A Guide to Land Investment in Bali - presented by RAH (the House of Legal Experts).pdf

Disclaimer:
This document shall not be treated as legal advice provided by RAH (The House of Legal Experts)

1. What to know to
invest on land in Bali
An overwhelming journey through traditions and national law

2. State at play
•Lands in Bali are currently registered pursuant to Indonesian
National Law and Balinese Customs or AdatLaw
•Understanding the whole concept may take times and efforts
•Bali’s AdatLaw Communities (Masyarakat Hukum Adat) or
hereinafter “Adat Communities” are protected and recognised
under Indonesian Law and Constitution
•The recognition comes with the accommodation of the
customary rights to land (hakulayat)with Adat Communities as
the bearer of such rights

3. State at play (II)
•Bali requires capital injections to develop itself, particularly in
the development of tourism and other industries’ infrastructures
•There are nearly 1500 traditional villages exist in Bali nowadays
•This invitesinvestors to jointly develop lands with Adat
communities
•Adatcommunitiestypically owns land for temples, traditional
markets, public facilities suchascemetery andlandreserved
fortraditionalvillageadministrations
•Somearrangements may entail problems with the legality of
land rights

4. Quest to legal certainty
•Agrarian Law of Indonesia regulates that Adat communities’
rights to land are recognised, if the rights are not contrary to
national interests, laws, and regulations.
•In 2014, Indonesian Ministry of Home Affairs concluded a
regulation on guidelines to recognise and protect Adat
communities
•In 2019, Indonesian Ministry of Agrarian Affairs and Spatial
Plannings concluded a regulation regarding the procedures on
the administration of Adat communities’ land rights

5. The spirit of land laws and regulations
•Indonesia is the sovereign and has complete authority over
lands in its jurisdiction
•Land serves the purpose of national interest hence exclusive
ownership to it reserved only to Indonesian nationals →this
creates the right of ownership/freehold title (hakmilik)
•Legal entities and foreign nationals may use or hold a right to a
land with limited time and use →this creates among other
things: right to build (hakgunabangunan), right to cultivate (hak
gunausaha), right to use (hakpakai), and leasehold (haksewa)

6. Bali’s customs and traditions
•Land is one of the most important elements in Balinese
traditions and rituals
•Lands recognised as hakulayatare typically used for
communal purposes, which involves temples and worship
activities. Simply put, most lands owned by Adat communities
have religious values and functions.
•ThenewlyenactedlawonBaliProvince(LawNo.15/2023)
affirmsandreassertstheimportanceBalinese people religious
and traditional values onlanddevelopment.

7. WheredoesAdatrightsfitinthislegalframework?
•Adat land rights accommodation is not without official national
recognition
•GovernmentRegulationonAdatLandConversion to Freehold
Title (PP 24/1997) allows Adat communities to convert
traditional ownership of a land into a certificate of freehold title
(sertifikathakmilik/SHM),whichisthe strongest land right in
Indonesia as it has no limit to land utilisation and duration of
ownership
•Hence, any person or institution lookingforinvestment
opportunities must arrange some agreements to obtain land
rights belonging to Adat communities

8. Some notable hindrance
•Customsandtraditionsarevariedin every Adat community
•Values, rituals, and communal interests are prerogatives of
each Adat community
•Investinginsomeareasmight be easier than in others, as the
attitudes towards investors are varied
•TheinclusionofAdatcommunities’ land rights in laws and
regulations accommodates the plethora of customs and
traditions adopted in different areas
•Simply put, terms and conditions of joint development of land
might be different throughout Bali

9. Simple but not easy process
•The existence of the Government Regulation on land
conversion allows investors to have legal certainty in obtaining
land rights after they come to an agreement with Adat
communities
•As hakulayatis crystalised by freehold title belonging to Adat
communities, administration process –may it be conversion to
right to build (HGB), leashold(haksewa), rightto use (hak
pakai), or other legally recognised land rights –is doable and
ensured by Indonesian laws and regulations
•ThekeyistorespectBalinesetraditionsanddeveloptheland
as the community sees fit

10. Thank you