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Ada Pertanyaan? Hubungi Kami Christina Desy
Less than a year from now, the long planned ASEAN-Economic-Community (AEC) will commence and open the door to further market liberalization in the ASEAN region. One general objective is to boost the free flow of investment between ASEAN members.
Comprised of 10 sovereign member-states, it is no surprise that the investment regime and legal systems of each country differ. Some are more liberal, some tend to be more protective when it comes to foreign investment.
Although the AEC Blueprint directs member-states to adjust their regulatory framework to be more favorable to foreign investment, there are, however, certain fundamental provisions in regard to property ownership and investment by foreigners which will remain off limits. Regardless, under the AEC, the incidence of foreign ownership of Indonesian assets can be expected to increase.
In this regard, the often touted legal principle known as “freedom of contract”, is often interpreted incorrectly when it comes to property ownership and investment by foreigners in Indonesia. Parties often forget when entering into an agreement that agreements, under the Indonesian legal system, are subject to limitations imposed by laws and regulations.
Anecdotes abound of individuals entering into nominee agreements, with the intent of making their agreement supersede such limitations, often finding themselves out of favor with the law. It should be noted that a nominee arrangement does not necessarily mean that there is an explicit provision in the agreement that states an Indonesian party is acting on behalf of a foreign party to conduct a certain legal act. These arrangements may involve a series of legal acts to disguise an underlying agreement, which consequently leads to a foreign party having control (“de facto”) over property or a company, using complex schemes of encumbering certain property under a loan/credit arrangement.
This week’s Indonesia Law Digest (ILD) will discuss the practice of nominee arrangements in Indonesia in regard to investment and land ownership matters, with a focus on the validity of nominee arrangements under Indonesian laws and regulations, as well how they bind nominees and third parties.
The ILD is available here.
Less than a year from now, the long planned ASEAN-Economic-Community (AEC) will commence and open the door to further market liberalization in the ASEAN region. One general objective is to boost the free flow of investment between ASEAN members.Comprised of 10 sovereign member-states, it is no surprise that the investment regime and legal systems of each country differ. Some are more liberal, some tend to be more protective when it comes to foreign investment.
Although the AEC Blueprint directs member-states to adjust their regulatory framework to be more favorable to foreign investment, there are, however, certain fundamental provisions in regard to property ownership and investment by foreigners which will remain off limits. Regardless, under the AEC, the incidence of foreign ownership of Indonesian assets can be expected to increase.
In this regard, the often touted legal principle known as “freedom of contract”, is often interpreted incorrectly when it comes to property ownership and investment by foreigners in Indonesia. Parties often forget when entering into an agreement that agreements, under the Indonesian legal system, are subject to limitations imposed by laws and regulations.
Anecdotes abound of individuals entering into nominee agreements, with the intent of making their agreement supersede such limitations, often finding themselves out of favor with the law. It should be noted that a nominee arrangement does not necessarily mean that there is an explicit provision in the agreement that states an Indonesian party is acting on behalf of a foreign party to conduct a certain legal act. These arrangements may involve a series of legal acts to disguise an underlying agreement, which consequently leads to a foreign party having control (“de facto”) over property or a company, using complex schemes of encumbering certain property under a loan/credit arrangement.
This week’s Indonesia Law Digest (ILD) will discuss the practice of nominee arrangements in Indonesia in regard to investment and land ownership matters, with a focus on the validity of nominee arrangements under Indonesian laws and regulations, as well how they bind nominees and third parties.
The ILD is available here.
Christina Desy
Less than a year from now, the long planned ASEAN-Economic-Community (AEC) will commence and open the door to further market liberalization in the ASEAN region. One general objective is to boost the free flow of investment between ASEAN members.
Comprised of 10 sovereign member-states, it is no surprise that the investment regime and legal systems of each country differ. Some are more liberal, some tend to be more protective when it comes to foreign investment.
Although the AEC Blueprint directs member-states to adjust their regulatory framework to be more favorable to foreign investment, there are, however, certain fundamental provisions in regard to property ownership and investment by foreigners which will remain off limits. Regardless, under the AEC, the incidence of foreign ownership of Indonesian assets can be expected to increase.
In this regard, the often touted legal principle known as “freedom of contract”, is often interpreted incorrectly when it comes to property ownership and investment by foreigners in Indonesia. Parties often forget when entering into an agreement that agreements, under the Indonesian legal system, are subject to limitations imposed by laws and regulations.
Anecdotes abound of individuals entering into nominee agreements, with the intent of making their agreement supersede such limitations, often finding themselves out of favor with the law. It should be noted that a nominee arrangement does not necessarily mean that there is an explicit provision in the agreement that states an Indonesian party is acting on behalf of a foreign party to conduct a certain legal act. These arrangements may involve a series of legal acts to disguise an underlying agreement, which consequently leads to a foreign party having control (“de facto”) over property or a company, using complex schemes of encumbering certain property under a loan/credit arrangement.
This week’s Indonesia Law Digest (ILD) will discuss the practice of nominee arrangements in Indonesia in regard to investment and land ownership matters, with a focus on the validity of nominee arrangements under Indonesian laws and regulations, as well how they bind nominees and third parties.
The ILD is available here.
Less than a year from now, the long planned ASEAN-Economic-Community (AEC) will commence and open the door to further market liberalization in the ASEAN region. One general objective is to boost the free flow of investment between ASEAN members.Comprised of 10 sovereign member-states, it is no surprise that the investment regime and legal systems of each country differ. Some are more liberal, some tend to be more protective when it comes to foreign investment.
Although the AEC Blueprint directs member-states to adjust their regulatory framework to be more favorable to foreign investment, there are, however, certain fundamental provisions in regard to property ownership and investment by foreigners which will remain off limits. Regardless, under the AEC, the incidence of foreign ownership of Indonesian assets can be expected to increase.
In this regard, the often touted legal principle known as “freedom of contract”, is often interpreted incorrectly when it comes to property ownership and investment by foreigners in Indonesia. Parties often forget when entering into an agreement that agreements, under the Indonesian legal system, are subject to limitations imposed by laws and regulations.
Anecdotes abound of individuals entering into nominee agreements, with the intent of making their agreement supersede such limitations, often finding themselves out of favor with the law. It should be noted that a nominee arrangement does not necessarily mean that there is an explicit provision in the agreement that states an Indonesian party is acting on behalf of a foreign party to conduct a certain legal act. These arrangements may involve a series of legal acts to disguise an underlying agreement, which consequently leads to a foreign party having control (“de facto”) over property or a company, using complex schemes of encumbering certain property under a loan/credit arrangement.
This week’s Indonesia Law Digest (ILD) will discuss the practice of nominee arrangements in Indonesia in regard to investment and land ownership matters, with a focus on the validity of nominee arrangements under Indonesian laws and regulations, as well how they bind nominees and third parties.
The ILD is available here.