The HGU, HGB, Hak Pakai difference comes down to three things: what the land may be used for, who may hold it, and how long the right lasts. HGU is for farming, plantations, fisheries and livestock; HGB is the right to build and own buildings; Hak Pakai is a right to use land, and of the three it is the only one open to foreign individuals and foreign legal entities. None of them is Hak Milik, the freehold that only Indonesian citizens and a few designated bodies can hold. This guide sets out each title, why the land beneath an HGB matters, the risks introduced in 2025, and a worked scenario.
In brief:
A company in Indonesia, foreign-owned or not, cannot hold Hak Milik.
Factories and warehouses almost always sit on HGB.
HGB over state land or HPL runs 30 + 20 + 30 years; over Hak Milik it runs 30 years with no extension.
HGB over HPL needs the HPL holder’s consent to extend or renew.
Unused HGB, HGU and Hak Pakai can be flagged as idle land from two years after issue.
The short answer
For an industrial buyer, the realistic choice is HGB, occasionally Hak Pakai. Article 21 of the Basic Agrarian Law reserves Hak Milik for Indonesian citizens and designated bodies, and Article 26(2) makes any transfer of Hak Milik to an ineligible company void, with the land falling to the state. So the useful questions are what kind of HGB, over what land, and with how many years left. Our guide to industrial land in Indonesia covers the wider buying process.
The HGU, HGB, Hak Pakai difference at a glance
Hak Milik (SHM): described in Article 20 of the Basic Agrarian Law as hereditary, the strongest and fullest right. No term. Indonesian citizens and bodies designated under PP 38/1963 only.
HGU (right to cultivate): state land or HPL land for agriculture, plantations, fisheries or livestock, at least 5 hectares under Article 28 of the Basic Agrarian Law. 35 years, extendable by 25, renewable for 35 under Article 22 of PP 18/2021. Indonesian citizens and Indonesian companies.
HGB (right to build): the right to build and own buildings on land that is not one’s own. Indonesian citizens and Indonesian-incorporated companies, including PT PMA.
Hak Pakai (right to use): the right to use land or take its produce. The time-limited form can be held by Indonesians, Indonesian companies, foreign legal entities with a representative office in Indonesia, religious and social bodies, and foreigners. An open-ended form, lasting as long as the land is used, is reserved for government bodies and the representative offices of foreign states and international bodies.
Hak Milik, HGU, HGB and time-limited Hak Pakai can all be mortgaged; open-ended Hak Pakai and HPL cannot.
HGB land title in Indonesia: the land underneath decides the term
An HGB land title in Indonesia can sit on three kinds of land, and PP 18/2021 treats each differently:
Over state land: 30 years, extendable by 20, renewable for 30 (Article 37(1)).
Over HPL: the same 30 + 20 + 30, but the grant, extension and renewal all require the HPL holder’s consent (Articles 38(2) and 40(2)). When the HGB ends, the land returns to the HPL holder.
Over Hak Milik: at most 30 years, with no extension; it can only be renewed by a new grant deed from the owner (Article 37(2)).
Extensions must be applied for before expiry, and renewal within two years after it. There is no single 80-year grant: the Constitutional Court struck that down in decision 21-22/PUU-V/2007, and in November 2025 brought the capital city’s longer terms into line with 30 + 20 + 30 in decision 185/PUU-XXII/2024.
HGB over HPL: how industrial estate plots are titled
HGB over HPL is the critical distinction inside industrial estates. Under PP 20/2024 on industrial zoning, which replaced PP 142/2015, a licensed estate company may be granted HGB over the land it develops, which may be split into HGB per plot, with the splitting the estate company’s responsibility (Article 56). Where the estate company is state- or regionally-owned, it may receive HPL instead, with HGB granted over it per plot or per group of plots (Article 57).
For a tenant, two checks follow. Has the certificate been split into the plot’s own title? And is the HGB over state land or over HPL? The second tells you whose consent you will need when the term runs down. More on estates themselves is in our guide to industrial parks in Indonesia.
