Restrictions on the foreign ownership of property. Indonesia and Singapore compared

DOIhttps://doi.org/10.1108/14635780410525162
Publication Date01 Feb 2004
Pages101-111
AuthorRichard Ming Kirk Tan
SubjectProperty management & built environment
Restrictions on the foreign
ownership of property
Indonesia and Singapore compared
Richard Ming Kirk Tan
Department of Real Estate, School of Design and Environment, National
University of Singapore, Singapore
Keywords Property, Legal systems, Indonesia, Singapore
Abstract Many countries have restrictions on the foreign ownership of property in their territory
and there have been attempts to circumvent such restrictions. This article looks into the restrictions
and shows how various methods have been used to try to circumvent them. It focuses on the
situation in two Asian countries, namely Indonesia and Singapore. These two countries represent
two stages of legal development and two of the main families of legal systems, i.e. Indonesia coming
from a civil law system and Singapore from a common law one. The article also shows how the
differences in laws and treatment of legal issues have resulted in different situations in each
country. However, it would seem that despite the differences in the two countries, arrangements to
circumvent restrictions on the foreign ownership of property would be considered illegal in both
countries and therefore would not be enforced.
Introduction
With more cross border investment and international travel taking place, there
has been an increasing interest in the acquisition of foreign properties.
However, a foreigner’s acquisition of a country’s land (also called “property” in
this article) often evokes adverse emotional and other reactions. This
xenophobic response appears to be same throughout many parts of the world
regardless of the type of culture, government or political philosophy. For
example, in the US, local concerns about foreigners’ purchase of US agricultural
land in the 1970s led to restrictions in their purchase of farmland in 20 States,
despite some doubts as to the economic justification (Luttrell, 1979). They also
led to US Congress approved legislation requiring foreign purchasers of US
farmland to report their purchases of long term leases of agricultural land to
the US Secretary of Agriculture (Luttrell, 1979). On the other side of the world,
an increase in speculative activity in the property market, especially by
foreigners, resulted in amendments to the National Land Code of Malaysia in
1985 that essentially prohibited foreigners from acquiring certain types of land
without the necessary prior approval (Fernandez, 1997). Thus, it is not
surprising that many countries have restrictions on the foreign ownership of
land within their territory. Like in many other areas governed by restrictive
laws, there have been attempts to circumvent the restrictions on the foreign
ownership of property. Moreover, in socialist countries like Vietnam, the
constitution and property law may actually provide that the land belongs to the
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.em eraldinsight.com/res earchregister www.em eraldinsight .com/1463-578X .htm
Foreign
ownership of
property
101
Journal of Property Investment &
Finance
Vol. 22 No. 1, 2004
pp. 101-111
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/14635780410525162

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