Foreign Property Ownership (FPO) Regulations in Indonesia being Reviewed
#1
Posted 30 January 2010 - 01:52 PM
Amongst the changes that are being discussed, here are some of them;
Foreigners would be:
* Able to buy and own a house or apartment with the minimum price of 1.5 billion rupiah.
* Able to buy newly built residences only and not second-hand residences.
* Able to buy up to 50 percent of the units in a complex of houses or apartments
Taking care of our environment is our form of Yadnya, sincere voluntary sacred work, towards nature
#2
Posted 02 February 2010 - 09:09 AM
Bali Real Estate: Boom or Bust?
Editorial: Changes in Land Ownership Rules Now Under Consideration May Threaten Bali's Culture and Heritage.
(2/1/2010) The Indonesian press has been awash with news of a promised change in property laws that, if approved, would allow foreign nationals to lease land for 75 years. The response to the proposed regulation has earned enthusiastic praise from the national property sector. Conceivably, the new rules would end the illegal and fraught-with-danger current procedure of placing a property in the name of a nominee Indonesian national. And, members of the prestigious Real Estate Indonesia (REI) optimistically project that liberalized property ownership for foreigners would open a flood gate of demand for property purchases by foreigners, primarily in Jakarta and Bali.
One Bali-based property developer - who runs investment seminars as well as advertorials on Bali radio stations and print media, has even begun running advertisements heralding coming increases of 500 to 1,000% in both demand and prices for Bali real estate if the proposed new law is approved.
Unwittingly sounding what may be his darkest warning, the same developer even proudly quoted himself in one of his advertorials saying "Bali real estate would be like Hawaii 30 years ago."
Threat or Fair Warning?
Similarities between Hawaii's property boom and what dark prospects lay ahead for Bali's delicate culture could hardly be more ominously stated. In the Hawaiian context, New England Calvinist missionaries arrived in Hawaii in the early 19th century, fell in love with the islands and, together with their progeny, imposed far reaching changes in the social and political structures. Chief among these were changes in the rules on private property that allowed the newcomers to take possession of huge tracts and, in some cases, entire islands. Hungry for more land, more money and more power - the Hawaiian pretenders even managed to extend their domination and overthrow the Island's traditional government in 1893. Over the ensuing decades, the native Hawaiians and their rich culture became increasingly marginalized through their disenfranchisement from their lands and cultural institutions.
The culture of the Balinese people is inextricably linked to the island's land. In fact, ancestral lands dictate the very position of every Balinese in society; where he must return for ritual prayers, where his ancestral spirits visit each year between Galangan and Kuningan, and the location for critical rites of passage. Membership in local banjars and subaks are property based, dictating both the rights and obligations of stewardship for every member of a Balinese community.
It is not an exaggeration to suggest that a Balinese without ties to the land is genuinely disenfranchised; something less than true Balinese.
Sadly, developers salivating at the prospect of quick returns on the real estate market are both aided and abetted by Balinese who sell their land, lured at the idea of unheard sums suddenly landing in their hands. As a result, increasingly many are the stories of listless characters, idle in the local villages who, only a few years ago, held immense wealth but who are now penniless and landless; the proceeds from the sale of their ancestral land frittered away on motorcycles, cockfights and transitory high-living.
Property developers respond, insisting they are empowering the Balinese by placing hard cash in their hands in a process which is, after all, undertaken without coercion and completely at the will of the Balinese seller. And while such arguments are not without force, the practical consequence of the ongoing land rush in Bali is that land once sold by a Balinese to an "outsider" is extremely unlikely to ever return to the hands of a Balinese in some future cycle land transaction. As island newcomers build homestead with little nuance of Balinese culture in their design and reap the financial gains of the promised 1,000 return on investment, the next generation of Balinese born without ancestral lands to inherit have nary a "hope in paradise" of possessing the financial wherewithal to purchase even a modest piece of real estate on "their" island.
A local pundit, only half-jokingly, described a future in which fast ferries would operate from Lombok to Bali carrying loads of Balinese to work as maids and houseboys in luxury villas now standing on their ancestral lands. Later in the day, those same ferries will bring troupes of professional dancers to recreate ersatz renditions of Balinese dance and music to the delight of the Island's new masters.
