The Indonesia land legislation is based on the basic Agrarian law number 5 of 1960. This law does not recognize the concept of freehold land right. Instead, the various right attached to land are decided into separate elements which are subjects to separate titles.

The Basic Agrarian Law Recognizes several types of rights on land. To the foreign investor, the following three main rights are significant, i.e. :

1. The Rights of Exploitation ( Hak Guna Usaha / HGU )
2. The Rights of Building ( Hak Guna Bangunan / HGB )
3. The Rights of Use ( Hak Pakai / HP )

These right all authorize the use of land. The differences lie in the duration of validity, the nature of utilization and the opportunities for obtaining a mortgage law.

The right of ownership is an inheritable right that can be held only by Indonesian Citizens. Therefore, only Indonesian companies have legal right to land.

The right of exploitation is the right to use the state owned land for agriculture in a broad sense, including plantation, fishing and cattle raising. The title which is normally granted for 35 years, but my be extended maximally for 25 years, as long as the company is still exist and in good operation, can be renewed again.

Based on Presidential decree number 34 of 1992 concerning the use full of right of exploitation:

The Rights of Exploitation (HGU) and the right of building ( HGB ) for the joint venture company, stated that in the joint venture company that established on Indonesian Law and domiciled in Indonesia. Those HGU that kept by the joint venture company can be used as collateral and can be transferred after having permission by the Chairman of BPN.

The right of the building (HGB ) is the right of land to construct and built building on it. Usually it is given for 20 to 30 years and can be renewed on consideration of policy of the Regional government. If the joint venture company needs a land for emplacement, a factory, storage, employ houses and other building, so to the joint venture company can be given the right of building (HGB ) according to the available regulation although the land proposed located outside of the past The Rights of Exploitation (HGU). If those land located in the zone of The Rights of Exploitation (HGU), so the land status is still The Rights of Exploitation (HGU) and can both be given the The Rights of Building (HGB).

Foreign investors who have obtained mining right from the Minister of Mines and Energy or Exploitation right from the Minister of Agriculture or the Minister of Forestry have automatically obtained the use right to use the land within their concession boundaries for purposes directly concected with the operations of the enterprises. Outside these purposes, special applications should be submitted to the Ministry concerned.

L A N D 

Indonesian land legislations do not recognize the concept of freehold land rights. Instead, the various rights attached to the land are subdivided into seperate titles. The Basic Agrarian Law recognizes types of rights on land. To foreign investors, the following three main rights are significant:

1. The Land Cultivation Right (Hak Guna Usaha, abbreviated HGU)
2. The Right of Building on land (Hak Guna Bangunan, abbreviated HGB)
3. The Right of Use (Hak Pakai, abbreviated HP)

These rights authorize the use of land in some ways and their differences are mainly on the duration of validity, the nature of utilization, the oppurtunity to mortgage, (to use as an asset or collateral) and proof of title:

The Land Cultivation right of ownership is an inheritable right that can be held only by Indonesian citizens. Therefore, only Indonesian companies have legal rights to land.

The right of explotation is the right to use state-owned land for purposes of agriculture, including plantation, fishing, or cattle raising. The title is normally granted for thirty years but may be extended to sixty years if the land is properly maintained and managed. This right is also limited to Indonesia nationals or legal entities domiciled in Indonesia, but can be "leased" to a joint venture.

The right of building is the right to construct and own buildings. The title is usually granted for twenty or thirty years and maybe renewed at the discretion of the local government.

The right of use is the right to use land for any purposes for a certain period. Foreign investors who have obtained mining work contract from the Minister of Mines and Energy or Forestry- exploitation rights from the Minister of Agriculture or the Minister of Forestry could automatically use the land within their concession boundaries for purposes directly connected with the operations of the enterprises. Outside these purposes, special applications should be submitted to the Ministry concerned.