Saudi investors showing interest in Indonesia’s property and real estate - Investment Coordinating Board official

JAKARTA – Saudi Arabian businesses are interested to invest in property and real estate in Indonesia, Cahyo Purnomo, Marketing Officer Middle East at Indonesia Investment Coordinating Board (BKPM) told Salaam Gateway.

Earlier this month the BKPM hosted a delegation of around 30 Saudi business leaders from the Makkah Chamber. This was the Chamber’s first official visit to Indonesia.

According to Purnomo, the group asked questions about foreigners’ rights to buy property in Indonesia, and the process of getting work permits and visas for business matters.

Among the companies that showed an appetite to invest were those in construction, decoration, building materials, heavy equipment, hotel and tourism. The companies include Modern Building Contracting Est, Afaaq Al Hadeel Est, Waleed Saleh Alhalabi Co, Tayseer Shalabi Est, A’mal & Asfar Company, Pleasant Homes Co, Ufuq Alam, Nawaf Alyd Fahid Alsawaf Co, and Ghaziat Co.

“They are very interested to invest in property and real estate such as hotels. One of the [members of the] delegation directly asked for feasibility studies especially for Special Economic Zones. [Investment] looks promising despite their first visit to us,” Purnomo told Salaam Gateway.

REAL ESTATE OWNERSHIP

According to Indonesia’s Government Regulation No. 103 from December 2015 on House Ownership of Foreigners Residing in Indonesia, foreigners are allowed to buy landed houses or apartments only in terms of the right of use instead of the right of ownership.

The permit will be valid for an initial 30 years. It can be extended by another 30 years and thereafter for another 20 years.

Foreigners who purchase property in Indonesia are not allowed to rent them out. They may transfer their permit within a year of leaving the country.

INVESTING IN HOSPITALITY SECTOR

In February the Indonesian government announced sweeping changes planned for its so-called “Negative Investment List” but confirmation on those plans is pending.

The plans cover 100 percent foreign ownership in 25 sectors including tourism, up to 67 percent foreign ownership in construction with contract values above 10 billion rupiah ($752,000), and 51 percent foreign ownership in natural tourism management.

However, foreign ownership will still not be allowed in small- and medium-sized enterprises (SMEs) and businesses with investment values of less than 10 billion rupiah.

FDI

Investment commitment from Saudi Arabia reached 1.6 trillion rupiah last year, according to BKPM. The Middle East’s largest economy was the twenty-second largest investor to the country.

Total investment from Saudi Arabia in the last five years (2010-2015) was $34 million. This was 0.02 percent of total foreign direct investment (FDI) of $146.8 billion in the same period. This figure excludes oil and gas, banking, non-bank financial institutions, insurance, leasing and home industry sectors.

($1= 13,300 rupiah)

© SalaamGateway.com 2016