PMA’s (Penanaman Modal Asing) Foreign Direct Investment Companies & Villas

Up market luxury Bali villa sales agents ply the PMA (Penanaman Modal Asing) or Foreign Direct Investment company route. They set wealthy foreigners up with PMA’s in their names and manage these companies and their villas for them. PMA’s can enjoy Hak Pakai rights over a property, true, but the way villas are sold and PMA’s are applied for, it is not legally possible for someone to sell another person a villa (or have them invest in it individually), even if that villa is not built yet, on the basis of a PMA.

The reason for this is that foreigners have to apply for Indonesian PMA’s and the procedures are very involved; critically because you have to submit investment and trading plans to The Indonesian Investment Coordinating Board (BKPM). If you are buying a villa, even if the villa has not been built yet, you are buying someone else’s preexisting investment / operational plans. Also, most of the villa sales agents conscript their customers into their management services for property maintenance, cleaning, services, etc. which means the only thing left to do by the foreigner is stay at the property and enjoy a share of any rental income; these are not grounds for a lawfully made PMA application of course. Although BKPM’s can be bribed to overlook certain facts like any other Indonesian government office, the PMA route is fraught with risk as a) the “investor” (villa buyer) is generally beholden to the villa sales and management company, plus are reliant on their continued "good standing" with local officials, b) PMA’s are initially licensed for just 3 years, c) PMA’s bring “investors” within the jurisdiction of the Indonesian tax man on their worldwide earnings as obtaining a KITAS for your key foreigner work permits is a prerequisite and within the initial 3 year term.

PMA's are therefore not an option unless you are the original project manager from initial planning, to land acquisition, to building permits, to the actual construction, to the hiring of staff, to the obtaining of operational permits and more. The only realistic legal way for a foreigner to control a villa in Bali is described here: ABN Method

In addition, be warned; PMA owned villas are also flags to the local corrupt authorities that the foreign “owner” / investor in that villa is very wealthy.