"Nyoman, be a dear and get me another gin and tonic."
Are such dire warning alarmist and overstated? Perhaps. In fact, we would be genuinely delighted if that proved to be the case.
At the same time, those who argue for a laisez faire approach to Bali’s future development are blind to the negative impact of the many changes now taking place on the island and equally naïve to the dismal outcome that awaits wherever and whenever money is the only measure of value.
In the end, it is only the Balinese who will save their island and its magnificent culture. Governor Pastika's effort to introduce island-wide zoning and building standards offer a ray of hope that wise men with noble aims might still be heard amongst the deafening din of cash registers.
Fail to head these voices screaming in the Bali wilderness and it may mean aloha ahiahi or good night to yet another tropical island paradise.
#3
Posted 02 February 2010 - 02:05 PM
In Wayans village property prices has gone sky-high even though it's not a very nice area of Denpasar. There are no villas around but a few Ruko's (commercial buildings), alot of low standard developed housing complexes (perumahan) and kos-kosan amongst the local village compounds. Land is very hard to come by and a few are's will cost several hundred million rupiah nowadays.
For families who's compounds aren't big enough to support another head of family (if you have sons getting married), they're in for a ride in trying to find a home. Buying land in their own village is too expensive or scarce, so the only option is to look for a very 'un-balinese' housing complex which leave almost no room for traditional living, or, getting land and moving into another village somewhere where land is cheaper. There are zero foreigners in this area and it doesn't have any kind of potential or is of interest for a foreign investor. Sometimes i'm amazed by property in some areas where people just seem to push it as high as possible even though it's in a really messy area of Denpasar. What amazes me even more is when someone actually goes ahead and buys that piece of property and proves me wrong.
I always try to advice and talk about the importance of holding on to your family land with people here and there, especially in Canggu where there now is a big boom going on. Some people in Canggu choose to sell their land because it has become 'useless' as they put it. They had a prosper green ricefield 5 years ago. Now that some urbanization with villas has taken place in the area the water supply for the ricefields has decreased leaving them with dry grassy fields only to be used for grazing cows.
Lets make an imaginary scale where you put 10 grazing cows to the left and 5 billion rupiah on the right. Remember you have no money to develop the land or make anything out of it more than putting a few cows there. IF the family has a decent roomy compound and maybe even other plots of land around the village then selling off this big 5 billion rupiah infusion will not feel like a burden.
On the other hand, who know, someday in the future of your kids or grandchildren when land has all been developed and even more expensive, would they not think back and say 'darn i wished my grandfather had not sold all this land. We could've used it for this and that and it would've given us more space and freedom.'. Just look at areas and families in Denpasar. Some families had vast lands but chose to sell them or gamble them away with cockfighting and now there are just buildings all over the place. The remaining lands were divided into the different head of families and in the old days people had alot of kids so.. many small plots it became. The current families now live in small crammed compounds and have nowhere to go unlike in villages where people still have land, even if unused, where they can go and stretch their legs.
This is why wayan and i a couple of years ago bought 2 small plots of land in her village for family use. We knew it would be impossible to get it in a couple of years and become a serious burden for her brothers. One is being used by my in laws for small scale farming (mostly vegetables, a few chickens, ducks) and the other will eventually probably be used for a kos-kosan so we get some moneyflow for monthly costs and family expenses. Eventually either one of these will probably be used for one of the brothers when he gets married and starts a family. Without out this 'lifeline' life after retirement would become a burden. No sawah, no kebun... no where to go.. no where to work. Now they have their kebun back and can go ahead and do the daily traditional work as they did decades ago as young Balinese farmers. They can once again enjoy the daily natural cycle of work and get back to nature, in the middle of a thrashed up Denpasar. This is my way of trying to give something back and their revived spirit is all i need to feel it was worth while.
