Bali Property in 2026: Perda No. 4 of 2026, the Nominee Prohibition, and the Compliant Investment Structure

Bali Policy Update 2026  |  Article 4 of 4

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Article 1 in this series sets out the full regulatory landscape: the Governor’s letter, the categorical OSS restriction confirmed by TraceWorthy’s own testing, the DPMPTSP’s formal proposal to BKPM, the Ministry of Investment’s four proposed structural interventions, and the KBLI 2025 migration deadline. Article 2 covers the compliance obligations of existing PT PMA holders. Article 3 addresses new PT PMA formation under current conditions.

Nominee land arrangements in Bali were prohibited under Indonesian national law before Bali Provincial Regulation (Peraturan Daerah, or Perda) No. 4 of 2026 on the Control of Productive Land Conversion and the Prohibition of Nominee Land Ownership Transfer, signed by Governor Wayan Koster on 24 February 2026, came into force. Under Article 26(2) of the Basic Agrarian Law (Undang-Undang Pokok Agraria, or UUPA, Law No. 5 of 1960 on Basic Agrarian Principles), any arrangement through which an Indonesian citizen carries land title on behalf of a foreign national has been null and void since 1960. The person named on the title certificate has always been the legal owner. The foreign investor has never carried anything enforceable in an Indonesian court.

Perda No. 4/2026 has not created a new prohibition. It has added criminal prosecution to what was already civil nullity. It adds that exposure for both parties to the arrangement. It adds it explicitly for intermediaries and facilitators. It has been enacted within an enforcement environment that makes the probability of detection materially higher than it was two years ago.

Three categories of foreign property interest in Bali require separate assessment under the current framework.

• The first is a nominee arrangement: land title carried in an Indonesian citizen’s name on behalf of a foreign national. This has been a legal nullity since 1960 and now carries criminal exposure under Perda No. 4/2026.
• The second is a PT PMA (Perseroan Terbatas Penanaman Modal Asing, or Foreign-Owned Limited Liability Company) with Hak Guna Bangunan (the Right to Build, or HGB) registered in the company’s name, with appropriate KBLI (Klasifikasi Baku Lapangan Usaha Indonesia, or Indonesian Standard Industrial Classification) codes and genuine business activity. This is the legal structure for foreign commercial property interests in Bali and is not targeted by Perda No. 4/2026.
• The third is a PT PMA whose own compliance position is compromised through mismatched KBLI codes, operating in a sector from which PT PMAs are excluded, or carrying a structure on land that does not support its registered activities. These are distinct risks and are addressed separately below.

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What the Basic Agrarian Law Already Prohibited

Indonesian law has reserved Hak Milik (freehold ownership) for Indonesian citizens since the Basic Agrarian Law came into force in 1960. Article 21(1) of that law provides that only Indonesian citizens may carry Hak Milik. Article 26(2) provides that any transfer of Hak Milik intended to circumvent those foreign ownership restrictions is null and void by operation of law. No side agreement, power of attorney, notarised acknowledgement of beneficial ownership, or contractual arrangement between the foreign national and the nominee changes this position.

A nominee agreement establishes no enforceable property right for the foreign investor. Where the nominee dies, their heirs inherit the land. Where the nominee disputes the arrangement, Indonesian courts will not enforce the foreigner’s claim to title. Where the nominee sells, mortgages, or encumbers the land, the transaction is between the nominee and the third party; the foreign investor has no standing to prevent it or recover the proceeds.

Courts have increasingly ruled that nominee-carried land reverts to the nominee or to the state where the arrangement is discovered, leaving the foreign investor without legal recourse and without compensation. This outcome is the consistent position of Indonesian courts interpreting UUPA Article 26(2). No change to enforcement policy or provincial regulation is required to produce it.

What Perda No. 4 of 2026 Adds

Perda No. 4/2026 operates across two distinct provisions named separately in its full title.

The first provision addresses productive land conversion. Land classified as LP2B (Lahan Pertanian Pangan Berkelanjutan, Sustainable Food Agricultural Land) and other productive agricultural land is protected from conversion to commercial use. The penalties referenced by this provision draw on Law No. 41 of 2009 on the Protection of Sustainable Food Agricultural Land (Undang-Undang Nomor 41 Tahun 2009 tentang Perlindungan Lahan Pertanian Pangan Berkelanjutan): imprisonment of up to five (5) years and a fine of IDR 1,000,000,000 (one billion Indonesian Rupiah) for illegal conversion of protected agricultural land. Law No. 26 of 2007 on Spatial Planning (Undang-Undang Nomor 26 Tahun 2007 tentang Penataan Ruang) is also referenced for spatial planning violations: imprisonment of up to three (3) years and a fine of IDR 500,000,000 (five hundred million Indonesian Rupiah).

