HGB in Indonesia: What Happens to the Land After Conversion?
Indonesia is a prime destination for property investors, especially in fast-growing areas such as Lombok, Bali, and Jakarta. However, the legal framework around land ownership is often misunderstood—particularly when an Indonesian sells land to a PT PMA (foreign-owned company) and the title is converted into HGB (Hak Guna Bangunan).
One big question often arises: Can the former owner ever reclaim the land? And what really happens after this conversion?
1. From Hak Milik to HGB: An Irreversible Change
Indonesian citizens can hold land under Hak Milik (full freehold).
However, a PT PMA cannot legally own Hak Milik.
When land is sold to a foreign-owned company, it must be converted into HGB.
After conversion:
The land belongs to the PT PMA under HGB.
The former owner loses all legal rights to the property.
Renewal of the title is done directly with the government, not with the previous owner.
Unlike a simple lease (Hak Sewa), HGB is not “renting the land” — it’s a real, transferable property right.
2. Renewal Control: Only Between the PT PMA and the State
An HGB title is granted for:
30 initial years
+ 20 years extension
+ 30 years renewal
➡ A total of up to 80 years if all conditions are met.
To renew, the company must:
Be fully compliant with regulations and taxes.
Respect the approved land use (residential, commercial, hospitality…).
Pay the renewal fees.
The previous owner has no say whatsoever—their rights are permanently extinguished.
3. Why HGB is Better for Foreign Investors
Compared to a simple lease (Hak Sewa), HGB offers:
✔ A real, transferable property right.
✔ The ability to sell or pass on the property without third-party consent.
✔ Access to bank financing via mortgage.
✔ Renewal based on law, not private negotiation.
In short: it’s far more secure from a legal standpoint.
4. What Happens After 80 Years?
Once the HGB expires, investors have options:
Renew under a new PT PMA.
Sell to an Indonesian, who can reconvert it to Hak Milik.
Negotiate an extension directly with the land office.
In practice, most investors sell long before reaching the full 80-year term.
5. Conclusion: A Strong, Long-Term Right
Contrary to popular belief, HGB is not just a disguised rental agreement. It is a secure, state-backed property right that guarantees foreign investors:
Full control over the property.
Easy transferability.
Predictable renewal processes.
Structuring your PT PMA properly and planning ahead for renewals ensures a stable, long-term investment in Indonesian real estate.