Introduction
Indonesia presents huge potential for foreign investors — from property and infrastructure to digital startups. But many international investors unknowingly make legal missteps that cost them time, money, and trust.
In this article, we reveal the top 5 legal mistakes foreign investors make in Indonesia — and more importantly, how to avoid them with expert legal support.
1. Not Understanding Ownership Restrictions
The Mistake:
Foreigners cannot directly own freehold land (Hak Milik) in Indonesia. Many investors jump into deals without fully understanding the property ownership laws.
The Fix:
Work with a trusted legal advisor to structure your investment properly using Hak Pakai, HGB (Right to Build), or by forming a PT PMA (foreign-owned company) — all legal and secure alternatives.
2. Incomplete or Unverified Legal Documents
The Mistake:
Skipping due diligence leads to buying land or assets with hidden disputes, overlapping ownership claims, or incomplete permits.
The Fix:
Always conduct full legal due diligence before signing anything. Use certified notaries and consult lawyers to verify property titles, zoning status, tax records, and permit history.
3. Delaying Compliance & Licensing
The Mistake:
Some investors start operations or development without proper business licenses, which can result in hefty fines, shutdowns, or legal disputes.
The Fix:
Ensure you register your entity (e.g., PT or PMA), obtain a NIB (Business ID), and secure all sectoral permits (location, building, environmental, etc.) before operating.
4. Using Unregulated Nominee Agreements
The Mistake:
Entering into informal nominee arrangements with local individuals to bypass foreign ownership limits can be risky and unenforceable under law.
The Fix:
Use law-firm-assisted nominee structures or licensed corporate nominees with contracts that are enforceable, legal, and protective of your investment.
5. Ignoring Tax & Reporting Obligations
The Mistake:
Neglecting tax registration, reporting, and compliance can result in back taxes, penalties, or even revocation of licenses.
The Fix:
Register for a NPWP (Tax ID), stay on top of BPHTB (Property Transfer Tax), and engage a legal tax consultant to manage your monthly and annual tax reporting.
✅ How Wyndham-Alliance Can Help
With over 25 years of legal experience in Indonesia, Wyndham-Alliance assists foreign investors with:
- Entity setup & legal structuring
- Property purchase & due diligence
- Secure nominee arrangements
- Licensing, permits & compliance
- Tax advisory & audit support