Can a PT PMA Build on HPL Land in Indonesia?

A PT PMA can build on HPL (Hak Pengelolaan, or Land Management Right) land in Indonesia. It does so not by acquiring ownership of the HPL itself — that right belongs to the state body or institution that holds it — but by obtaining a derivative land title or cooperation agreement from the HPL holder. The most common instrument is HGB (Hak Guna Bangunan, or Right to Build) granted on top of the HPL with the holder’s written consent, a structure expressly recognised under Indonesian land law and codified in Government Regulation PP 18/2021. For investors eyeing Parapuar, the HPL-based tourism zone above Labuan Bajo managed by BPOLBF, this is the foundational legal architecture that makes foreign company participation theoretically possible. The candid qualifier: no public BPOLBF document has confirmed the exact instrument, lease term, or tariff for any Parapuar lot. That gap matters, and this article states it plainly rather than filling it with guesswork.

What HPL Is — and What It Is Not

HPL is a land management right, not a land ownership title. It is issued by the state (via the Ministry of Agrarian Affairs and Spatial Planning / ATR-BPN) to a designated institution — typically a government body, SOE, or authority entity — to manage and allocate a defined area for a specific purpose. The HPL holder does not own the land in the sense that a private freehold owner does; it administers the land on behalf of the state and can grant derivative use rights to third parties.

At Parapuar, BPOLBF holds the HPL. The certificate for Zone 1 — covering approximately 129.6 ha of the Nggorang Bowosie forest above Labuan Bajo — was handed over on 15 September 2023 by Deputy Minister of ATR/BPN Raja Juli Antoni at the Parapuar site. A note on numbers: some English-language Antara coverage writes “129,609 hectares” — that is an Indonesian decimal-comma formatting error; the correct reading is 129.609 ha, or approximately 129.6 ha. 129,609 ha would be larger than the island of Bali and is physically impossible for this site.

Because BPOLBF holds HPL rather than freehold, no investor can buy a Parapuar lot outright. The 19 lots BPOLBF has made available to investors are offered through cooperation arrangements, not land sales. The legal foundation for what an investor can actually hold sits entirely on top of the HPL — derivative rights only.

The Legal Basis: HGB on Top of HPL Under PP 18/2021

Government Regulation PP 18/2021, which implements the broad regulatory reforms of the Cipta Kerja omnibus law (UU 11/2020), is the current governing framework for land rights in Indonesia. It is also where the HGB-on-HPL structure finds its clearest statutory expression.

Under PP 18/2021, the general terms for HGB are:

Initial HGB term: Up to 30 years.
First extension: Up to 20 years, granted if the land is still being used in accordance with the original purpose and the holder meets obligations.
Renewal: Up to 30 additional years, subject to evaluation.
Maximum cumulative: Up to 80 years total (30 + 20 + 30) before a fresh application cycle would be required.
Consent requirement: HGB on HPL land requires the written consent of the HPL holder. Without that consent, ATR/BPN will not issue the derivative certificate.
Who can hold HGB: Indonesian citizens, PT (domestic companies), and PT PMA (foreign-invested companies) are all eligible to hold HGB. This is the land-right instrument most commonly used by hotel and resort developers in Indonesia.

In practice, the HPL holder — in this case BPOLBF — and the investor negotiate a cooperation agreement that typically underpins the HGB grant. This agreement sets out the land area, permitted use, obligations, and often a land contribution fee or periodic payment to the HPL holder on top of any statutory ATR/BPN charges. The HGB certificate that emerges is then registered with ATR/BPN and constitutes the investor’s legally recognised land right.

One important practical point: HGB is mortgageable. A PT PMA holding HGB on HPL land can, in principle, pledge that HGB as collateral for project financing — a significant structural advantage over pure contractual leasehold, which sits off-title and is harder to pledge.

