INDONESIA Law and Practice Contributed by: Maria Sagrado, Frederick Simanjuntak and Stephanie Kandou, Makarim & Taira S.
• education, research and development facilities; • sports, arts and cultural facilities; • area development infrastructure; • tourism infrastructure; • health infrastructure; • correctional institution infrastructure; • people’s housing infrastructure; • state building infrastructure; • industrial ecosystem infrastructure; and • battery energy vehicle infrastructure. 8.3 Governing Law Construction contracts and power purchase agree- ments in Indonesia must be governed by Indonesian law. For dispute resolution, the parties may agree to settle disputes either through onshore or offshore courts or arbitration forums. Offtake contracts are not subject to specific require- ments regarding governing law or dispute resolution. Therefore, they can be governed by foreign law, with international arbitration as the chosen dispute resolu- tion forum. 8.4 Foreign Ownership Land Ownership There are several types of land rights under Indone- Although Indonesian agrarian law does not fully rec- ognise the concept of freehold ownership, Hak Milik is the nearest equivalent. Subject to planning regula- tions, this right allows its holder to use the land for any purpose, except for exploiting natural resources beneath the land. Only Indonesian individuals, and certain legal entities specified in government regulations are permitted to hold this land right, and its validity is unlimited. Hak Guna Usaha (“Right to Cultivate”) This land right is granted for agricultural purposes, including plantations, fisheries, and livestock prop- erties. Depending on the type of crop, this right is granted for a term of 35 years, extendible for another 25 years, and then renewable for a further 35 years. sian laws, including the following. Hak Milik (“Right of Ownership”)
Indonesian individuals and companies/entities incor- porated and domiciled in Indonesia, including foreign capital investment companies, are entitled to hold this land right. Hak Guna Bangunan (“Right to Build”) This land right grants its holder the right to build and exclusively own buildings on state or private land. Although a Right to Build is usually granted for erect- ing structures, it does not preclude the holder from having plants or a fish pond, provided the main use of the land is for buildings. This right is granted for a maximum term of 30 years, extendible for another 20 years, and then renewable for a further 30 years. Indonesian individuals and com- panies/entities incorporated and domiciled in Indone- sia, including foreign capital investment companies, are entitled to hold this land right. Hak Pakai (“Right to Use”) This land right grants its holder the right to use the land and obtain the produce from a plot of land, either directly controlled by the state or privately owned, subject to limitations imposed by the decision grant- ing the land right or an agreement with the landowner. However, granting a Right to Use over privately owned land is still uncommon. Indonesian agrarian law does not specify a particular period for the validity of this land right. Under Gov- ernment Regulation No 18 of 2021 on the Right to Manage, Land Rights, Multi-Story Housing Units and Land Registration (“GR 18/2021”), a Right to Use is granted for a maximum term of 30 years, extendible for another 20 years, and then renewable for a further 30 years. A Right to Use for embassies and religious institutions for example, is granted for an unlimited term for as long as the embassy or religious institution needs the land. A Right to Use for a certain term can be held by Indo- nesian individuals and companies/entities, resident foreigners and foreign companies represented in Indonesia.
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