The second provision addresses nominee land ownership transfers. The prohibition draws on the pre-existing UUPA framework, adds provincial enforcement authority, and introduces criminal prosecution for nominee arrangements. Where document manipulation or ownership fraud is involved, the provisions of the Indonesian Criminal Code (Kitab Undang-Undang Hukum Pidana, or KUHP) also apply. Provincial regulations cannot themselves create new criminal offences under Indonesia’s legal hierarchy. Perda No. 4/2026 references and enforces the applicable national criminal law instruments.

Administrative sanctions accompany the criminal provisions: temporary suspension of business operations and construction, licence revocation, and mandatory demolition of non-compliant structures. Civil servants found to have assisted nominee arrangements face disciplinary proceedings and potential abuse-of-authority charges.

Who Carries Exposure Under Perda No. 4 of 2026

Three classes of person carry explicit exposure under the Perda.

1. The Indonesian citizen who carries land title as a nominee on behalf of a foreign national is a party to a null and void arrangement that now also carries criminal prosecution risk. The nominee’s position as legal titleholder provides no protection; the arrangement itself generates the exposure.
   
2. The foreign national who is the beneficial owner behind the nominee carries nothing enforceable and now faces criminal investigation as the party who procured the arrangement.
   
3. Intermediaries and facilitators are explicitly named as exposure carriers under the Perda. Any person who participated in structuring, documenting, or enabling a nominee arrangement in Bali falls within the Perda’s enforcement scope. The professional role provides no exemption.

The enforcement priorities since the Perda’s enactment have focused on nominee arrangements involving productive and agricultural land, particularly in Tabanan and Gianyar, which form the principal zones of the Subak irrigation system recognised as a UNESCO World Cultural Heritage site. This enforcement focus does not limit the Perda’s operative scope. For nominee arrangements on non-productive land, the KUHP fraud and document manipulation provisions apply independently of the agricultural land conversion penalties.

The PT PMA and HGB: The Structure Perda No. 4/2026 Does Not Target

A PT PMA with HGB title registered in the company’s name at the Ministry of Agrarian Affairs and Spatial Planning / National Land Agency (Kementerian Agraria dan Tata Ruang / Badan Pertanahan Nasional, or ATR/BPN), operating with an appropriate KBLI code that accurately reflects its actual business activities, with genuine investment substantiated through LKPM (Laporan Kegiatan Penanaman Modal, or Investment Activity Report) reporting, is the legal structure provided by Indonesian law for foreign commercial property interests. Perda No. 4/2026 does not target this structure.

Where land is currently carried under Hak Milik, acquisition by a PT PMA requires conversion of the title from Hak Milik to HGB. This conversion is conducted through the ATR/BPN process and must be completed before the PT PMA records its HGB title in the land certificate.

Where PT PMAs Carry Their Own Compliance Failures

A PT PMA with legitimate HGB is not a nominee arrangement. It is also not automatically compliant. Three separate compliance failures affecting PT PMAs with Bali property interests arise independently of the Perda No. 4/2026 question.

The first is the KBLI classification mismatch. KBLI 68111 under KBLI 2020 authorised long-term real estate operations. Under Central Statistics Agency (Badan Pusat Statistik) Regulation No. 7 of 2025 on the Indonesian Standard Industrial Classification 2025, that code has been refined: KBLI 68111 now specifically covers residential development for sale, while long-term residential rental is reclassified to KBLI 68112. A PT PMA whose classification no longer matches its actual operational activity following the KBLI 2025 transition faces the substance-based compliance risk described in Article 2, and the KBLI 2025 migration deadline of 18 June 2026 requires that transition to be completed.

The second is the short-term accommodation prohibition. Short-term tourist accommodation in Indonesia, including villas, guesthouses, and similar daily-rental categories, is reserved for Indonesian UMKM (Usaha Mikro, Kecil, dan Menengah, or Micro, Small, and Medium Enterprises) under Presidential Regulation No. 49 of 2021 on Amendments to Presidential Regulation No. 10 of 2021 on Investment Business Fields. PT PMAs are excluded from operating short-term tourist accommodation other than hotels. A PT PMA generating income from daily villa rentals is operating in a sector from which PT PMA investment is prohibited, regardless of whether it carries legitimate HGB title to the underlying land.

