How to Vet a Developer in Bali and Indonesia: 10-Step Due Diligence Checklist

Off-plan discounts in Bali can run as high as 30% against a finished villa's price. That exact figure is what sinks investors: the payment buys a promise, not an asset. Legally, an unfinished project falls under Wanprestasi (Article 1243 KUHPerdata), but winning a refund case in court is hard, especially when the project has no liquid assets left to claim².

Vetting a developer in Indonesia is not a conversation in a showroom. It is five documents, one PPAT notary, and two site visits.

Below is a working checklist for Bali and Jakarta buyers: what to demand, where to check it, and what timelines and rates to budget for.

Quick Answer

• Land first, brand second. Demand the land certificate (SHM or HGB) registered to the developer's company, not to an individual partner. A mismatch between the certificate name and the PPJB name is a stop signal⁴.

• PBG, not IMB. Since 2021, Indonesia's building permit is called PBG (Persetujuan Bangunan Gedung). A project without a PBG at the time of sale is selling a render, not a building.

• PPJB, not a handwritten receipt. The preliminary sale and purchase agreement (PPJB) is signed before a notary; under current rules a unit can be sold via PPJB once construction reaches at least 20%. Confirm the exact threshold and wording with a local lawyer before signing.

• Track record beats the brochure. Look for completed projects from the same legal entity, feedback from current owners, and valid permits already issued on finished buildings¹.

• Complaints and litigation. Check whether the developer has been named in consumer complaints or failed to deliver on brochure and contract promises⁵.

• Progress on the ground. Track actual construction progress, not photo updates sent over messaging apps³.

Scenarios and Options

Scenario 1: buying from an established developer with a delivery history. The price runs 10-15% above market and the launch discount is smaller, but finished blocks exist and can be inspected in person. Trade-off: you pay for lower completion risk and accept a lower entry yield.

Scenario 2: a new developer, first project, 25-30% discount. The most common setup in Canggu, Pererenan and Uluwatu. Here, due diligence does all the work: land certificate, PBG, and a payment schedule tied to construction milestones rather than calendar dates. If payments are tied to dates rather than actual progress, the entire risk shifts to the buyer².

Scenario 3: entering through a bank. If the project is accredited by an Indonesian bank for KPR mortgage lending, the bank has already verified the land and permits itself, a free layer of screening⁵. Downside: non-resident foreigners rarely qualify for KPR, but the bank accreditation itself remains a strong credibility marker.

Scenario 4: buying a completed unit instead of off-plan. You give up the groundbreaking-stage discount, but you get the certificate, the PBG and a working rental stream immediately. For a first deal in Indonesia, this is often the more sensible route.

Comparison Table

Main Risks and Mistakes

The project stalls or gets redesigned. The developer changes the layout or floor area, the delivered unit doesn't match what was promised, and there's no financial guarantee behind it². Mitigation: lock an acceptable area tolerance (typically no more than 2-3%) and a late-delivery penalty into the PPJB.

The land doesn't actually belong to the developer. A classic Bali setup: the plot belongs to a local landowner under a verbal arrangement. Mitigation: cross-check the certificate name against the PT PMA incorporation documents⁴. Bali police have even launched a dedicated Land Mafia Task Force (Satgas Anti Mafia Tanah) to investigate forged titles and illegal land grabs targeting foreign buyers².

Delivery date with no consequences. The PPJB states a deadline but carries no penalty clause. Mitigation: require a daily penalty rate for delays plus the right to terminate with a full refund.

Cash payments or transfers to a personal account. Funds disappear outside the company's financial perimeter. Mitigation: bank transfers to the corporate account only, ideally with project-level segregated accounting.

Leasehold shorter than the payback period. If the land has 20 years of leasehold left but the project needs 12 years to break even, the remaining term can wipe out resale value. Mitigation: check the residual term and any locked-in extension rights.

No construction oversight. Mitigation: independent technical supervision and personal site visits every 4-6 weeks³.

FAQ

How do I check if a Bali developer actually has a building permit?

Request the PBG number and verify it directly with the regional administration (Badung, Gianyar, Denpasar). Verbal assurances that 'the permit is in process' are not proof of anything⁴.

What is a PPJB and how is it different from an AJB?

The PPJB is a preliminary sale and purchase agreement for a property still under construction. The AJB is the deed of transfer, signed before a PPAT once the unit is delivered. Read the PPJB carefully for the delivery deadline and termination terms³.

Can I get my money back if a developer fails to finish the project?

Formally yes: non-performance is classified as Wanprestasi under Article 1243 KUHPerdata. In practice, recovery depends on whether the project entity has any liquid assets left, so a court win can end up being a symbolic one².

What's a normal off-plan discount in Bali?

The market range runs 15-30% against a comparable finished unit. A discount above 35% usually signals the developer is plugging a cash shortfall using buyers' deposits.

How risky is a new developer with no completed projects?

It's a heightened risk by definition. The best reliability indicator is a portfolio of delivered buildings with valid permits and feedback from owners actually living there¹. For a first-time developer, compensate with escrow, staged payments, and strict PPJB penalty clauses.

Does anyone besides the buyer screen developers?

Yes. Pre-project selling is permitted under active oversight from central and regional regulators, and a bank accrediting a project for KPR lending runs its own independent check on land titles and permits⁵.

How often should I visit the site?

Every 4-6 weeks, or hire a technical supervisor to do it for you. Tracking actual construction progress is explicitly named as one of the core buyer protection measures³.

What taxes should I budget for at transfer?

At transfer of title, the buyer pays BPHTB at a rate of 5% of the taxable base, minus the regional tax-free threshold; the seller pays final PPh. Exact deduction amounts vary by region across Bali, so confirm with the local tax office.

Source: CNBC Indonesia

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This material was prepared with the help of artificial intelligence and checked by a person. Editorial responsibility: Housebook Investment LLC.