a reputable source.  You want to be a bit careful, because it is likely that a  large number of legal professionals, good or otherwise, are smelling a windfall here and raising their hand to be noticed.  If you had reason to trust your established connection, such as your Notary, this is where I would go.

Very likely you will then hear about the following available options:

1.    Entering into a lease agreement (Hak Sewa) with your nominee. Leasing cars, boats, airplanes and property is fully legal, as we do not obtain ownership. Contractual arrangements need to be legalised by professionals.  Expect fees and tax to approx. 10% of the property value. This will vary, depending on each individual situation. Also check your agreements for the clause saying: 'if any change in Government regulations is negatively affecting your beneficial ownership, the agreement automatically converts into a lease agreement. You will likely find this has been already entered by your Notary into the agreements in anticipation of such event.
        
2. Converting the property into Hak Pakai (the right to use and build): Such a land holding title can be held directly by a foreigner for an initial 20 year period, then is extendable, presently up to 70 years. After this period the law is silent. (No further ruling in place). This title is also fully supported by law, because the local owner is holding the underlying property title and we just obtain the right-for-usage-title. If the foreign title owner wants to sell again, e.g to an Indonesian citizen, the title will be re-converted to Freehold (Hak Milik). Fees and taxes will apply upon initial conversion and also upon re-sale, relating to the property value (NJOP), as appointed by the Government at the time.

Until recently a foreigner could also hold land by forming a Foreign Investment Company (PT PMA, -now FDI/PMA , Foreign Direct Investment Company). This Company then could own land in it's name, effectively being controlled by the Company's foreign owner. This option is not attractive any more, as new regulations require considerable investment to be made and a minimum number of units to be developed. Besides that such Company has to follow strict corporate rulings by the controlling body.

Back to the top, where I suggested we should leave the panic button untouched for the time being.
The more I speak about this with insiders, the more raised eyebrows I meet. "Who is going to send thousands of expats away, many together with their businesses? How is this going to work in an environment where consecutive presidents predicted "eradication of corruption is just a matter of time?" Look around and notice the environment in which these plans were created and are supposed to be implemented. There is reason to believe that the issue, although backed by the 55 year old law of land ownership, will be around for quite some time to come.
 
Again, - it is surely advisable to be watchful. However, I see no reason for panic. No matter what happens if, and when, I think eventually some reasoning will set in, in order to come to a workable solution to keep foreigners connected with their investment and the investments coming.

It may pay to check our regular newsletters on www.ubudproperty.com. As soon as we hear about relevant and important news, you will find it there.

Until then, heads up and ears wide open.

Wishing you well and with best regards,

Ramon / Senior adviser