Where Hak Pakai fits for foreign investors
Hak Pakai matters mainly where HGB is not available. A foreign legal entity with a representative office can hold it; so can a foreign individual. Under Article 71 of PP 18/2021, a foreigner may own a landed house on Hak Pakai, or an apartment unit on Hak Pakai or HGB land; units on HGB must be in special economic zones, free trade zones, industrial estates or similar economic zones, and Article 72 adds minimum price and size limits. For an operating business, though, the usual route is a PT PMA holding HGB, which is set out in our page on PT PMA land ownership.
Idle land and expiry: the risks that change the answer
PP 48/2025, in force since 6 November 2025 and replacing PP 20/2021, makes HGB, HGU, Hak Pakai and HPL liable to be inventoried as idle land if deliberately left unused, starting as early as two years after the right was issued; evaluation, warnings and a formal designation follow. Hak Milik is covered only where the land has become a settlement occupied by the community, has been controlled by others for 20 years without any legal relationship, or its social function is not fulfilled. Buying HGB land to hold without a plan now carries more risk than it did.
Expiry is a live issue as well. In July 2026 the government announced that 605 hectares of expired, non-renewed HGB land would be redirected to public housing. And the five-year window to register old customary land evidence under Article 96 of PP 18/2021 closed around February 2026, so such documents are now only a guide rather than proof of title.
A scenario: two plots, two titles
A company compares two neighbouring plots. The first is Hak Milik owned by an individual, outside any estate. It is cheaper, but before a company can take it the title must be converted to HGB, and the zoning must be checked. The second is an estate plot on HGB over HPL with 18 years remaining. It can transfer straight away, but its extension will depend on the estate operator’s consent as HPL holder.
Neither is automatically better. The first takes longer; the second depends more on a third party. The right answer comes from reading the certificate and the land office register, not from the title label in a listing.
Common mistakes
Assuming every HGB comes with 80 years upfront.
Not distinguishing HGB over state land, HPL or Hak Milik.
Buying Hak Milik in a company’s name without converting it to HGB first.
Ignoring the remaining term when agreeing a price.
Holding HGB land idle for years without a use plan.
A checklist before you sign
Confirm the title type and the land beneath it, the remaining term, that the holder is an eligible subject, any HPL holder consent required, whether the certificate has been split, and that the data matches the land office register through land due diligence. Then budget transfer and conversion costs using our guides to the cost of acquiring land and notary fees.
Frequently asked questions
What is the difference between HGU, HGB and Hak Pakai?
HGU is for cultivating state land or HPL land for agriculture, plantations, fisheries or livestock. HGB is the right to build and own buildings. Hak Pakai is a right to use land and, of the three, the only one open to foreigners and foreign legal entities.
Can a foreign-owned company own land in Indonesia?
A PT PMA can hold HGB or Hak Pakai, but not Hak Milik. Any transfer of Hak Milik to an ineligible company is void by law.
How long does an HGB land title last?
Over state land or HPL, 30 years, extendable by 20 and renewable for 30. Over Hak Milik, up to 30 years and renewable only by a new deed from the owner.
What does HGB over HPL mean?
The HGB sits on land managed by an HPL holder, often a state-owned estate operator. Extension and renewal need that holder’s consent, and the land returns to it when the HGB ends.
Is Hak Milik better than HGB?
It lasts longer, but companies cannot hold it. For individuals buying a home, it is generally the stronger title; for industrial use, HGB is the practical option.
Can HGB be used as bank collateral?
Yes. HGB can carry a mortgage right under UU 4/1996. Because the mortgage ends when the HGB ends (Article 18(1)(d)), lenders look closely at the remaining term and may require an extension.
What happens if industrial land sits unused?
Under PP 48/2025, HGB, HGU and Hak Pakai left deliberately unused can be flagged as idle land from two years after issue, followed by evaluation, warnings and possible designation.
Once the title type and remaining term are clear, comparing land options gets much easier. Yardzeal lists industrial and commercial land with the title type and certificate status stated up front. Browse the current listings when you are ready to compare.
This article is part of our Industrial Land guides.
See all articles on Industrial Land