BPOLBF’s Six Cooperation Schemes — What Is Publicly Known

BPOLBF has described six cooperation frameworks available to investors at Parapuar, referenced in its Indonesian-language FAQ materials. These are standard categories under Indonesian public-asset management regulations:

Sewa Aset — Asset rental, a straightforward fixed-term lease.
Pinjam Pakai — Loan-for-use, typically between government entities rather than private investors.
KSP (Kerja Sama Pemanfaatan) — Utilisation cooperation, where the investor contributes capital/works and shares returns or pays a utilisation fee to the asset holder.
BGS/BSG (Bangun Guna Serah / Bangun Serah Guna) — Build-Operate-Transfer and Build-Transfer-Operate variants; investor builds and operates infrastructure, then transfers at end of term.
KSPI (Kerja Sama Penyediaan Infrastruktur) — Infrastructure provision cooperation, often used in PPP contexts.
KETUPI (Kerja Sama Terbatas untuk Pembiayaan Infrastruktur) — A limited cooperation instrument specifically for infrastructure financing.

Which of these six applies to any given Parapuar lot — and whether HGB is issued on top of a KSP or BGS/BSG framework, or whether the investor holds a purely contractual right without a registered land certificate — is not publicly documented. BPOLBF has not published a standard term sheet, prospectus with binding lot-level terms, or sample cooperation agreement for Parapuar. Pricing exists only via direct negotiation. These are not minor details for an investor committing US$10–15 million to a hospitality build; they are the questions a legal adviser working on due diligence will need answered before any preliminary agreement is signed.

If you are at the stage of evaluating a specific Parapuar lot, our enquiry form connects readers with independent legal specialists who can accompany you through the due-diligence conversation with BPOLBF — we introduce, they advise.

The PT PMA Prerequisite — Company Formation Before Land Rights

A foreign individual or foreign company cannot hold HGB directly under their own name. The required vehicle is a PT PMA — a foreign-invested limited liability company established and registered in Indonesia. The land-right sequence is therefore non-negotiable: PT PMA first, then the cooperation agreement and HGB application.

The PT PMA requirements for a tourism or hospitality project in Indonesia are set by Peraturan BKPM No. 4/2021 and the OSS-RBA (Online Single Submission — Risk Based Approach) framework under PP 5/2021:

Minimum investment value: More than IDR 10 billion per 5-digit KBLI activity per project location, excluding land and buildings. This is a statutory threshold, not a guideline.
Minimum issued and paid-up capital: IDR 10 billion (approximately USD 620,000 at mid-2026 rates — verify against current Bank Indonesia rate).
NIB (Nomor Induk Berusaha): The single business registration number issued via OSS; this replaces the former SIUP, TDP, and API import licences for most purposes.
KBLI codes: For a star-category hotel, the relevant code is KBLI 55110 (Penyediaan Akomodasi Jangka Pendek, hotel berbintang). A spa or wellness facility may fall under a separate KBLI. Confirm the exact 2020 KBLI nomenclature with an OSS-licenced adviser before filing, since KBLI revisions can shift applicable codes.
NPWP: Tax registration number, required before the PT PMA can enter into commercial contracts or employ staff.

The OSS-RBA system classifies most hotel businesses as medium-high risk, which means a Standard Certificate (Sertifikat Standar) must be met before commercial operations begin — not just before the NIB is issued. The standard includes spatial conformity (Kesesuaian Kegiatan Pemanfaatan Ruang, or KKPR), environmental approvals if applicable, and sector-specific technical requirements from the Ministry of Tourism. KKPR in particular requires confirmation that the intended land use is consistent with the spatial plan (RTRW) for Manggarai Barat Regency — a check that is mandatory and non-trivial in a forested HPL zone.

The Practical Sequence for a Parapuar Investment

Stitching the legal framework to the Parapuar context, here is the logical step order a foreign investor would need to follow. This is informational overview, not legal advice; each step requires specialist input at the appropriate moment.

