What Are the Legal Solutions for Investing in Bali as a Foreigner?

Indonesia, and Bali in particular, has attracted international investors for several years, drawn by attractive returns, a high quality of life, and portfolio diversification outside Europe.
Contrary to common belief, it is possible for foreigners to invest legally in Bali, provided they understand the local legal framework and choose the structure best suited to their project.

However, as with any overseas investment, the transparency of partners and the accessibility of legal documents are critical factors in securing a real estate investment in Bali.

The General Framework for Real Estate Investment in Bali

In Indonesia, land ownership is strictly regulated by law.
Freehold ownership (Hak Milik) is reserved exclusively for Indonesian citizens. Foreigners cannot therefore own land in their own name.

That said, Indonesian law provides several legal mechanisms allowing foreign investors to acquire usage or exploitation rights over real estate assets.

👉 Important point of attention
Investors should always be able to access official documents, including land certificates, building permits, lease agreements, and operating licenses.
A lack of clarity or difficulty in obtaining these documents should be considered a warning sign.

Leasehold (Hak Sewa): The Most Common Solution

The leasehold, or long-term lease, is the most widely used structure among foreign investors in Bali.

Principle

The investor acquires a contractual right of use over land or property for a defined period, typically between 25 and 30 years, with one or more renewal options.

Advantages

• A widely recognized legal structure.
• Lower entry cost compared to freehold.
• Suitable for both short-term and long-term rental strategies.
• Attractive potential returns in high-demand areas.

Points of Vigilance

• The lease duration and renewal conditions must be clearly defined in the contract from the outset.
• The leasehold agreement should be drafted and notarized by a licensed local notary.
• All documents relating to the land and the legal owner must be verifiable.

👉 In practice
Investors should be cautious if contracts, land certificates, or permits are provided late, only partially, or in non-official formats.

Hak Pakai: A More Regulated Right of Use

Hak Pakai is a right of use granted by the State, generally linked to residency status in Indonesia.

Advantages

• A legally recognized framework.
• A more institutional approach to property use.

Limitations

• More complex administrative procedures.
• Less suitable for intensive short-term rental strategies.
• Limited flexibility for investors focused primarily on yield.

👉 Transparency required
Administrative steps must be clearly explained, documented, and traceable.
A lack of visibility regarding approvals or timelines should prompt caution.

Investing Through an Indonesian Company (PMA)

A PMA (Penanaman Modal Asing) is a foreign-owned company registered in Indonesia, allowing investors to structure their real estate investment within a corporate framework.

Advantages

• A solid legal structure for long-term or multi-asset projects.
• The ability to legally operate rental activities.
• Greater credibility with authorities and local partners.

Constraints

• Higher setup and operating costs.
• Ongoing accounting and tax obligations.
• Best suited for structured or professional investment strategies.

👉 Key point for investors
The creation of a PMA must be supported by accessible official documentation, including company statutes, business licenses, operating permits, and tax registrations.
Any lack of transparency at this stage represents a significant risk.

Indirect Freehold: A High-Risk Practice

Some investors consider acquiring freehold property through a local nominee.
While this practice exists, it offers no real legal protection to foreign investors.

In the event of a dispute, Indonesian law recognizes only the Indonesian individual registered as the legal owner.

👉 This approach should be avoided in any secure, long-term investment strategy, particularly when agreements rely on informal or undocumented arrangements.

Why Bali Remains Attractive for Foreign Investors

Despite a specific legal framework, Bali continues to offer strong investment fundamentals:

• Sustained demand for rental properties, particularly in the tourism sector.
• Potential yields that remain competitive compared to many European markets.
• Entry costs that are still accessible depending on location and project type.
• A dynamic market driven by tourism, expatriates, and digital nomads.

With the right legal structure and professional guidance, investing in Bali as a foreigner is not only possible, but can be strategically attractive. Doing this with the right safe partner will help you to go through difficult administrative work with a real peace of mind.

Transparency and Local Guidance: Key Success Factors

A secure real estate investment in Bali relies on:

• Clear and full access to legal documentation.
• Well-drafted, understandable, and verifiable contracts.
• Transparent communication at every stage of the process.
• Support from experienced and reputable local professionals.

👉 Simple rule
If certain information is difficult to obtain, poorly explained, or deliberately vague, investors should pause and reassess before proceeding.

Conclusion

There are today several legal solutions for investing in Bali as a foreigner, each suited to different profiles and investment strategies. Their effectiveness depends on a thorough understanding of Indonesian property law and a high level of transparency.

Bali remains an attractive destination for real estate investment when approached with a structured, cautious, and professional mindset.
Transparency from partners and full access to documentation are not optional, but essential prerequisites for any sustainable investment.