FIABCI, the International Real Estate Federation, has thrown its weight behind persistent calls for the government to allow foreign ownership of property in the country, as Indonesia would be an attractive market.
The government could do this by revising its rules banning such ownership, which should help revive the country's property market currently hit by the global downturn, said visiting FIABCI world president, Lisa Kurass, on Monday evening.
"We're supporting urging the Indonesian government to reform its property law," Kurass told a press conference, also addressed by Real Estate Indonesia chairman Teguh Satria, and Public Housing Minister Jusuf Asya'ri.
Unlike some other countries, such as Malaysia and Singapore, which allow expatriates to own property, Indonesia still bans this. Based on the prevailing 1996 government regulation, foreigners cannot own houses, apartments, and condominiums in Indonesia.
They are only allowed to have utility rights up to 20 years, then eligible for another 20 year extension.
FIABCI is an international real estate federation that is represented by chapters in 48 countries, including Indonesia, with the objective of helping members to add an international dimension to their businesses and optimize business opportunities all over the world.
Kurass noted that the Indonesian property market has good potential and can be made more attractive by further reforming the law.
"The Indonesian property mar-ket has an important role in the regional property market. With its third largest population in Asia after China and India, its residential and commercial sectors are very promising."
Property developers have long called on the government to change the law, which in part has led to expatriates using loopholes in the existing laws to indirectly own houses, apartments or condominiums.
For example, a foreigner will ask a local person to buy a house with his money. Then before a notary they would sign an agreement saying that the local person gets a loan from the foreigner worth the same amount of the house price.
And based on this agreement, the loan will be made permanent while the house, used as collateral, can be taken over anytime.
Jusuf Asya'ri said that the government was already working on an agenda to change the law banning foreign ownership. "We're working on it," he said.
Teguh Satria noted that as the Indonesian economy was improving, and that its property sector would start growing faster and stronger in the second half of this year.
"We can see some positive indicators. The banking industry has been trying to improve its liquidity and cut interest rates. A number of foreign companies have been starting to invest in Indonesia.
"And the Indonesian economy, together with those of India and China, are the only *major* economies that can still produce positive growth," he said.