What business structure do you need for commercial real estate in Bali?

As a foreigner looking to invest in real estate">commercial real estate in Bali or elsewhere in Indonesia, it is important to choose the right business structure. Indonesian law does not allow foreigners to own land outright, but there are several business structures that allow you to own and manage real estate">commercial real estate. Choosing the right structure is essential to protect your investment and avoid legal complications. Below we discuss the three most common business structures you can use for real estate">commercial real estate in Bali.

A PT is a limited liability company that must be fully owned by Indonesians. With a PT, you can own and manage real estate">commercial real estate, but you cannot own land outright (freehold) as a foreigner. A PT can be useful for foreign investors who have a local partner with Indonesian nationality.

• Advantages: Suitable for real estate">business real estate and easy to set up with local partners.
• Disadvantages: Foreigners cannot directly own land.

A PMA is a foreign investment company and the most common structure for foreigners who want to own real estate">commercial real estate in Indonesia. With a PMA, you can own real estate">commercial real estate, including land in freehold through the company. This structure allows you to engage in a wide range of commercial activities and is specifically designed to attract foreign investors.

• Advantages: The ability to own land and engage in commercial activities.
• Disadvantages: Higher setup costs and more administrative work than a PT.

A joint venture with a local partner is another option for foreigners. This is a collaboration between a foreign investor and an Indonesian partner, where the local partner retains ownership of the land. The joint venture provides the opportunity to benefit from the real estate without being the owner of the land.

• Advantages: Access to land through a partnership with a local party.
• Disadvantages: Risks such as reliance on the partner and potential disputes over ownership.

Choosing the right business structure for real estate">commercial real estate in Bali depends on your investment goals and your willingness to collaborate with local partners. A PMA is generally the best option for foreign investors who want to fully own and manage real estate">commercial real estate. For those who prefer to collaborate with local partners, a PT or joint venture may provide a solution, but these options come with limitations and risks. Make sure to consult a legal advisor to make the best choice for your specific situation.