It's not easy to turn back the time and help out like this now that property prices are continuously climbing and lands are dissapearing. Who will buy a plot or house for a couple of hundred million rupiah and knock it down just to get a plot to grow vegetables on for the elderly? For this reason alone i suggest that people should hold on to their lands and not sell it off especially if you don't have alot of it. If it's a family with hectares hectares of land i've felt that either selling a little bit or leasing out abit would be a good way to infuse money into the compound. This money will enable them to rebuild of renovate their compound and houses, perhaps the family temple, pay for school, get scooters etc in the best case scenario. Worst case scenario is that the money will be taken by one greedy member of the family and he'll do what he sees fit. Even worse is if the money would be gambled away by cock-fighting. Money will come and go but land will always come to some use if it sticks with your family and future generations to come.
As a lighter ending note so that we don't all lose faith in Bali;
I think two of the main cultural fortresses Bali have installed as compared to Hawaii is the Banjar and Subak system. These two plus the Village itself are very powerful and will play a continuously important role in the future of Bali's ongoing developments. Even the grandest and well financed developers will fall to their knees if the Banjar and Village doesn't like what they are doing in their village. After all, anyone can buy land, but the Village is still a Village and there are rules to be followed, unless one care to take on some very nasty consequences.
Taking care of our environment is our form of Yadnya, sincere voluntary sacred work, towards nature
#4
Posted 02 February 2010 - 04:55 PM
A few years back our own village put into its adat a new restriction on selling land to anyone outside the village…ANYONE, including Balinese who are not members of our Banjar. While it can be done, it requires the approval of the Banjar and an exhaustion of every effort to sell it to someone already within the Banjar. It was the first and only time I exercised my voting rights as a member of our Banjar approving of this concept whole heartedly. Land leases are not under this restriction, just the sale of land.
Just about everyone in our village has had a good look at what’s happened to Kuta, Seminyak and Legian and the resounding response here is “no thanks.”
#5
Posted 03 February 2010 - 10:38 AM
#6
Posted 03 February 2010 - 12:27 PM
If I'd been asked ten years ago about opening up property purchases to foreigners, I would have been wholly in favor of it. But, that was a long time ago, and what I've seen over the past decade has led me to change my mind about this issue. Actually, I'm still in the process of working out just exactly what I think about this, but my first impulse is to be opposed for several reasons.
First off, I was just recently talking with two old Balinese friends who I hadn't seen in quite some time. After the usual inquiries about family and work, we ended up talking about changes in Bali. Land and development immediately came up because the Singaraja/Lovina area has really changed a lot in the past twenty years. Even in this sleepy little place there's construction everywhere. Both friends commented on how they had sold land to foreigners for relatively large amounts of money, and how most of that money was now gone - motorbikes, televisions, extra rooms added to the house, some developments to the family compound, a few ceremonies, and some gambling losses. Both regretted the fact that they had sold the land, but pressures from kids and other family members to get rich quick, led them to sell the land. When they want coconuts or banana leaves or any other items needed for ceremonies, they have to buy it in the market now, because they can't go to the kebun and pick it like they used to. So my first issue is that for some people living a subsistence existence, the first thing they see is a chance to get some cash and buy some things. It's a common response. I did the same when I was younger and broke and sold off some relatively valuable items because I needed and wanted money there and then.
Second, since this proposed change has been made public, I've seen a number of threads on various expat forums about get your land now before the prices go up. These are usually from folks who enjoy talking about how much money they've made building villas and selling them to other foreigners. Or, they build a villa, live there a few months a year and then rent it out to other tourists. All this is justified with the arguments about paying fair price, not forcing the Balinese to sell and providing employment (maids, gardeners, satpams, and drivers). So, the Balinese are alienated from their land, heritage and culture.
I certainly have nothing against foreigners living in Bali; how could I, as I'm here, and I enjoy it immensely. But, I do have this feeling that having foreigners come in, use their superior financial resources to tilt the playing field in their favor, and then essentially disenfranchise a future generation, is not right. It reminds me a lot of the urban renewal battles of the '60s in the U.S. Poor people pushed by financial need to sell their property to developers, and then left to look for a new home and lifestyle afterward.
