HGB (Construction Right) in Indonesia | Deadline, renewal procedures, and precautions
in indonesiaHGB (Hak Guna Bangunan: Construction Right)Do you know of its existence?
For companies that own and operate their own factories and bases,
It is necessary to accurately understand the expiry date of the HGB of real estate owned and manage it appropriately.
In this column, we will discuss points to note regarding the expiration date of HGB, which are often overlooked in practice.
We will also explain the specific renewal procedure flow and costs.
1. What is HGB?
What is HGB in Indonesia?Hak Guna Bangunan (construction rights)It is an abbreviation of
The purpose and issuing organization of HGB are as follows.
| name | HGB: Hak Guna Bangunan (construction rights) |
| Purpose | The right to construct and own buildings on the land of another person (the state or the owner). |
| Target audience | Indonesian citizens and corporations established in Indonesia (including PT PMA (foreign capital companies)) = Foreigners (individuals) are not included |
| use | Necessary when constructing factories, office buildings, commercial facilities, etc. |
| issuing authority | BPN (National Land Agency) |
Differences from HP (Hak Pakai: usage rights)
| name | HP: Hak Pakai (Usage rights) |
| Purpose | The right to "use" or "earn revenue" from land owned by the state or others. |
| Target audience | Indonesian citizen Indonesian corporation (including PT PMA (foreign company)) Foreigners (individuals) with Indonesian ITAS (temporary residence permit (work visa, etc.)) or ITAP (permanent residence) Representative office of a foreign corporation etc. can be obtained. |
| use | Mainly purchases of residential housing (apartments and detached houses). |
| issuing authority | BPN (National Land Agency) |
HP (right of use) is mainly used by individuals to acquire real estate (with expiration date)This right is used when
On the other hand,HGB (right to build)in principleAcquired land for a factory by a Japanese company (corporate) expanding into an industrial park etc.This right is used when
2. Pay attention to the HGB expiry date
The expiry date of HGB in Indonesia is determined by law.“30 years in principle, renewable every 20 years thereafter”It is stipulated that
However, there are some cases where the starting date of ``30 years'' is mistakenly assumed to be ``the date when the company purchased the land.''
In practice, not from the time of purchase,
30 years since the industrial park company created the "original HGB" before divisionThere are many cases where it has been calculated as
thereforeIt is possible that several to ten years have already passed by the time you purchase the land.There is a risk of unexpected expiration.
HGB extension procedure
Applications for extension of HGB in Indonesia started two years ago.
However, taking into consideration the preparation period for the necessary materials,"3 years before the due date"You need to start preparing for the procedure.
From the perspective of business continuity, we strongly recommend that you immediately check the expiration date written on your HGB certificate.
3. Calculation formula for public fees for HGB renewal
Based on current laws and regulations (Cabinet Order No. 128 of 2015),
The official fee for HGB extension to be paid to BPN (National Land Agency) is calculated using the following formula:
[Formula for calculating HGB extension fee (public expense)]
(Real estate tax valuation determined by the government on January 1st every year [NJOP] / ㎡) × Land area (㎡) × 0.2% + 100,000 rupiah
[Estimation example]
Real estate tax assessed value [NJOP] / ㎡: 3,000,000 rupiah/㎡
Land area (㎡): 1 hectare (10,000㎡)
3,000,000 × 10,000 × 0.2% + 100,000 = Approx. 60,000,000 rupiah
For factories and companies that own vast premises, public fees alone are a huge expense.
It is essential to incorporate this into your financing plan in advance with an eye to the renewal period.
*The above amount is only the official fee paid to BPN (National Land Agency).
Fees paid to the PPAT (land registry preparer, usually a notary public) are not included.
If the renewal deadline is approaching, we recommend that you promptly consult the notary in charge for an estimate of the total cost.
4. HGB renewal procedure flow and required period
From the start to the completion of the renewal procedure,Approximately 8 monthsThis is a long-term procedure that requires a lot of effort.
The standard procedure flow when supported by our company and a notary public is as follows.
[Step 1: Document preparation and initial examination] (Estimated time: 2-3 months from start)
| 1 | Payment of PBB (land and buildings tax) | Confirmation of payment for the relevant year |
| 2 | Advance confirmation | Confirmation of required documents at BPN (National Land Agency) (conducted by our company/notary public) |
| 3 | Data preparation | Providing necessary materials from companies |
| 4 | Application made | Submit materials to BPN (National Land Agency) through our company or a notary public |
| 5 | examination | Verification by BPN (National Land Agency) and submission of additional documents |
| 6 | Billing | Billing code for SPS (public fees, document examination) issued by BPN (National Land Agency) |
| 7 | Fee payment | 1st payment of SPS (public fee, document examination portion) |
[Second stage: On-site inspection] (Approximately 5 to 6 months from the start)
| 1 | 1st on-site inspection (Periksa Lapangan) | Confirmation of consistency between land area stated in HGB and actual situation |
| 2 | 2nd on-site inspection | Reconfirmation work by senior executives |
| 3 | Billing | BPN (National Land Agency) issues billing code for SPS (public fees, on-site inspection) |
| 4 | Fee payment | 2nd SPS payment |
[Stage 3: Final approval and certificate issuance] (Estimated completion time: approximately 8 months from start)
| 1 | Issuance of recommendation letter | Issuance of recommendation letter from BPN (National Land Agency) |
| 2 | Issuance of decision | Issuance of SK (Decision Letter) by BPN (National Land Agency) (Head Office or Regional Headquarters) |
| 3 | Billing | Billing code for SPS (public fee, final examination) issued by BPN (National Land Agency) |
| 4 | Fee payment | 3rd Payment of SPS (public fee, final examination portion) |
| 5 | Procedure completed | Issuance of HGB with new term (valid for 20 years) |
5. At the end
HGB deadline management is an important compliance matter related to the foundation of business continuity in Indonesia.
In order to prevent unexpected situations from occurring, we would like to ask you to once again check the status of your real estate rights.
Keystone Consulting Group also provides support for legal and administrative procedures by leveraging our network of experts.
If you have any concerns or inquiries regarding this matter, please contact us.herePlease contact us from.
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