Indonesia gov't proposes ban on foreign ownership of property

13:50, June 25, 2010      

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The Indonesian government has proposed new rules to ban foreigners from owning property, but allow them to secure leaseholds of up to 70 years, local media reportedin Jakarta Friday.

The proposal comes after the government sent mixed messages at times this year.

A Ministry of Public Housing official, Zulfi Syarif Koto, was quoted by the Jakarta globe as saying that the ministry was still in the process of working on changing the regulations, which would require the approval of the House of Representatives.

" we must be careful that we can still protect our national interest," he said.

Currently foreigners are entitled to use, or effectively lease, apartments, but not land or freestanding houses, for up to 70 years. With the right to use, foreigners sign a convertible lease agreement with property management companies or use the name of an Indonesian citizen whom they have a separate agreement with. Foreigners must also periodically renew their right to use.

Initially they can hold the property for 25 years, after which, they need an extension of another 25 years and then a final 20- year term.

Now the government is considering giving foreigners the right to an initial lease period of 70 years, rather than go through several extensions.

Gita Wirjawan, chairman of the Investment Coordinating Board ( BKPM), said that opening up the property sector to foreigners would have a positive impact on the property market.

Foreigners would inject a large amount of capital into the Indonesian market and make the local property market more robust, he said.

Source: Xinhua


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