Hak Guna Bangunan: The Right to Build Explained for Foreign Developers
Hak Guna Bangunan (HGB) is the statutory land right that allows a PT PMA company to hold, build on, and use land in Indonesia for a defined term. It is the mechanism through which PT Dream Paradise Serenity holds the Sidemen Serenity Estate parcels, and it is the title type that every foreign-owned company operating in Indonesian real estate uses. Understanding it removes the most common source of uncertainty for foreign investors assessing the Sidemen opportunity.
HGB Term Structure
| Period | Duration | Notes |
|---|---|---|
| Initial HGB term | 30 years from date of grant | Standard initial term for PT PMA entities in tourism sector |
| First extension | Up to 20 additional years | Applied for no later than 2 years before initial term expires |
| Second renewal (Omnibus Law, PP 18/2021) | Further 30-year term | Available for compliant PT PMA entities in tourism sector subject to government discretion |
| Conservative financial modelling basis | 50 years (initial 30 + first extension 20) | Second 30-year renewal treated as an option, not a certainty |
| Maximum potential tenure | 80 years | Initial + first extension + second renewal |
The Conversion Process From Hak Milik to HGB
The Sidemen Serenity Estate parcels are currently held under Hak Milik (freehold) certificates by the Indonesian landowners. Converting these to HGB in the name of PT Dream Paradise Serenity involves the following steps:
- Execution of a sale and purchase agreement (Akta Jual Beli, AJB) before a registered Land Deed Official (PPAT)
- Payment of land and building acquisition duty (BPHTB) at 5 per cent of the transaction value
- Lodgement of HGB application at the Karangasem BPN (National Land Agency) office
- Issuance of HGB certificate typically 30 to 90 days from submission in Karangasem
- Total conversion cost estimate: 7 to 9 per cent of the gross land purchase price, covering BPHTB, PPAT fees, BPN administrative charges, and legal oversight
What HGB Does and Does Not Provide
| Aspect | HGB Provides | HGB Does Not Provide |
|---|---|---|
| Right to build | Full authority to construct and use buildings on the land for the HGB term | Ownership of the underlying land in perpetuity |
| Transferability | HGB can be transferred, mortgaged, and used as security for financing | The land itself cannot be sold to a foreign entity outside of HGB |
| Renewal certainty | First extension is available by right subject to compliance | Second 30-year renewal is discretionary not guaranteed |
| Operational security | 50-year tenure (conservative basis) provides full investment horizon security | Tenure is not in perpetuity must be monitored and renewed |
Discuss Title and Tenure With the Project Team
The specific HGB conversion timeline and cost for the Sidemen Serenity parcels is addressed in the Developer Portal feasibility pack.