Sham Marriages: How Foreigners Bypass the Law for Land Ownership in Bali

In Bali, the practice of nominal landowners or name lending agreements is gaining popularity. Simply put, foreigners who legally cannot own land in Bali, enter into contractual marriages with Balinese people so that the land can belong to them.

The name lending agreement involves two parties: the party providing the name or nominee (a Balinese with residency), and the party taking the name or beneficial owner (the foreigner). Under the contract, the nominal owner (Balinese) agrees to act on behalf of the beneficial owner (foreign citizen) to manage or own assets.

Thus, foreign citizens who are legally not allowed to invest in Indonesia, do so using the name of a local citizen. Balinese people agreeing to lend their name receive compensation of up to 2 billion rupiahs from the foreigner.

Such agreements violate Bali's law, leading to fraud, document forgery, and embezzlement. Moreover, the practice of nominal ownership can lead to the conversion of agricultural land in Bali.

The government of Bali province is now developing a regional regulation on nominal owners (Perda). One of the main aims of this regulation is to control the leasing of villas by foreigners in Bali without official permission.

The Deputy Governor of Bali, I Nyoman Giri Prasta, stated his intention to complete the development of the regional regulation by 2025. According to him, the document will regulate the various practices used by foreign citizens to control property in Bali, including the practice of contractual marriages with citizens of Indonesia.

“With this regional regulation on appointment, everything can be pursued by law, including contractual marriages. Our citizens involved in the system of contractual marriages are being paid half a billion, 1 billion, and even 2 billion rupiahs; and they can make deals (invest),” he said.

In addition, foreigners often use the WeChat app for these secret deals. WeChat is a Chinese messenger with an enhanced privacy protection system, so such messages cannot be traced.

The practice of nominal ownership via contractual marriages allows foreigners to illegitimately own and manage villas in Bali. Therefore, the regulation will also provide the island's authorities with a legal basis to take action against villas operating illegally in Bali.

Currently, without this regulation, law enforcement officers in Bali cannot take any action against foreign investments, let alone illegal villas. “We must do this to implement strict measures to bring order among foreign tourists on the island of Bali,” concluded Giri.