Fundamentally, the Omnibus Law regulates some of the provisions that have been exercised in practice. The Omnibus Law aims to give these practices a clearer legal standing. One of the most significant sectors impacted by this law is the real estate market, where the government make some amendments and introduce new clauses in hopes of improving the ease of doing business in Indonesia.
This article discusses some of the most important provisions regarding the real estate market in Indonesia that the Omnibus Law regulates.
Building Permits through the OSS
Omnibus law replaces the Building Permit (Izin Mendirikan Bangunan or IMB) with Building Approval. This Building Approval will be issued directly via the OSS (Online Single Submission). The requirements for the issuance of a Building Approval will soon be stipulated in the implementing regulations. This law eliminates the consultation process on the technical plan and examination.
But keep in mind, that the Omnibus law also regulates new building service providers, in which the building owner must appoint a Planner, a Manager and a Supervisor before constructing a new building. The Supervisor will act as an extension of the government and supervise the construction of the building. It is also the Supervisor who decides the readiness of the building and when it can be put into service.
Zoning Conformity
Prior to Omnibus Law, a company must have a Principle License (Izin Prinsip), Location Permit (Izin Lokasi) and Land Use Permit through the local government (PTSP) before starting a business. Omnibus simplifies these requirements into a new permit called Suitability for Space Utilisation Activities (Kesesuaian Kegiatan Pemanfaatan Ruang) which includes all the permits mentioned earlier. This permission will be also issued through the OSS. The Detailed Spatial Plan will also be accessible via OSS so that business owners do not need to go to the local office (PTSP) to find out if their business is in the right and appropriate zoning requirements.
Building Ownership for Foreigners
Previously foreigners could only get the Right of Use for Apartment Units (Hak Pakai Atas Satuan Rumah Susun). The Omnibus Law will allow foreign individuals to obtain the Freehold Right for Apartment Units (Hak Milik Atas Satuan Rumah Susun). The Freehold Right (Hak Milik) is the highest building ownership right in Indonesia because it does not expire unlike the Right of Use (Hak Pakai). This article provides a more detailed overview of land ownership rights in Indonesia.
However, it needs to be highlighted that although the Omnibus Law is hierarchically higher in degree than the regulations stipulating that foreigners can only obtain the Right of Use, we still have to wait for the implementing regulations to revoke or replace these regulations so that the law can come into effect.
Closing Thoughts of Omnibus Law Impact
The Indonesian president Joko Widodo enacted Law No 11/2020 on Job Creation on the 2nd of November 2020. However, this may not come into full effect immediately. If you have any concerns about omnibus law or the Indonesian real estate market that not addressed in this article, please reach out to us at anita@permitindo.com or by filling out this contact form.
References
Law No 11/2020 on Job Creation
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