INDONESIA Law and Practice Contributed by: Yogi Sudrajat Marsono, Heru Pamungkas, Agnes Maria Wardhana and Andin Aditya Rahman, Assegaf Hamzah & Partners
1. General 1.1 Main Sources of Law
Private or contractual agreements, excluding land-related aspects, are governed by the Indo - nesian Civil Code. 1.2 Main Market Trends and Deals Based on publicly available information, the main trends in the real estate sector include the following. • Industrial property investment in industrial estates and special economic zones (SEZs) is trending, driven by government tax and cus - toms incentives and improved infrastructure, such as enhanced port access and toll roads. As the current government is prioritising the development of regions outside of Java and relocating the capital to Nusantara, East Kalimantan, property transactions in the new capital are on the rise. • Commercial property transactions, such as office building acquisitions, remain stagnant, and there is a growing preference for lease arrangements for virtual offices and co-work - ing spaces. • Residential property ownership is on trend, especially with the current tax incentives for purchasing new homes or apartments under IDR5 billion (about USD320,000) as part of the government’s efforts to raise the economy post-pandemic. Specifically for Jakarta, the development of mass transportation infrastructure, such as the Jakarta MRT phases 1 and 2, Jakarta LRT and Jakarta-Bandung high-speed train, has led to the expansion of residential neighbourhoods, hotels, apartments, malls and shopping centres. 1.3 Proposals for Reform Since the implementation of the Job Creation Law, the government has focused on digitising licensing procedures through the Online Single
The fundamental basis for property law stems from Law No 5 of 1960 on Basic Agrarian Prin - ciples (“Agrarian Law”). The Agrarian Law is detailed and enforced through the following sup - plementary regulations, among others (together, “Land Regulations”): • Government Regulation No 24 of 1997 on Land Registration; • Government Regulation No 18 of 2021 on Management Rights, Land Rights, Apartment Units and Land Registration; • Minister of Agrarian Affairs and Spatial Plan - ning/National Land Agency (MOA) Regulation No 3 of 1997 on the Implementation Provi - sions of Government Regulation No 24 of 1997 on Land Registration, most recently amended by MOA Regulation No 16 of 2021; and • MOA Regulation No 18 of 2021 on the Pro - cedures for Determining Management Rights and Land Rights. Other notable regulations include the following, all of which were most recently amended by Law No 6 of 2023 on the Enactment of the Govern - ment Regulation in Lieu of Law No 2 of 2022 on Job Creation (“Job Creation Law”): • Law No 26 of 2007 on Spatial Planning (“Spa - tial Planning Law”); • Law No 28 of 2002 on Building (“Building Law”); • Law No 20 of 2011 on Apartments (“Apart - ment Law”); and • Law No 1 of 2011 on Housing and Settle - ments.
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