What Is Hak Guna Bangunan? PT PMA Property in Bali

Hak Guna Bangunan (HGB), or Right to Build, is the title a PT PMA company holds when it acquires property in Bali. Defined under Article 35 of Indonesia's Basic Agrarian Law (Law No. 5 of 1960), HGB grants the right to construct and own buildings on land for a certified period, registered as a Sertifikat HGB with the National Land Agency (BPN). Foreigners cannot hold HGB in their own name. Only Indonesian citizens and Indonesian legal entities, including a PT PMA, qualify as holders.

Under Government Regulation No. 18 of 2021 (PP 18/2021), HGB on state or government-managed land runs for an initial 30 years, extendable by 20 years, then renewable for a final 30 years, giving a maximum of 80 years of tenure. On land originally held as Hak Milik (freehold owned by an Indonesian individual), HGB is limited to 30 years and is renewable only by private agreement with the landowner. Most Bali villas sold to PT PMA buyers start as Hak Milik land, and the title converts to HGB at the point of transfer.

Three titles matter to foreign investors. Hak Milik is perpetual freehold, reserved by law for Indonesian citizens only and unavailable to any company. Hak Pakai (Right to Use) can be held directly by a foreigner with a valid KITAS or KITAP residence permit for one personal residential property, but it generally cannot be mortgaged as bank collateral. HGB through a PT PMA is the standard commercial title. Its key practical advantage is that the SHGB certificate can be registered as Hak Tanggungan (a security interest) with an Indonesian bank, making leverage possible in a way Hak Pakai for a company does not allow.

When a PT PMA buys from an Indonesian seller holding Hak Milik, the title must convert. The seller formally releases the Hak Milik, and BPN issues a new Sertifikat HGB in the PT PMA's name. A licensed PPAT (Pejabat Pembuat Akta Tanah, the land deed official) prepares the Akta Jual Beli (sale and purchase deed). The PT PMA pays BPHTB acquisition duty at 5% of the transaction value, and the seller pays PPh Final at 2.5% of the gross amount. BPN registration typically takes several weeks to a few months depending on the local office and whether a title conversion is required.

A PT PMA holding HGB can exit in two ways. It can transfer the title directly to another eligible buyer through a new Akta Jual Beli executed before a PPAT, or it can sell the shares of the PT PMA itself, leaving the land certificate in the company's name while changing who owns the company. The exit strategy guide covers both routes and the applicable taxes. One practical point to track: since mid-2025, BPN has tightened enforcement of the rule that HGB land must be actively developed within two years of acquisition, and renewal applications must be filed before the 30-year certificate lapses.