BALINEWSID.COM, DENPASAR — The Regional Office of Indonesia’s National Land Agency (BPN) in Bali has raised concerns over the increasing misuse of land ownership through nominee arrangements, warning of potential risks not only in the agrarian sector but also in the financial system.

Head of the BPN Bali Regional Office, Eko Priyanggodo, said the nominee practice—where an Indonesian citizen (WNI) is listed as the legal owner of land while the actual control lies with a foreign party—is becoming more prevalent across the island.

According to Eko, such arrangements violate agrarian regulations and create loopholes that can be exploited for unlawful purposes.

“The concern is that an Indonesian citizen purchases land, but there is a foreign party behind it. Once the land certificate is issued, it can be used as collateral, potentially to defraud banks. This is something that needs to be mitigated,” he said during a recent interview at his office.

He added that these practices often only come to light when disputes arise. There are also indications that funds generated from such transactions may be transferred abroad, posing further risks to the national economy.

“We usually identify nominee arrangements only after disputes occur. I have not heard of cases involving state-owned banks, but based on the information we have received, funds can flow overseas. This is not good for investment,” he stressed.

Eko acknowledged that detecting nominee practices remains challenging, as they are typically carried out through formal legal mechanisms, including sale and purchase agreements executed before a notary.

“In practice, these transactions are made legally through notaries with sale and purchase agreements. Meanwhile, our working partners are Land Deed Officials (PPAT),” he explained.

He also highlighted the dual roles that can be held by a single individual, who may act both as a notary and as a Land Deed Official, operating under different ministries.

“One person can have two roles—serving as a notary under the Ministry of Law and Human Rights and as a PPAT under the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency,” he said.

Despite the challenges, Eko emphasized that existing regulations already require both notaries and PPATs to apply the principle of identifying the source of funds in every transaction.

“In fact, both notaries and PPATs are required to comply with regulations related to recognizing the source of funds. The rules exist, but perhaps they have not been widely socialized,” he noted.

He further reminded the public of legal provisions concerning land ownership in mixed marriages. Referring to Law No. 5 of 1960 on Basic Agrarian Principles, foreign nationals are prohibited from holding ownership rights over land in Indonesia.

“In the context of marriage, Article 21 of Law No. 5 of 1960 stipulates that if a foreign national acquires land rights, they must relinquish them within one year—either by selling or transferring the rights to another party,” Eko concluded.