Establish PT PMA in Indonesia. Engage an Indonesian notary and corporate lawyer to incorporate, appoint directors and commissioners (at least one Indonesian commissioner is conventional practice), and register through OSS to receive the NIB. Timeline: four to eight weeks if documents are in order.
Open the BPOLBF cooperation conversation. Contact BPOLBF’s investment and cooperation division directly. Request the current lot availability list, indicative cooperation framework, and any draft term sheet or Heads of Agreement. At this stage, confirm which of the six cooperation schemes applies and whether HGB will be issued or only a contractual utilisation right.
Commission independent legal due diligence. This covers: the HPL certificate (Zone 1, approximately 129.6 ha, issued 15 September 2023), the specific lot under discussion, the spatial plan conformity for the intended hotel/resort use, and any encumbrances or third-party claims registered against the HPL or the lot.
Negotiate and execute the cooperation agreement. The instrument — KSP, BGS/BSG, or hybrid — determines the financial structure, the annual land-contribution fee (if any), the build obligations, and what happens at the end of the cooperation term. Execution in notarial deed form is standard for state-asset cooperation agreements of this type.
Apply for HGB via ATR/BPN (if applicable under the agreed scheme). ATR/BPN will require BPOLBF’s written consent, the cooperation agreement, and the PT PMA’s corporate documents. The HGB certificate, once issued, is the registrable title you can hypothecate to a lender.
Complete OSS-RBA licensing. Obtain KKPR, environmental approvals if triggered by project scale, and the Sertifikat Standar for your specific KBLI activity. The hotel construction permit (PBG — Persetujuan Bangunan Gedung, replacing the former IMB) is issued at the kabupaten level — Manggarai Barat — and requires spatial-conformity confirmation as a prerequisite.
Proceed to design, permits, and build. BPOLBF’s selectivity screening — sustainability alignment with the zone’s E3NC framework (Etno, Eco, Edu, Nature Conservation) — applies before cooperation agreements are signed, so conceptual design will likely be needed earlier than step six in practice.

What Parapuar-Specific Public Documents Do Not Confirm

This section exists because the gap matters as much as the legal framework does.

No public BPOLBF document — not the Indonesian-language FAQ, not the Antara press releases, not the Jakarta Post advertorials — has confirmed any of the following for Parapuar specifically:

The exact cooperation instrument (KSP, BGS/BSG, or another) that applies to a given lot category.
Whether HGB will in fact be issued to investors or whether their right is purely contractual.
The term of the cooperation in years. PP 18/2021’s 30+20+30 framework is the general law background; whether BPOLBF’s actual agreements mirror that structure or diverge is unpublished.
Land tariffs, annual contribution fees, or any other financial parameter. The only publicly quoted investor figures are Dusit International’s reported US$15 million commitment for Lot 1.6 and Eiger’s reported US$1.2 million — both from a single April 2025 source (windonesia.com, 29 April 2025), both flagged UNVERIFIED pending corroboration from BPOLBF or the companies directly.
The specific conditions attached to each of the 19 lots — size, zone, permitted use category, and status (available, under exclusivity, or committed).

The honest investor takeaway: the HGB-on-HPL structure that makes PT PMA participation legally possible is well-established in Indonesian law. The Parapuar-specific implementation of that structure is opaque. Filling the opacity requires a direct conversation with BPOLBF, backed by independent legal advice. No broker, no aggregator site, and no government advertorial can substitute for that conversation.

Parapuar vs Town Land: Two Different Animals

For investors comparing Parapuar’s HPL model with buying or leasing land directly in Labuan Bajo town, the structural difference is significant.

