Bali - Island of the Gods, inhabited by mere mortals.

By Daniel O’Leary

Bali is back. The most recent tourism numbers (up 13% in 2009) confirm what the worsening traffic congestion over the last year has subtly hinted at. This increase in traffic has fueled a property and building boom, especially in villas targeted at visitors who have been ensnared by Bali’s undeniable charms and opted to stay. However, the transition from tourist to resident often doesn’t go as smoothly as anticipated and many experience headaches when buying properties or setting up businesses here. This fact was highlighted recently when the principal of one of Bali’s most prominent expat service agencies received a prison sentence for scamming foreign clients. This serves as a timely reminder that it may be an opportune time to examine how some of these dodgy deals can be avoided. Sit on a high stool in any expat bar in Sanur, Kuta or elsewhere in Bali and it wont be long until you hear the story of someone who is in Immigration lock-up, has been deported or cant find the partner who owns his business /home. However, the origin of these stories can often be due to disregarding the basic “caveat emptor” rule or failing to do the basics that one would never neglect in their own home country. One needs to handle business affairs with caution from the outset by seeking professional advice from qualified professionals and avoid involving “newfound friends”. Someone you meet briefly communicating in pigeon English doesn’t constitute a friend under most peoples’ definition. Neither does it mean someone is honest just because he shares his personal life story with you or brings you to meet his family in the village. So the message here is be prudent when parting with your hard earned sheckels. Before investing in Bali it is useful to have a basic understanding of government structures and how the legal system may differ from that in one’s home country. Bali is one of 33 provinces in Indonesia and the highest government official is the Governor. Provinces (which are further subdivided into regencies) have their own local governments and legislative bodies. Since regional autonomy laws were passed in 1999, provinces and regencies have extensive power over their own affairs. Foreign investors wishing to set-up large projects would be well advised to get to know their Regent “Bupati” and enlist their support before proceeding. Denpasar city has a Mayor, also elected, with similar powers to a regent. Under the Regent or Mayor are “Camat” and “Lurah” respectively who are government appointed civil servants. The government office with which most foreigners would have interaction with is that of the Chief of village “Banjar”. The Banjar has authority over the local people in accordance with acknowledged local traditions and is elected by popular vote. In terms of the legal system, the three most commonly used services are provided by Notaries “Notaris”, Lawyers “Pengacara” and Legal Consultants “Konsultan hukum”.

A Notary is required to hold a Bachelor’s Degree in Law “SH”, a Masters Degree in Notarial Law followed by Ethics and Company incorporation courses and one year of practical training. Licenses to practice are issued by the ministry of justice. Many Notaris also hold PPAT licenses issued by the Ministry of Lands which qualifies them to process transfers of ownership of land titles. Notaris typically provide legal advice, handle civil and commercial agreements/contracts, leases, deeds and company incorporation A Lawyer is required to hold a bachelors Degree in law “SH” followed by an Advocacy training course and a period of practical training. Licenses to practice “SK” are issued by the regional High Court. Lawyers typically provide general legal advice, handle criminal cases, breach of contract, immigration problems, litigation and representation at court. Common misunderstandings occurs when foreigners confuse a notaries with lawyers or when led to believe a person with an “SH” is a qualified Lawyer or Notaris. Before employing the services of a Lawyer or Notaris, it is good practice to ask them to show you their License “SK”. If they are reluctant or hesitant to present you their credentials, then think again before hiring them. Try to find a Lawyer or Notaris who speaks your language, leaving your Notary’s office “thinking” you know what you agreed to/signed is a recipe for disaster. The third category you are likely to encounter is the Legal Consultant / Advisor “Konsultan Hukum”. These businesses are commonly owned by professionals with connections to well qualified Lawyers, Notaris and government officials and very often offer additional Business and Investment Advisory Services. Relocating to another country is never easy especially when dealing with different cultures, languages and legal systems, therefore, one has to be disciplined and methodical and exercise careful judgment at every step. Some useful general guidelines to keep in mind: • • • • • Professional advice is relatively inexpensive in Indonesia so hire the best. If buying a property, have professional due diligence carried out, you don’t want a 30 year lease on your house with only a 15 lease on access. Be discerning, don’t always take things at face value and get a second opinion. Get your own safety box in the bank and keep all your important documents. Hire a professional or consultant that offers independent advice. Using the same broker you are buying the property from to arrange your legal affairs and permits may be convenient at the time but may leave you very vulnerable later on if you have made a bad choice to begin with.

Doing things the legal way in Indonesia is not as difficult as many would have you believe. Basically, by employing a similar level of caution as you would at home and avoiding some of the main pitfalls discussed above you can settle down to the real business - enjoying life in Bali.
Daniel has lived and worked in Indonesia for 25 years, holds Indonesian citizenship and is the Director of IndoAdvisors, a company based in Bali offering Business and Legal advisory services

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