Foreigners still facing barriers to buying houses<\/p>\n
By Devi M. Asmarani<\/p>\n
JAKARTA (JP): Two years have past since the government enacted
\na regulation allowing foreigners to own properties in Indonesia,
\nbut in practice this has not helped them purchase their own homes
\nin this country.<\/p>\n
Developers, property consultants and home buyers all complain
\nabout the poor implementation of Govt. Regulation No. 41\/1996,
\nwhich states that a foreigner with a legal residency permit is
\nallowed to buy property here.<\/p>\n
\"The regulation has been unable to help save the property
\nsector from a crash and it is simply powerless to help foreigners
\nbuy properties here,\" property analyst Panangian told The Jakarta
\nPost.<\/p>\n
Panangian blamed a lack of action of the part of the
\ngovernment for poor implementation of the regulation.<\/p>\n
He said that information pertaining to the regulation had
\nnever been disseminated to the public following its issue by the
\nOffice of the State Minister of Land Affairs.<\/p>\n
Poor understanding of the regulation lead to the central
\ngovernment and local administrations interpreting it in different
\nways, he said.<\/p>\n
Even the State Minister of Land Affairs, Hasan Basri Durin,
\nrecently admitted that a lack of awareness of the law had
\nimpaired its efficacy.<\/p>\n
Panangian said he expected the country to absorb at least Rp
\n14.9 trillion (US$1.86 billion) from the sale of property to
\nforeigners by this year, adding that the real figure had yet to
\nreach even 10 percent of that amount.<\/p>\n
The regulation stipulates that a foreign national with
\nresidency permits or who visits the country regularly or on a
\nseasonally basis for business reasons is allowed to own a
\nproperty -- a home, apartment or condominium unit -- provided it
\nis not in a subsidized housing scheme.<\/p>\n
Panangian said problems surrounding land titles had prevented
\nproperty developers from tapping into the market potential opened
\nup by the regulation.<\/p>\n
Under the law, foreigners can only buy property which has a
\nland-use rights certificate, however most property owners in
\nIndonesia hold building-use (the right to build) titles.<\/p>\n
Potential buyers are often discouraged by the long and
\ncomplicated procedure required to convert a building-use title
\ninto a land-use title -- a process that can take over six months.<\/p>\n
An expatriate said that he has been trying with no avail to
\nbuy a house in Indonesia for over two years now.<\/p>\n
\"I hired an attorney to make all the necessary arrangements
\nand I was told to wait for six months, but up to now, nothing has
\nmaterialized,\" he said.<\/p>\n
Most apartment building owners hold building-use titles, not
\nland-use titles.<\/p>\n
Since all apartment buildings are only covered by a land
\ntitle, the buyer of an apartment cannot have a land certificate
\nthat is different from the one that has been issued for the
\nbuilding. Consequently, foreigners cannot buy apartment units
\nbuilt under building-use certificates, unless the land title is
\nconverted to a land-use certificate.<\/p>\n
Land-use titles last for 25 years and are extendible for a
\nfurther 20 years. The title can then be renewed for another 25
\nyears.<\/p>\n
Building-use titles are effective for 30 years, and can be
\nextended for another 20 years, after which they can be renewed
\nfor another 30 years.<\/p>\n
Holders of land-use titles can obtain the rights to their
\nproperty for 70 years without having to extend and renew their
\ncertificates, while holders of building-use titles must apply for
\nextension and renewal of their certificates to get the full 80-
\nyear rights.<\/p>\n
Currently, most Indonesians prefer land-use right titles
\nbecause of poor awareness of the land-use title. Up until 1996,
\nland-use titles were only effective for a 10-year period.<\/p>\n
Third party<\/p>\n
Despite the possibility of owning properties in their own
\nright, it remains simpler for foreigners to purchase under the
\nname of an Indonesian national.<\/p>\n
That is how most property transactions take place in Bali, the
\ncountry's number one tourist destination.<\/p>\n
A property consultant in Bali said that although many
\nforeigners have purchased properties in the area, not one single
\nland-use certificate has been issued in a foreigner's name.<\/p>\n
\"Transactions that do take place have all been engineered by
\ndevelopers. Foreigners must buy properties through a third party
\nwho is a native Indonesian,\" he said.<\/p>\n
Panangian called on the government to review the current
\nregulation and to monitor its implementation.<\/p>\n
He said the government had not even addressed cases involving
\nthe sale of properties to foreigners in Batam, Riau, which set \"a
\nbad precedent\" for the entire domestic property sector, he said.<\/p>\n
In late 1980s, many Singaporeans bought properties on Batam,
\nan island reachable by a half-hour boat journey from Singapore,
\nbefore the regulation was drafted.<\/p>\n
Properties were purchased through third parties and buyers
\nwere promised that they would be able to convert the properties
\ninto their own names in due course.<\/p>\n
However, even after the 1996 regulation was enacted,
\nbureaucratic problems prevented this from ever taking place, he
\nsaid.<\/p>\n
\"This has badly damaged our image in the eyes of potential
\nbuyers,\" he said.<\/p>",
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