Feature	Parapuar (HPL / BPOLBF)	Labuan Bajo Town Land (SHM/HGB private)
Land title held by investor	HGB on HPL (derivative) — or contractual right only, depending on scheme	HGB over private SHM land (PT PMA), or registered leasehold
Counterparty	BPOLBF (government authority)	Private landowner / PT developer
Indicative land cost	Not published — direct negotiation with BPOLBF only	Asking prices IDR 500K–15M/m2 depending on location and sea view (broker listings, unverified; not transaction data)
Maximum HGB term under PP 18/2021	Up to 80 yrs cumulative (30+20+30), subject to BPOLBF agreement terms	Up to 80 yrs cumulative (30+20+30), subject to private negotiation
Land scarcity / competition	19 lots, BPOLBF controls allocation and screens applicants	Open market, multiple sellers, competitive but fragmented
Infrastructure readiness	Staged; access road built, utilities being developed — investor must verify per lot	Town grid infrastructure generally available; quality varies by location
Forest / environmental context	Former Bowosie production forest; 80% green pledge; adat land claims contested (structurally unresolved as of mid-2026)	Private land; environmental obligations per project scale under AMDAL/UKL-UPL
Nominee risk	Not applicable — HPL structure has no nominee path; PT PMA is the required vehicle	High if nominee used — courts have repeatedly voided nominee side agreements; land reverts to state

The HPL model removes the nominee-risk trap that catches some foreign investors in private-land deals — there is no practical incentive to circumvent the PT PMA structure when BPOLBF itself requires dealing through a legal entity. That is a genuine structural advantage. The trade-off is less price transparency and more counterparty concentration: you are negotiating with a single government authority, and the terms of that negotiation are confidential until a deal is signed.

A Note on Incentives — What Parapuar Is Not

Parapuar is not a KEK (Kawasan Ekonomi Khusus, Special Economic Zone). The fiscal facilities available inside a KEK — income-tax reductions, VAT/PPnBM exemptions, customs-and-excise concessions, and KEK-specific land-licensing easements under PP 40/2021 — do not apply at Parapuar. Golo Mori (the ITDC-managed zone approximately 25 km south-east of Labuan Bajo) has been proposed as a tourism KEK but had not been established by Peraturan Pemerintah as of the latest available information — verify against the current Dewan Nasional KEK list before assuming otherwise.

What BPOLBF offers is land legality (the “clean and clear” HPL), coordination facilitation, and staged infrastructure development. It has not publicly committed to any project-specific fiscal incentive for Parapuar investors. General tax-allowance facilities under PP 78/2019 may apply depending on KBLI and regional eligibility — but eligibility is determined case by case and requires verification with the Directorate General of Taxes, not assumed from promotional materials.

State this to any adviser or intermediary who implies guaranteed tax benefits specific to Parapuar: ask for the regulatory citation. If they cannot produce one, the claim is promotional, not legal.

The Bowosie Dimension — What Investors Are Also Buying Into

No legal briefing on Parapuar is complete without flagging what the HPL sits on top of. The Nggorang Bowosie forest — from which the approximately 129.6 ha HPL Zone 1 was carved — is the main ecological buffer for Labuan Bajo town. It is also where four kampung — Racang Buka, Kaper, Lancang, and Nggorang — claim customary use and long-term occupation rights going back to at least the 1990s, and in some cases to the 1960s–70s by residents’ own accounts (cadastral documentation has not been publicly produced to support the scope of those claims).

In 2022, residents physically blocked land-clearing machinery during the HPL processing phase. Demonstrations continued into 2023. Advocacy organisations including Sunspirit for Justice and Peace, Floresa.co, WALHI NTT, and AMAN Nusa Bunga have documented and publicised these objections. BPOLBF has proceeded — HPL certificate issued September 2023, Parapuar Park groundbreaking August 2024, investor promotion active through 2025. No publicly documented comprehensive settlement, compensation scheme, or formal recognition of adat claims has been announced. The community-rights question is structurally unresolved as of mid-2026.

From an investor due-diligence perspective, this is not a reason to dismiss Parapuar outright. It is a reason to ask BPOLBF directly — in writing, before signing anything — about the status of community consultations, any social safeguard commitments, and how the project addresses the concerns of the four kampung. Lenders with ESG frameworks, including most international development finance institutions and many European commercial banks, will ask these questions in their own financing processes. Starting the answer now is more efficient than reconstructing it later.

