Some foreign investors in Bali have found a sneaky way around ownership laws, by marrying locals and using nominee agreements to gain control of land and businesses.
Bali’s had enough. With fictitious Foreign Investment Companies (PT PMA) popping up and unlicensed villas spreading, the government is fast-tracking a regional regulation on nominee agreements, aiming to enact it by the end of this year. So, what’s the full story?
Reduced Regional Revenue
The Deputy Governor of Bali, I Nyoman Giri Prasta, highlighted the issue of contractual marriages involving foreign nationals and local residents as a loophole allowing both of these problems to occur.
“There is a significant influx of foreign investment without legitimate mechanisms. Contract marriages are also widespread, leading to villas being built on land with falsified ownership status,” said Giri Prasta on 25th April 2025, as quoted from Sekilas Media.
Giri Prasta added that unscrupulous foreign nationals who “pay” local residents to become their legally recognized spouses can freely carry out investment activities in the name of their partners (nominee practice) without being subject to the requirements for Foreign Investment Companies.
This subsequently triggers a series of other problems in Bali. For example, the misuse of land that does not comply with regulations and a decline in hotel occupancy despite an increase in tourist visits to Bali.
It was recently discovered that tourists prefer to stay in unlicensed villas owned by foreign nationals, which in turn reduces regional revenue. Those unscrupulous foreign nationals, Giri Prasta continued, are marketing these villas through their social media.
“This deceptive tactic has been in play for a long time—while the assets are registered under the wife’s name, the real authority lies with foreign entities. It’s a manipulative scheme that demands action to put an end to it,” Giri Prasta concluded.
Null-and-Void Agreement
Contractual marriages has fueled illegal foreign investment and unregistered villas, posing challenges to Bali’s tourism sector. In Indonesia, nominee agreements, where assets or company shares are placed under another person’s name, are prohibited and not legally recognized.
Despite the common use of terms like pinjam nama or nominee agreement, there are no clear regulations explicitly addressing these arrangements. Giri Prasta acknowledged that the lack of specific laws makes it difficult for authorities to take decisive action against violations by foreign nationals.
These agreements come with serious legal risks:
• Invalid & Unenforceable: Courts are likely to declare nominee agreements—especially involving foreign land ownership—null and void, as they violate Indonesia’s Basic Agrarian Law No. 5 of 1960 and nationality principles. Articles 21 & 26 explicitly state that only Indonesian citizens can own land, and transferring ownership to foreigners—directly or indirectly—is illegal.
Legal Conflicts: Such agreements often lead to disputes between the nominee and the foreign investor, as well as with third parties.
Potential Criminal Consequences: In certain cases, nominee agreements may be classified as asset concealment or fraudulent ownership, which could lead to criminal charges.
Without stronger legal frameworks, nominee practices remain a problematic loophole, raising concerns about law enforcement and investment integrity.
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Sources: RadarBali, SekilasMedia, MCWNews
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