But, in the end, it's not my land that I'm talking about. If Balinese decide to sell out to whomever, that's their right. The government couched their terms as making sure that they get the tax revenues from foreigners who are now not paying taxes because they've illegally purchased land through the nominee system. So where does the tax money go? My guess is that a lot of it will make it back to the Jakarta and Balinese elite, leaving the regular folks with little other than the options of hiring themselves out on their former land as maids, gardeners or drivers.
I read about a law somewhere (it was a while ago, and I've forgotten the details) where foreigners were allowed to come in and buy land with stipulations like price, residency, etc. That is, it was an anti-developer law basically. A person could come and buy a house or an apartment or whatever, if they were going to live there, but they couldn't build and then sell or rent out their property.
Well, a first post.
#7
Posted 04 February 2010 - 10:02 AM
drbruce, on 03 February 2010 - 12:27 PM, said:
Well, a first post.
Perhaps that is the answer, no investments at all, you would only be able to buy land and houses if you could show that you plan to live there for x amount of time.
#8
Posted 04 February 2010 - 10:29 AM
Here in Bali I think we would all hate the idea of high rise condos like in Bangkok, so perhaps ownership of land for primary residence only and not for any investment or income use makes sense for Bali.
Of course this won’t make those Ponzi scheming SOB’s “down south” very happy but to hell with them anyway I say…and obviously so do others (who also think they all belong in Kerobokan) and who have been writing to Jack to tell him how pleased they were with his editorial.
#9
Posted 04 February 2010 - 01:12 PM
A few years back our own village put into its adat a new restriction on selling land to anyone outside the village…ANYONE, including Balinese who are not members of our Banjar.
Wayan applauded your Banjar and Village for this. It's very strict but seeing what has happened and continues to happen with certain villages it might be the best preventive option available.
I'm glad though that it's not like this in all villages as it would unable Wayan and me owning any land outside her over-crowded village in Denpasar.
We can hardly imagine what Wayans village would be like if this was done 10 years ago. Now it's a complete mess with Indonesians and Balinese from all over the place, some renting land others bought it straight off and they can do whatever that want with it. At this point in time land is very hard to come by in her village and we even had a big ugly case of 'tanah sengketa' a few months ago between a local villager and a migrated Balinese (who is very wealthy). In the end the local villagers house was knocked down under police supervision and told to move as the wealthy one managed to get the Indonesian Law on his side. The issue was who owned the land and apparently some of their grand-parents came to a mutual agreement before they were born. Now that land is scarce and expensive the wealthy Balinese decided to void that old verbal agreement.
Dr Bruce's (Welcome!) input and experience is much welcomed, but there is a thought i can't seem to brush away. I'm interested in your views on this. Whenever the bad effects of property developments are directed towards foreigners as the main contributors i cannot help to think, since i've lived in Denpasar for many years, that this is not entirely true. I've seen the devastating effects from local developments all around the southern parts of Bali. With local developments in don't just mean Balinese but Indonesian developments. If we look in the rural areas of Denpasar you won't find many foreigners building or investing but still the villages around there are flooded with the same or even worse issues. The main difference is that foreigners are looking for those natural areas 'with a view' while many Indonesian developers look for the rural or areas along new roads for business opportunities. A new road opens up and bam bam bam.. you have Ruko's, ugly Warehouses, ethnic wood sales, Pertamina stations.. who is investing and building all of that in the once green fields and obstructing the views along the roads for years to come?
I put them both on a scale an weigh all the developments i know have some sort of foreign investment or purpose against the Indonesian developments and i gotta say i like many of the foreign developments, but, rarely do i see something beautiful or interesting coming out of an Indonesian developer or investor. I can't help to think that the Indonesian developments are more of a burden in Bali than the foreign invested developments, though at times they do go hand in hand. I never forget the pressure coming from 160 million population Java with many many fierce investors and developers keeping a good eye on Bali.
Balinese will still get alienated from their land, heritage and culture even without foreign involvement. I think even more so from Indonesian or Balinese investors and developers who are looking for a quick buck and making those fake 'green' development concepts for the upper middle-class citizen. What i'm saying is that even if foreigners wouldn't be in the equation, the rich Indonesian investors and developers will still be and they will do exactly what the foreigner investors are doing with possibly an even worse outcome.