The third is the OSS risk classification restriction. As confirmed by TraceWorthy’s own testing documented in Article 1, the Online Single Submission (OSS) system blocks all low-risk and medium-low risk KBLI classifications for PT PMAs registering a Bali Province address. KBLI 68111 under KBLI 2020 and KBLI 68112 under KBLI 2025 carry low-risk classifications. A PT PMA in Bali with these codes therefore faces the categorical OSS restriction at any interaction point that subjects the registration to a fresh system review.

These three compliance failures can apply to a PT PMA that carries entirely legitimate HGB title to its land. The land title question and the operational compliance question are governed by different regulatory instruments and must be assessed separately.

KBLI 68111, KBLI 2025, and the Full Compliance Picture for Property-Based PT PMAs

The intersection of these issues is most concentrated in the structure that has been most common in Bali: a PT PMA registered under KBLI 68111, with an underlying Hak Milik title in an Indonesian nominee’s name or a legitimate HGB structure, generating income from short-term villa rental, with the villa located on agricultural or mixed-use land.

Where the underlying land is Hak Milik carried by a nominee, the arrangement is void under UUPA Article 26(2) and criminal under Perda No. 4/2026. The KBLI classification does not cover short-term accommodation under either KBLI 2020 or KBLI 2025. The short-term accommodation activity is prohibited to PT PMAs under Presidential Regulation No. 49 of 2021. Where the land is productive or agricultural, the Perda’s land conversion provision also applies. Each violation carries its own enforcement consequence and they are cumulative.

A PT PMA in this position faces assessment under multiple regulatory instruments simultaneously: UUPA Article 26(2) and Perda No. 4/2026 for the land ownership structure; the Positive Investment List for the short-term accommodation exclusion; the KBLI 2025 migration deadline for the classification question; and the substance-based field inspection programme for the operational activity mismatch. Article 2 addresses the KBLI migration and inspection obligations in detail. This article addresses the land title and nominee question specifically.

Zoning and the Due Diligence Framework

Every Bali land transaction or property structure assessment requires confirmation of zoning through the ITR (Informasi Tata Ruang, or Spatial Use Information) process before any structuring advice or acquisition proceeds. The ITR confirms zoning designation and land use compatibility for the intended activity. It is the primary verification step and cannot be substituted by a notary’s confirmation or a market agent’s representation. TraceWorthy conducts independent due diligence on all land structures and does not rely on notary-conducted verification, which is considered insufficient for the risk assessment required in the current enforcement environment.

Zoning can be verified through the GISTARU (Geoportal Tata Ruang, or Spatial Planning Geoportal) system or the OSS RDTR (Rencana Detail Tata Ruang, or Detailed Spatial Plan) interactive portal. Online tools may not reflect the most recent zoning updates; confirmation with the local spatial planning office (Dinas Tata Ruang) is required for certainty before any commitment is made.

The Enforcement Environment Surrounding Perda No. 4/2026

Perda No. 4/2026 has been enacted within a broader enforcement environment that makes detection of non-compliant structures materially more probable than in prior years.

Governor Koster’s September 2025 instructions to all regents and mayors across Bali Province to tighten permit issuance on productive land are active. In July 2025, forty-eight (48) structures at Bingin Beach were demolished following confirmation that they occupied state-owned coastal protected land. Nine further locations are under review for similar enforcement action.

The Directorate General of Taxes (Direktorat Jenderal Pajak) has increased audits of nominee-carried assets in Bali through 2025 and into 2026. Tax audits of property arrangements can identify nominee structures through the financial flows between the Indonesian titleholder and the foreign beneficial owner. A nominee structure that passes a casual document review may not pass a tax audit tracing actual income distribution.

The Ministry of Investment’s field inspection programme, expected to begin in June 2026, assesses whether PT PMAs’ actual operational activities match their registered KBLI classifications and whether declared investment values are being realised. A PT PMA generating short-term villa rental income under KBLI 68111, or carrying zero LKPM realisation, carries this inspection risk alongside any land title or nominee question.

Property structures in Bali are now assessed across multiple regulatory frameworks simultaneously, from multiple government agencies, rather than as isolated compliance questions within a single regulatory domain.

