The recently launched Marina Bay project has put Lombok property investment in the spotlight. As Bali’s property sector faces oversaturation and lower returns on investment, investors are now seeking alternative sources of returns and a different lifestyle investment, making Lombok an attractive option. Despite some criticisms, the Lombok project has prompted reflection on the future of Indonesia’s property industry.
Investing in Lombok through the Marina Bay project offers new investment opportunities with the potential for improved urban planning. This project will feature high-rise buildings, a rarity in Eastern Indonesia. It will also allow for expanded green space, environmentally friendly design, and equitable infrastructure.
Investing in Lombok is not without risk. The Marina Bay Project has a promising concept, but it has yet to receive government approval. The project remains dependent on future government support. Foreign investors are advised to use a PT PMA (Foreign Investment Company) to obtain proper legality, legal protection, market access, and ease of expansion. Investors should also conduct due diligence regarding land rights, tax obligations, and zoning regulations. Lombok has high potential, but caution is still needed in making decisions. Comply with the legal structure for a safe investment.
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With a proven track record, clear communication, and a client-focused approach, ILA Global Consulting has become a trusted advisor for individuals and businesses looking to establish a strong, sustainable presence in Indonesia.
Is Investing in Property in Lombok or Bali Better?
Unlike Bali’s predominantly horizontal villa development, this Lombok project introduces high-rise buildings to East Indonesia. This architectural approach, common in Jakarta and across Southeast Asia, offers a higher property ratio. It provides architects with greater flexibility to incorporate natural parks and preserve untouched land.
Investors and future residents will find significant green and pleasant common areas within the city centre. Jamie McIntyre meticulously designed this project to create a structured and organized city centre. He intentionally distances it from the chaotic and unorganized infrastructure often seen in Bali.
The concept and designs would represent a new paradigm in tourism, whereas property development in Bali and Lombok has not been considered before. The Marina Bay Project: A Premier Investment Opportunity in Lombok. The government has never considered it due to its inability to control illegal construction or its complacency with it.
The government must develop an urban development plan in collaboration with developers to ensure the provision of proper road infrastructure, water access, and electricity. The situation in Uluwatu highlights the consequences of poor planning. The developers sold illegally built properties to investors—many without access to water or relying on illegal groundwater pits.
This results in an environmental and legal scandal. The ecological disaster and road congestion with hundreds of trucks delivering water to Uluwatu every day is one of the examples of the importance of providing infrastructure, urban planning, and building permit authorization and control.
In this way, Lombok can be the anti-Bali if the government collaborates with developers to establish a proper urban planning plan. The success of Marina Bay for investors will depend on how the government supports the development with appropriate and extensive road infrastructure, water access and electricity supply. Enforcing control is also part of the government’s role and responsibility. The government creates problems when it approves side constructions or allows people to build villas illegally next to main roads.
| Term | Definition |
|---|---|
| Vertical Development Approach | A building strategy using high-rise structures to maximize land efficiency and preserve green spaces, as applied in Lombok’s Marina Bay Project. |
| Urbanism Plan | A government-defined framework that ensures organized infrastructure, utility access, and legal construction to prevent unregulated development. |
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Is Marina Bay in Lombok a Safe Project?
It is certainly too early to say if this project will be successful for the investors. It will be a pleasant place to live if the project is developed as planned. However, being able to promise a return on investment with the current situation in Lombok is a big bet that some investors might take.
This project is more of a lifestyle, but a lot of infrastructure is currently missing, such as additional international and domestic flights, and larger infrastructure with access to water and electricity supplies, to avoid repeating the same mistakes as Bali.
The Marina Bay project has still not received official approval and is still a private development. We recommend conducting a solid due diligence to ensure the following:
- Ownership rights
- Tax situation
- Zoning allowing to rent out the property
- Land and access surrounding the project to ensure access to the property
Lombok has several ownership issues and we see a lot of disputes between local villages and the province level on the ownership of the land. Unfortunately, some lands have not yet a certificate of ownership and some brokers offer some land with not guaranteed access or an unclear situation.
Investors must conduct proper due diligence on this project to ensure a safe investment and avoid future disputes.
How to Invest in the Marina Bay Project in Lombok?
A foreign investor willing to invest in the Marina Project will have several options. The person can either invest under its personal name or incorporate a company in Indonesia to obtain ownership through the company.
Is It Better to Invest Leasehold or Freehold in Lombok?
1. Legal Aspect
On paper, a freehold provides more rights than a leasehold. With a slight difference on the price, the answer to the question is evident and the freehold provides more benefits and secured rights.
A leasehold is a private agreement between two parties, and the rights are not registered at the land office (BPN) compared to a freehold. On a legal point of view the investment in a freehold called HGB or SHMSRS (strata title) is more evident.
In order to invest in a freehold, a foreigner needs to set up a company called PT PMA. Indeed, foreigners cannot obtain the rights under their own name except in the case of a strata title (SHMSRS).
This PT PMA will obtain the rights on the property, and the property and certificate of ownership will be transferred to the PT PMA. On the other hand, a leasehold agreement has no certificate of ownership.
A PT PMA, owned by foreigners, allows for the transfer of shares to heirs. Ownership under a PT PMA is valid for a maximum of 80 years (30 + 20 + 30). Prior to the 80-year term, the PT PMA can resell the property at its freehold value. In contrast, a leasehold depreciates over time. For example, a 30-year lease will have significantly less value than a freehold after only 10 years, as only 20 years will remain on the lease.
2. Tax Aspect
From a tax perspective, investing in freehold property offers distinct advantages. Non-residents face a 20% tax on leasehold property as individuals, or 10% if held under a PMA. In contrast, freehold properties incur only a 2.5% tax upon resale and a 5% purchase tax.
Is It Better to Invest Under a PMA or as An Individual Investor in Lombok?
PMA can invest in freehold properties and in leasehold properties, while investors under their name can invest only in leasehold properties. For a leasehold property, an investor investing under their own name will face 20% tax as a non-resident when it comes time to resell the property. An investor under a PT PMA will face a 10% tax on the resale of the property.
The tax advantages are significant, especially when the person can pass some expenses under the company without having to repatriate the funds to their home country.
Income from rental properties (Airbnb, etc.) will ultimately be taxed less if the funds are used at the company level, without being sent overseas.
For example, if an investor transfers the funds abroad after receiving them from a property manager, they will pay an additional 20% tax on top of the 10% local tax.
| Individual | PT PMA | |
| Daily Rental local taxl | 10% | 10% |
| Money sent overseas after the property manager shared the return | 20% | 0% (if reinvested for 3 years)
10% on dividends |
| Resell | 20% | 10% |
In Lombok the strategy is clear. The freehold property under a PMA is the straightforward strategy to adopt if the budget allows the investor to take advantage of it.
Historically, some developers in Bali and Lombok developed leasehold because they lacked sufficient funds to purchase the land and relied on investors’ money to finance the development.
