Friday, 1 May 2009

Bali Real Estate Sales (Balinese villas - KITAS visas)

Bali BS urges foreigners not to “invest” or otherwise buy into Balinese real estate (Bali villas) for their own sakes; see below for information on the sham regarding KITAS work permits / residency visas which potential villa owners are told they can get easily (but they can't legally). Bali BS points out;

1) You will be lied rotten to while you are in the process of buying your dream [sic] (try nightmare) holiday home in Bali. Everyone will tell you what a great investment owning a Balinese villa is, and how risk / problem free it is. You will also be told you will easily then get for a KITAS work permit / residency when legally you can not.
2) Once you have committed to buy either land (which you can never own) and / or a property in Bali, this real estate market run extensively by rogues on a so called island paradise will suddenly cost you much more than you had “expected”; your dreams will be shattered when you find out just how nasty Balinese villa ownership truly is.

Forget what real estate agents and land owners tell you, most of them are at best liars and cheats, at worse crooks. An excellent detailed explanation of the facts (laws and recorded definitions) can be found here: Bali Villas & Real Estate for foreigners; the facts

Understand that what these money grabbing villa sales con artists are doing are coming up with fanciful interpretations of secondary laws and / or agreements that attempt to circumvent the law; but these are ultimately unlawful as they contradict the provisions actually made by the laws that do exist. As with all countries, Indonesia has and no doubt will continue to rule such agreements unlawful; not worth the paper they are written on.

For now you can buy your way out of legal issues with bribes in Bali / Indonesia, but for how long? One thing is for sure, unless and until the Indonesian government and legislator incorporate foreigner right of use and / or ownership laws into the statute, which there are no plans to do at all right now, when you "buy" a luxury villa in Bali you are actually buying a piece of paper and that is all your investment is ultimately worth. Some sales agents report a case of a foreigner was upheld against his greedy Balinese girlfriend namegiver, but it is certain the foreigner paid large sums of money to the judge to get that ruling. And understand this; there is no case law in Indonesia. That means a ruling in one court has no relevance and can not even be admitted as evidence in another court; Indonesian judges make up their interpretations and minds about things. So that ruling will not help you if you need to go to court.

Often contended land is sold; that is land where there maybe a title dispute. Sometimes Indonesians will even claim to own land which they do not with forged or unlawfully gained documents. Balinese villas are also sometimes sold where the building permit was falsely and unlawfully given (for a bribe) and which is subject to further extortion or closure in the future. Beachfront land is often sold for building purposes when there is an 100 meter exclusion regulation and no hope of getting a building permit legally or at all; this is where the land seller / real estate agent points potential buyers to other villas which are closer than 100 meters to the beach but “forgets” to tell them that those villas were built when special building permit dispensations were allowed. Land and / or villas in Bali are also often sold where the local government has stopped the issuing of new villa construction and / or operating licenses, so legally they can never be anything more than a private holiday home, not a rental villa.

Foreigners can not be directors of private Indonesian companies. This is important because in order to rent a Balinese villa out to guests, the property must have a valid operational license; these can only be obtained by Indonesian citizens and companies of course. The only type of Indonesian company a foreigner can be a director of and can control is a public company with two types of issued shares; normal and voting. Foreigners can not own more than 49% of a public company’s normal (main / legal) shares, but they can have a majority of the voting shares, although this is fraught with future potential risk. Also, of course, the time and money needed to set up and run a public company is totally disproportionate with owning a Balinese holiday home you simply want to rent out a little. This means that controlling your investment if you want to derive rental income from it is very difficult, as you would basically be forced to turn over not just the land title rights but also all other rights to Balinese / Indonesians. Indonesians of course can form small companies called PT's, but foreigners can not be partners.

If you are thinking of buying an existing Balinese villa, you have to be especially careful and ask why it is being sold in writing. You can not easily find out about pre-existing legal problems, also having someone qualified to perform a proper structural survey out means getting someone in from Australia or Singapore at considerable expense, before you even buy the place; so you might pay for this and then the villa owner pulls out!

If you are thinking of buying land and building a new villa on it, be warned you may not get a building permit without giving people substantial bribes as new villa construction has all but been virtually stopped by the authorities. Also be warned most land owners will strip the land clean of all trees unless you specifically make sure these are included in the sale price; a piece of land without trees is going to make landscaping and even soil erosion control a nightmare, if not impossible. Also expect your builders to cheat you rotten. Expect they will keep demanding extra money and suffer delays; of course when you go to the site there only a few people there and they are just sitting around or sleeping. Expect construction standards to be awful unless you appoint a diligent project manager, which means hiring a western specialist who speaks Indonesian of course, at considerable extra cost.

Understand that if you do not have residency rights you will be subject to the same visa regulations as every other tourist to Bali even if you have spent all your hard earned money on some Balinese real estate; there are no “second home” type “stay as long as you like” visas like they have in Malaysia. This means that if you have dreams of spending extended periods of time in Bali, you will not be able to legally without coming out and getting a new visa each time. Also understand that coming in regularly as a tourist leaves you very vulnerable to extortion from both corrupt immigration and police officers as you are then not a tourist but an illegal resident. Even if you have a company set up to run the villa, you are unlikely to get a “KITAS” visa (work / residency permit) unless you have a professional skill your own villas need! This is despite the fact the Balinese real estate agents will say you can get a KITAS visa easily; you can not, investment in itself does not constitute grounds for a KITAS. Often KITAS visas are obtained because you are advised to lie about your past on your application or apply through front companies and / or bribes are made; in any event unlawfully / fraudulently obtained KITAS visas are just extortion and / or deportation opportunities for corrupt police and immigration officers in waiting. If you invest in a true Bali villa (one that is made available for other people to rent) and come yourself to Bali on holiday, you have to then also be careful as to what you say and do regarding the villa staff. You see, if the property is commercial and you are the investor, if you pick up a heavy item for a member of staff or ask them to get you something like a drink you can be viewed to be working illegally as a manager, as foreigners have been in the past and subsequently extorted or deported. The only “safe” use of a Balinese holiday home by the foreigner who paid for it is therefore for only 2 months maximum a year (to be a tourist, not a resident) and where the home is for your private use only (not rented out).

Understand that smiling helpful Balinese and Indonesians (and expatriates) will suddenly acquire frowns and be downright troublesome once you have committed your money. Village leaders will expect donations for local projects. Village leaders and village committee members will expect you to employ people they both know and in equal numbers. The village may well turn very nasty if you employ people from outside the village, especially if they have issues with the village those people come from. Adjacent local land owners may well also try to blackmail you either to be hired, to have you buy their land or simply to make them behave themselves as good neighbours; maybe allowing local youths on motorbikes to use the land next to your “tranquil” Balinese villa, or to dump smelly rubbish just their side of the perimeter, or to come and simply stare at you and your guests. Your neighbours may not appreciate your building or construction and pay Bali’s mafia police to create a problem for you.

There is a well used saying amongst foreigners in Bali; “After the rose colored glasses come off”. Balinese real estate is a nightmare. Buying a holiday home villa in Bali exposes you to ongoing expensive extortion through fraud, blackmail and corruption. Really, Bali is no paradise, go buy your land / ideal real estate and build your dream villa somewhere else where they treat foreigners / investors decently. Indonesia, including Bali is a nation of angry nasty anti-western thieves; don’t find out for yourself.

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