Anteya Research
What Is an HGB in Bali? Right to Build Explained for Foreign Companies (2026)
May 13, 2026
What Is an HGB in Bali?
HGB stands for Hak Guna Bangunan, the Right to Build. It is a certificated land title that lets the holder build and own structures on a plot of land for a fixed term that can be extended and renewed. Foreign individuals cannot hold HGB personally, but a foreign-owned Indonesian company (a PT PMA) can. That is why HGB matters to nearly every overseas investor who wants something closer to ownership than a rental contract.
Land-title questions come up early in our buyer conversations. Many people arrive believing freehold is available to them directly, then discover the real structure is HGB held through a company. This entry explains what the title is, who can hold it, and how it sits next to the other titles named on a Bali deal.
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Term length and renewal
Under Indonesian agrarian law and the 2021 investment regulations, an HGB is granted for an initial term of up to 30 years. Regulation provides for an extension of up to 20 years and a further renewal of up to 30 years after that, so the full arc can reach roughly 80 years across the cycle. These steps are administrative and contractual, not automatic: each extension must be applied for, and the land must stay in active use for its declared purpose.
"How many years of leasehold are you expecting?"
Buyer inquiry, Anteya CRM, 2025
The certificate names the grant date and the term; read those first.
Who can hold it, and why foreigners use it
A PT PMA is a limited-liability Indonesian company with foreign shareholding. Because the company is an Indonesian legal person, it can hold HGB in its own name, and the foreign owner controls the asset through the company. This is the standard route for foreigners who want to build, operate, and rent out property with a registered title rather than a lease.
Anteya observation: A growing share of buyers now name HGB explicitly when they ask which title a unit carries, rather than lumping every non-freehold structure together as "leasehold." The vocabulary is getting sharper on the buyer side.
"What land title is each villa sold under (Hak Pakai, HGB, or leasehold)?"
Buyer inquiry, Anteya CRM, 2025
A single project can mix titles across plots, so ask per unit.
HGB vs SHM vs Hak Pakai vs leasehold
Four terms get used loosely, so here is the short separation:
- SHM (Hak Milik, freehold): the strongest Indonesian title, reserved for Indonesian citizens. Indonesian agrarian law does not recognise direct freehold ownership by foreigners.
- HGB (Right to Build): held by an Indonesian company, including a PT PMA. Fixed term, with extension and renewal available on application.
- Hak Pakai (Right to Use): can be held by a qualifying foreign individual who holds a KITAS, usually for a residence they occupy. Also term-based and renewable.
- Leasehold (Hak Sewa): a contractual rental of land or a building for an agreed number of years, typically 25 to 30 with a contractual extension right. It is a contract, not a registered title.
For the deeper trade-offs, see our guide on leasehold versus freehold in Bali and the walkthrough of foreign ownership routes: KITAS, PT PMA and Hak Pakai.
"Is it possible freehold?"
Buyer inquiry, Anteya CRM, 2025
The honest answer is that a foreign buyer does not take freehold directly. The workable equivalents are HGB through a company or Hak Pakai in your own name.
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Costs and obligations of the PT PMA route
Holding HGB through a company is not free of upkeep. A PT PMA carries an investment-plan commitment, annual reporting, corporate tax filing, and bookkeeping. The building must be used for the company's declared business activity, and HGB land that sits unused can be challenged. Budget for a notaris, an accountant, and yearly compliance, not just the purchase price. Check Indonesia's investment authority (BKPM) for the current thresholds and reporting rules, since they are revised periodically.
What to check before you sign
Read the certificate, not the brochure. Confirm the title type in writing for each specific unit, the grant date, the years remaining, and the extension and renewal position. Confirm whether the land under a project is HGB, Hak Pakai, or leased, and that the zoning allows the use you intend, especially for short-term rental. Confirm who holds the title today. A licensed Indonesian notaris runs these checks as a matter of course, and their sign-off is worth more than any verbal assurance.
"If leasehold, what is the exact lease term, extension rights, and current years remaining?"
Buyer inquiry, Anteya CRM, 2025
A later guide will cover the PT PMA setup and running costs in full .
FAQ
What does HGB stand for in Bali property?
HGB stands for Hak Guna Bangunan, the Right to Build. It is a certificated Indonesian land title that lets the holder construct and own buildings on a plot for a fixed, extendable term. Foreigners use it to hold Bali property through a company.
Can a foreigner own HGB in Bali?
Not personally. Indonesian agrarian law does not recognise direct HGB ownership by foreign individuals. A foreigner controls it through a PT PMA, a foreign-owned Indonesian company that holds the title in its own name and that the foreigner owns and controls.
How long does an HGB last?
An HGB is granted for an initial term of up to 30 years, with provision for an extension of up to 20 years and a further renewal of up to 30 years. Each step is applied for, not automatic, and the land must stay in active use.
What is the difference between HGB and freehold (SHM)?
SHM (Hak Milik) is full freehold, reserved for Indonesian citizens; foreigners cannot hold it directly. HGB is a term-based right to build that an Indonesian company, including a PT PMA, can hold. It is the practical route for a foreign investor who wants a registered title rather than a lease.
Is HGB better than leasehold?
They are different tools. Leasehold is a rental contract for a set number of years; HGB is a registered title held through a company, with extension and renewal available on application. HGB can offer a longer horizon and stronger position, but it adds company setup and annual compliance costs.
Anteya Research is the editorial function of Anteya Real Estate, a Bali-based investment property advisory. This article reflects patterns across thousands of buyer conversations logged in the Anteya CRM between 2023 and 2026, supplemented by first-hand observations from our Bali-based team.
This article is general information, not legal advice. Indonesian real-estate rules change and individual situations vary; consult a licensed Indonesian notaris (notary) for your specific purchase.
