I really do try to stay cool and impartial when I write
this column, but once in a long while I simply cannot contain
myself. Please sit down, Dear Reader. I’m building up
to a rant.
I happened to pick up a glossy real estate magazine the other
week which featured dozens of pictures of land for sale. Most
of the photos were of productive rice fields. And almost all
the ads stated that the land was freehold.
There are two serious issues here… the legalities of
land ownership here and Bali’s rapidly diminishing agricultural
land bank.
First, let’s look at this loaded word FREEHOLD. There’s
no such thing as freehold title as we know it in the west
for foreigners in Indonesia. From a recent interview with
Ibu Rainy Hendriany taken from www.BaliDiscovery.com, we have
the information that under no circumstances can foreigners
own property under Hak Milik (Freehold) title in Indonesia.
According to Ibu Rainy, many of these land and villa sales
involve the use of “Name-givers”or “Nominees”
whereby the freehold land certificate is in the name of the
Indonesian nominee. This is an arrangement that does have
risks which will vary according to the full documentation
involved and has the potential to create some very unhappy
scenarios. For the full story, visit the Bali Discovery website
and check out “This land is your land, this land is
my land”.
“As the value of property in Bali increases toward international
levels and if young Balinese find that they can no longer
afford land on their own island, it is possible that legal
disputes will become much more widespread than has been the
case to date,” said Ibu Rainy. “As a general rule,
it is not advisable for foreigners to enter into legal disputes
in Indonesian courts.”
(This is a masterful understatement. It will be a snowy Galungan
indeed when a foreigner wins a land dispute on Bali.)
Then there’s the interesting issue of due diligence,
which is very complicated in Bali due to the custom of multiple
children inheriting land under local law, usually without
a will or any documentation.
Ibu Rainy continues, ”In advising clients I often ask
if, in their own country, they would entrust the ownership
of their house or apartment to someone they did not know and,
if not, why would they do so in a country they don’t
know? I’ve been amazed by how easily normally rational
people -- who would be very careful about buying a used car
in their own country -- can commit to a substantial real estate
transaction in Bali without having a true understanding of
the facts.” Quite.
My own experience after 18 years of living and working in
Southeast Asia is that a contract is just about as good as
your relationship with your Asian partner or landlord.
So foreigners cannot own a piece of Paradise, period. Nor
should we. The Balinese benefit very little from losing their
land. Middlemen pressure farmers into selling their land cheaply,
then they resell it to foreigners at a huge profit. Most land
deals leave only a few of those big bucks in Bali; the bulk
of the money goes overseas. According to an editorial in the
Bali Post back in February 2005, about 85% of the substantial
amount of money invested in the island’s tourism industry
is in the control of non-Balinese investors.
High real estate prices are very tempting to Bali’s
poor farmers. But what could be sadder than a farmer selling
the family’s rice fields because his son wants to buy
a car or motorcycle? The vehicles will be history within a
few years, and the money will be long spent and the land gone
forever. Spiraling land costs are also creating new social
problems. Consider the anger and resentment generated at a
local level when huge amounts of money change hands in poor
communities. The Balinese don’t even benefit much from
increased employment opportunities. Labourers from Java and
Lombok are cheaper during the construction phase. Once completed,
most villas employ just a couple of staff and some villa complexes
actually hire maids from Java.
And consider this. Every year, Bali’s agricultural land
bank is reduced by about 1,500 hectares -- lost to strip malls,
tourism projects and villas, mostly owned by non-Balinese
and with profits going offshore. Common sense suggests that
it’s a bad idea to take farmland out of production on
a small, agriculture-based island in a country where food
security is an urgent matter. Let me rephrase that. It’s
not just a bad idea. It’s insane.
Then we have the issue of aesthetics. No one sets out to turn
a beautiful series of rice fields into a suburb, but has anyone
seen Penestanan lately? And just what IS a villa, actually?
Let’s not be so pretentious, please. Most so-called
‘villas’ are ordinary houses or townhouses of
generic design, many shoddily built, and with electrical wiring
that will literally make your hair stand on end. I don’t
have space here to touch on their impact on supplies of wood,
water and other dramatically diminishing resources. But I
will. I will.
Do they have to be so ugly? Celebrated landscape architect
and designer Made Wijaya’s considered opinion on contemporary
villa design: “South Asian holiday homes used to be
one-offs –- wildly original. Now they are one-OFS --
all the same. I’m tired of looking at ads for ugly villas.
It’s none of my business if the world’s most gorgeous
cultures want to turn themselves into Florida. It’s
just that the treeless, birdless, godless look of these villas
gets on my nerves. The ‘walled crematorium with one
temple tree’ look has spread as far as the Caribbean.
They all seem to be built from a kit.”
NusaBali reports that data from the Bank Indonesia (BI) show
the number of visitors staying outside hotels has risen from
5.9% in 2005 to 10% in 2007. BI estimates that villa operations
cost Bali an estimated US$348,000 a day in lost foreign exchange
earning. Although they use phone lines, electricity, roads,
water supplies and other infrastructure, villas don’t
pay taxes like hotels do, so revenue is lost there as well.
So Bali is losing foreign exchange, taxes, agricultural land
and its priceless cultural integrity.
Bali is beautiful, magical –- and finite. Every year
more of that beauty and magic –- the reason people come
here in the first place -- is buried under concrete. If you
must build, please do so on the Bukit, where there is little
agricultural land, or on the beaches, riversides and other
land that the Balinese don’t use. And don’t expect
to own an asset to hand down to your children. “This
villa situation is like a trailer park,” mused a friend
of mine who is very savvy about real estate. “You might
own the trailer, but you just rent the pad.”