The Assessment Checklist for Existing Bali Property Interests

1. Confirm the current land title type and the name on the certificate.
   Where the certificate is in the name of an Indonesian citizen and the foreign investor is the intended beneficial owner, the arrangement is a nominee structure: void under UUPA Article 26(2) and subject to criminal prosecution under Perda No. 4/2026. Specific legal advice on the structure and remediation options is required before any further action is taken in relation to the property.
2. Confirm the land’s zoning classification through the ITR process.
   Where the land is classified as LP2B or Lahan Produktif, the Perda’s productive land conversion provision applies at its highest severity, and both the nominee prohibition and the land conversion prohibition may apply simultaneously. Confirmation from the local Dinas Tata Ruang is required for certainty; the GISTARU or OSS RDTR portal provides a starting point.
3. Where the structure involves a PT PMA, confirm the HGB title registration at ATR/BPN.
   The HGB title should be registered in the PT PMA’s name, confirmed against the land certificate, and current in its extension status. A PT PMA that carries what it believes to be HGB but whose certificate has not been formally converted from a previous Hak Milik title does not carry registered HGB.
4. Confirm the PT PMA’s registered KBLI code and whether it matches the actual operational activity.
   KBLI 68111 under KBLI 2020 authorised long-term real estate operations, not short-term accommodation. Under KBLI 2025, that code covers residential development for sale, with long-term residential rental reclassified to KBLI 68112. Where actual revenue is generated from short-term villa rental, the classification mismatch and the PT PMA’s exclusion from short-term accommodation both require specific legal analysis before the KBLI 2025 migration is initiated.
5. Confirm the PT PMA’s LKPM reporting is current and reflects genuine investment realisation.
   Zero realisation across four consecutive quarters triggers automatic administrative sanctions through OSS. Where realisation has been understated or unreported, the capital realisation and reporting position requires specific advice before June 2026.
6. Confirm utility access rights, land access rights, and physical boundaries through independent due diligence.
   Utility access to the land and access rights for entry and egress may not be included in the acquired title and require separate investigation. Land surveying or remeasurement may be required to confirm physical boundaries against the certificate description.

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Frequently Asked Questions

Was my nominee arrangement legal before Perda No. 4/2026?

No. Under Article 26(2) of the Basic Agrarian Law (Law No. 5 of 1960 on Basic Agrarian Principles), any arrangement by which an Indonesian citizen carries land title on behalf of a foreign national has been null and void since 1960. Perda No. 4/2026 did not create the prohibition. It added criminal prosecution provisions that reference national criminal law instruments, alongside the pre-existing civil nullity.

Does Perda No. 4/2026 affect my PT PMA’s HGB title?

No. A PT PMA with legitimate HGB title registered at ATR/BPN, with appropriate KBLI codes and genuine business activity, is the legal structure provided by Indonesian law for foreign commercial property interests. It is not a nominee arrangement and is not targeted by Perda No. 4/2026. The compliance risks that do affect PT PMAs, including KBLI classification mismatches, the short-term accommodation prohibition, and the OSS risk classification restriction, arise under separate regulatory instruments and require separate assessment.

Who is an intermediary or facilitator under the Perda?

The Perda names intermediaries and facilitators explicitly as exposure carriers alongside the parties to the arrangement. Any person who participated in structuring, documenting, or enabling a nominee arrangement in Bali falls within the Perda’s enforcement scope. The professional role provides no exemption.

Can I convert my nominee arrangement to a PT PMA structure?

Remediation of an existing nominee arrangement is a specific legal process that requires assessment of the particular structure, parties, title type, land use, and current regulatory position. There is no single answer applicable across all situations. Attempting to convert or unwind an arrangement without specific legal advice may compound the existing exposure rather than resolve it.

Does the Perda apply only to productive agricultural land?

The Perda has two operative provisions. The productive land conversion provision applies specifically to LP2B and Lahan Produktif classifications. The nominee prohibition provision is broader: it draws on the UUPA Article 26(2) framework, which applies to all land types. For nominee arrangements on non-productive land, the KUHP fraud and document manipulation provisions apply. The civil nullity under UUPA Article 26(2) has always applied across all land types regardless of zoning.

What if I purchased my property in good faith on professional advice?

The legal position is determined by the arrangement itself, not by the intent of the parties or the quality of the advice they received. An arrangement that was void under UUPA Article 26(2) remains void regardless of the circumstances in which it was entered. Specific legal advice is required to assess the current position and available options.

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This article provides general information only. It does not constitute legal advice and does not address any specific person’s or company’s circumstances. The regulatory environment described is active and evolving. The information reflects sources available at the time of publication and will be updated as the policy position develops. Readers should obtain specific advice from a qualified legal adviser before making any decision in relation to existing property interests or any proposed transaction involving land or property in Bali. TraceWorthy provides advisory and legal drafting services for PT PMAs, foreign investors, and expatriates operating in Bali and across Indonesia.

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