After the first bombing there was a big 'shift' in ownerships, especially around Kuta, and who became the 'new boss'. Alot of foreigners hit the road and left Bali after the tragic bombings while Indonesian investors decided 'this is an opportunity'. A few years later i see many of the places that had a foreign managers or owners now have people from Jakarta or Surabaya in those positions.
I don't know. It could be my ego speaking here. I'm not all that against developments, especially if it has interesting and mixed modern / traditional architecture and brings something new to meet the eye. I'd be disappointed if Wayan and i couldn't invest or buy land in certain areas, but know it might be better for that village areas if they didn't sell it to non-villagers. Another side of me wants to have mutual rights since Bali is my home and has been for many years, but considering i'm not yet an Indonesian citizen this is not justified. It would be nice though if there would be at least less property restrictions for people who are either married with an Indonesian citizen or are Kitas holders, in other words, a Permanent Resident.
I think the example below mentioned by Dr Bruce is a good one that would suit permanent residents perfectly. Some of us are simply looking for a permanent home for the family, though, i'd say many are at the same time looking for the opportunity to make an investment.
A person could come and buy a house or an apartment or whatever, if they were going to live there, but they couldn't build and then sell or rent out their property.
What makes me abit confused when we talk about Alienation from land, heritage and culture is the concept that foreigners are doing this. I think there are many factors to be considered not just foreigners. There are many internal factors between non-Balinese Indonesians and Balinese... and even between Balinese and Balinese that affect these problems. Even social or 'status' issues will affect the future of Bali in this respect. I've spoken to many Balinese who no longer speak Balinese coz 'it's not cool' anymore. They want to be 'gaul' like in Java. Some Balinese are even brought up with Indonesian instead of Balinese so they don't know they're own language. The modern or 'trendy' Bali is already showing a few ugly side-effects and is this really something foreigners can take the blame for. I hear lots of discussions, internal talks, about Balinese not taking their heritage serious and keeping it alive. There are many signs of the changes. Look at Jln.Tek Umar around Galungan and you will find One or perhaps Two Penjors sticking out. Indonesian investors and developers are not here to support the Balinese culture and heritage. They are here to make money, period. Some Balinese don't even want to support the Balinese heritage and just want to 'move foward'.
This cycle of Indonesian developers, investors, business men, foreign investors and the Balinese who are not seeing the diminishing cultural activities as urgent will take it's toll on Bali.
I don't see how only one of the contributors to this cycle is to take the blame. Restrictions on foreign ownership, fine with me, but there has to be some room for serious introspection and taking a good look at what their own citizens are doing to Bali as well.
Taking care of our environment is our form of Yadnya, sincere voluntary sacred work, towards nature
#10
Posted 04 February 2010 - 03:38 PM
Can it be changed? Sure,there are other cases where development has been halted or severely limited by decisive government and community action. (Point of disclosure, I tend to be on the anti-development side of these kinds of issues most of the time. I used to teach a class on Social Inequality that was decidedly anti-progress and anti-development.) It can be done here. And I hope that it is soon.
If we're talking scale, I'm sure that the foreign side of the equation is nowhere near the local(read Indonesian) side. But, the post was about foreigners so that was what I was responding to. And,I'm much more comfortable with discussing the role of foreigners than I am with discussing the role of the Balinese or other Indonesians. As you mentioned, and I think we have all come across this, the complexities surrounding land here extend far beyond those issues that befuddle us Westerners. I've been witness to intense disagreements almost to the point of blows between relatives over who is inheriting the land, how it can be used and by whom etc. As land becomes more of a scarce commodity, those kinds of situations are bound to increase.
If we go back through the literature, we can find concerns about the Balinese losing their culture dating back hundreds of years. The Balinese have always been masters at adapting to the situation. I hope that that ability continues to hold true.