The Wae Mese spring is the named PDAM source for Labuan Bajo’s water supply, and the town already has chronic water scarcity — intermittent distribution and trucked supplementation are common. Bowosie’s function as water-catchment forest means that development intensity inside the HPL directly bears on downstream water availability. Lot-level water infrastructure at Parapuar is staged and must be verified with BPOLBF before any construction timeline is committed.

Information-Not-Advice Reminder

This article explains the legal structure in general terms and maps it to the Parapuar context using publicly available sources. It is not legal advice, investment advice, or any form of regulated financial guidance. Indonesian land law is detailed, amendment-sensitive, and applied differently depending on the specific HPL holder, the cooperation instrument, and the regency in which the land is located. Regulations cited — PP 18/2021, PP 5/2021, Peraturan BKPM No. 4/2021 — should be verified against current JDIH versions before reliance; Indonesian implementing regulations are revised with some frequency.

For introductions to independent legal and market-entry specialists who work in Indonesian tourism investment — not intermediaries who sell lots, and not advisers with any financial interest in a specific Parapuar developer — visit our enquiry form. No one can pay to change what we publish; if you proceed with a specialist we introduce and they charge a fee, they may pay us a referral fee at no extra cost to you.

Frequently Asked Questions

Can a foreigner own the land under a Parapuar lot outright?

No. Hak Milik (freehold title) is closed to foreigners and foreign-owned companies under UUPA UU 5/1960. At Parapuar the land is held under HPL by BPOLBF; no freehold is issued from HPL to any investor, foreign or domestic. The derivative right a PT PMA can obtain is HGB — a registered, time-limited building right. The HPL itself stays with BPOLBF.

What is the minimum investment to set up a PT PMA for a hotel project at Parapuar?

The statutory minimum is more than IDR 10 billion per KBLI activity per project location (excluding land and buildings), plus minimum issued and paid-up capital of IDR 10 billion, under Peraturan BKPM No. 4/2021. At mid-2026 exchange rates that is roughly USD 600,000–620,000 in minimum capital — but a viable hotel project at Parapuar would almost certainly require a substantially larger commitment. Dusit International’s reported project on Lot 1.6 is cited at US$15 million (single-source, UNVERIFIED). The IDR 10B minimum is a legal floor, not a project budget.

How long is the HGB term on HPL land at Parapuar?

Under PP 18/2021, HGB on HPL can run up to 30 years initially, extendable by 20 years, and renewable for a further 30 years — up to 80 years cumulative. Whether BPOLBF’s cooperation agreements for Parapuar follow this structure, or impose shorter or different terms, has not been published. This is one of the questions an investor must obtain in writing from BPOLBF before advancing to any preliminary agreement.

Does Parapuar offer the same tax incentives as a Special Economic Zone?

No. Parapuar is not a KEK, and KEK fiscal facilities under PP 40/2021 do not apply there. BPOLBF has not publicly announced any Parapuar-specific fiscal incentive. General investment facilities — tax allowance under PP 78/2019 and similar instruments — may apply depending on the specific KBLI and project profile, but eligibility must be checked case by case with the relevant tax authority, not assumed based on promotional materials.

What is the role of the four kampung communities in a Parapuar investment decision?

The communities of Racang Buka, Kaper, Lancang, and Nggorang have asserted customary use and occupation rights over Bowosie land that overlaps with the Parapuar HPL. Their objections — documented by Sunspirit for Justice and Peace, Floresa.co, WALHI NTT, and AMAN Nusa Bunga — included physical resistance to land clearing in 2022 and ongoing advocacy through 2023 and beyond. BPOLBF has proceeded with HPL certification and investor promotion, but no comprehensive public settlement has been announced. For any investor with ESG commitments or international project financing, the status of community relations and social safeguards is a due-diligence item, not a peripheral consideration.