Developers told to issue bank guarantees<\/p>\n
JAKARTA (JP): President Soeharto requested property developers
\nyesterday to give home buyers bank guarantees to ensure payments
\nin case they fail to build houses.<\/p>\n
\"The President said developers should open accounts in banks
\nfrom which clients could withdraw their money if houses are not
\nbuilt as planned,\" State Minister of Public Housing Akbar Tanjung
\nsaid yesterday after meeting Soeharto.<\/p>\n
Tanjung said developers should ask their banks to issue
\nguarantees to buyers, who could cash them in if they felt
\ncheated.<\/p>\n
\"Don't buy from a developer who does not provide a bank
\nguarantee,\" Soeharto was quoted by the minister as saying.<\/p>\n
Tanjung said he and other ministers would see if the
\ngovernment needed to issue a special ruling for the guarantees.<\/p>\n
Developers have frequently failed to build houses for buyers
\nwho had made down payments.<\/p>\n
In October, a delegation representing 700 disgruntled
\nhome buyers from the East Java capital of Surabaya went to the
\nNational Commission on Human Rights because they had been cheated
\nby a cooperative run by retired military officers.<\/p>\n
They paid Rp 2.5 billion (US$1.1 million) in installments over
\ntwo years but the cooperative had not built their houses and its
\nmanager had disappeared.<\/p>\n
In another case, about 2,500 people employed by the Ministry
\nof Transmigration and the National Family Planning Board were
\ncheated by a Jakarta Workers Cooperative which promised to build
\nhouses in cooperation with a developer.<\/p>\n
They paid billions of rupiah in initial payments for houses
\nwhich have not been built.<\/p>\n
Tanjung said he had reported this fraud to the President.<\/p>\n
To prevent further fraud, Tanjung said, the Ministry for
\nPublic Housing had sent letters to all government offices asking
\nthem to consult the ministry before choosing partners to develop
\nhousing projects.<\/p>\n
Tanjung said some irresponsible developers had blatantly
\ncheated their clients and some lacked capital because they could
\nnot get loans.<\/p>\n
Many buyers failed to check the credibility of developers
\nbecause they were desperate for houses, he said.<\/p>\n
The government could not check the credibility or financial
\nsoundness of a developer because this was not among the licensing
\nconditions for housing projects.<\/p>\n
\"Normally, a developer gets 70 percent of its finance from
\nbank loans and 30 percent from its equity,\" he said.<\/p>\n
Tanjung also told the President that 110,000 cheap houses
\nwould be built in the 1997\/1998 fiscal year.<\/p>\n
The government expects that 500,000 cheap houses will be built
\nin the Sixth Five-Year Development Plan which will end in 1999.<\/p>\n
Tanjung was optimistic that this target would be achieved
\nbecause 413,000 cheap houses had already been built.<\/p>\n
\"We will probably have built 600,000 low-cost houses by the
\nend of the current Five-Year Development Plan,\" he said. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/developers-told-to-issue-bank-guarantees-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}