As for me, I enjoy reminding our fellow expats that their luxury villas with the view and the pool are ultimately displacing someone who can't go someplace else. I'll go back, and boy have I been criticized for saying this before, to what I said yesterday, I can agree with limited rights to own property based on proof of residency as a requirement. And no pools. That's my other big bias. There's a world wide water crisis, and that includes this island, and folks keep building pools. I know people who live on the ocean and they have pools 10 meters from the ocean. Is this green? Hmm. Think that I'll stop here. At least you know my two biases, so you can factor those in to whatever else I say around here.
#11
Posted 04 February 2010 - 05:03 PM
In my recent post where I described the process of selling land within our Banjar I didn’t mean to make it sound like someone like your wife, a native Balinese, would be automatically excluded by our Banjar, as that is not the case. What would be expected though is a full understanding of her intentions in buying land within our Banjar…i.e. is it for profit and business, or is it for residency? The reason for this concern has little to do with her (or any other Balinese), nor is it about the money, but rather who would reside in that property if the land was for development as rental property.
Our Banjar would never consider to deny the rights of any Balinese to live wherever in Bali they chose, but, if the intentions are to lease the land to someone else, then they are interested because of who else might live there, and I think that concern is understandable if not outright justifiable. In our Banjar those rights are equally shared by both men and woman although as you well know, women have no vote in the village adat. However, woe to the husband who voted the wrong way!
You wrote:
“I can't help to think that the Indonesian developments are more of a burden in Bali than the foreign invested developments, though at times they do go hand in hand. I never forget the pressure coming from 160 million population Java with many many fierce investors and developers keeping a good eye on Bali.”
There is no denying that. For me personally, I tend to ignore the elephant in the room if said elephant is Indonesian. My wife and brother in law (as a MOP) can take on these issues, but even if I took citizenship here, I’d likely side step that issue only because I’ll never be Balinese even if I became an Indonesian citizen. For me the bottom line is that I have no “birth rights” here. My wife, her family, and our three boys do, and so it’s up to them to deal with these inter-Indonesian issues.
You also wrote,
“Balinese will still get alienated from their land, heritage and culture even without foreign involvement.”
I’m not so sure about that, however, it could easily be effectively argued that in some places in Bali this has already happened, viz with Wayan’s own village and countless others in southern Bali. I can only judge from what I’ve learned over the years living in one specific, and very traditional village. We are very lucky in that we were afforded the vision of seeing this coming, and its results if we just sit back. If our village was somewhere else in Bali, who can say we wouldn’t already be in the situation that Wayan’s village already is? Surely, we would. But for us, knowing what we know now, seeing what is happening elsewhere in Bali, this isn’t going to happen, and of that I have no doubts whatsoever.
BTW, for anyone who is following this discussion and yearning to learn more about the Balinese perspective on this and other modern world issues effecting Bali, there is an excellent book which is a compilation of essays written by prominent Balinese scholars titled Bali, Living in Two Worlds, edited by the pre-eminent scholar, Urs Ramseyer. IMHO, it should be mandatory reading before anyone gets a visa longer than a VOA.
This is a great discussion, and as both you gentlemen are very well aware, it is one that happens daily amongst our Balinese families and friends.
#12
Posted 04 February 2010 - 05:17 PM
http://www.cyberbali.com/
This forum is very fortunate to have this esteemed scholar and author on board. His experience and knowledge gained over a lifetime of educating here in Indonesia is unparalleled, and his willingness to share is typical of the hospitality we foreigners have grown to love best about the people of Indonesia.
#13
Posted 19 March 2010 - 04:42 PM
Ubudian, on 04 February 2010 - 05:17 PM, said:
http://www.cyberbali.com/
This forum is very fortunate to have this esteemed scholar and author on board. His experience and knowledge gained over a lifetime of educating here in Indonesia is unparalleled, and his willingness to share is typical of the hospitality we foreigners have grown to love best about the people of Indonesia.
Thanks for the info. Ok. I know I've been MIA from HIB the last 2 months and I'm not sure when you and Dr. Bruce jumped on board with HIB but thank you. I've enjoying reading the input from both of you and as always from Tompa as well.
Tompa-I noticed the useful links today when I logged in that you added on the left side bar. Very nice job Tompa!
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