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Indonesia Considers Change in Property Law

Those Eager to Expand the Property Sector in Indonesia Will Have to Deal with Restrictions and Constitutional Challenges to Foreign Land Ownership.

(1/16/2010) An international real estate conference planned for Bali in May is prompting Indonesian property developers to lobby intensively for a change in Indonesian law to allow foreign nationals to purchase apartments and private residences.

Speaking to The Jakarta Globe, Teguh Satria of the Indonesian Real Estate Developers Association (REI) said : "The REI has chosen Nusa Dua, Bali, as the host for its 61st World Congress from May 24 to May 28. It would be good to revise the regulation by then so Indonesia could not only act as the host, but could open its doors to the participants interested in purchasing property here."

Separately, Indonesia's Housing Minister, Suharso Monoarfa, confirmed that changes to the rules on property ownership by foreigners were under consideration. If approved, the areas and types of residents open to foreign property purchases would be restricted. Any changes would also likely stipulate minimum levels of investment and require a period of residence each year in the country.

While supporters of the change in property rules point to benefits in taxation and an improved foreign investment climate that would result from allowing foreign ownership of land, the strength of forces opposed to allowing any foreign ownership of Indonesian land should not be underestimated. Past efforts to liberalize the law to allow foreign land ownership have been consistently rejected by Indonesia's Constitutional Court.