Government won't fully open local property market<\/p>\n
JAKARTA (JP): State Minister of Public Housing Akbar Tandjung
\nrejected demands from housing developers yesterday to fully open
\nthe local property market to foreigners, which they argue would
\nbolster today's sagging market.<\/p>\n
Akbar told a seminar on property law that the government's
\nchief concern is still in providing affordable housing for
\nIndonesian people.<\/p>\n
He said Indonesian regulations encourage foreign investors to
\ndevelop houses and build apartments, but not to own them.<\/p>\n
Speaking at a seminar to review Indonesian property law with
\nregards to foreign ownership, Akbar said he disagreed with the
\nargument that allowing foreigners unlimited access to Indonesian
\nproperty would stimulate the housing market.<\/p>\n
"Based on my own observations, the demand for low-cost housing
\nis still far in excess of what the developers can supply," he
\ntold the seminar organized by Tistra Communication at the Grand
\nHyatt. "If there are marketing problems, it is largely occurring
\nin the market for luxury property, particularly apartments."<\/p>\n
The one-day seminar was held amidst fears that the completion
\nof hundreds of new luxury apartments would glut the local
\nproperty market, particularly in Jakarta.<\/p>\n
The leading property consultant, PT Procon Indah\/Jones Lang
\nWootton, said in a report last week however that its own survey
\nfound the demand for apartments, including condominiums, in
\nJakarta to be stable.<\/p>\n
Akbar said the current regulation by the State Investment
\nCoordinating Agency permits foreign investors to undertake
\nhousing development projects.<\/p>\n
The List of Investment Opportunities states that foreign
\ninvestors can take part in the development of non-apartment
\nhousing for the low, medium and upper segments of the market.<\/p>\n
However, the list makes no mention of the construction of
\napartments, he noted. "But, in my opinion, the construction of
\napartments should also be open to foreign investors, because it
\nis now time to introduce the concept of living in high rise
\nbuildings to improve efficiency in land use and in property
\ninvestment as well as in public facility maintenance."<\/p>\n
Akbar said Indonesian investors could only supply about a
\nfifth of the demand for new housing in large cities, which reach
\n610,000 units each year.<\/p>\n
Nationwide, Indonesia needs to build one million housing units
\neach year simply to keep up with the growing population and make
\nup for the shortages that have been accumulating over the years.<\/p>\n
Akbar said the law allows for restricted ownership of
\nIndonesian property by foreign investors through corporations,
\nrather than individuals.<\/p>\n
The 1960 Agrarian Law and the 1985 law on apartments allow
\nforeigners residing in Indonesia to own apartments for their own
\nuse, which must be built on land with a leasehold title.<\/p>\n
The regulation, however, requires further clarification
\nbecause there is still debate over whether the leasehold should
\nbe limited to 10 years or longer, he said.<\/p>\n
Akbar said there are some Indonesian experts and government
\nagencies disagree as to whether or not foreigners should be
\nallowed to own non-apartment property, with many arguing against
\nthe idea.<\/p>\n
"I think the question of foreigners owning Indonesian property
\nother than apartments should be thoroughly discussed and studied,
\ntaking into account the cost and benefit to the nation and the
\nstate," he said.<\/p>\n
Several housing executives and their lawyers have said that
\nuncertainties in Indonesia's property law have deterred many
\npotential foreigners from investing in Indonesian property.<\/p>\n
As a result, lawyer Otto Cornelis Kaligis, one of the speakers
\nat the seminar, said foreign investors have gone to other
\ncountries where the law is clearer, such as Malaysia and even
\nChina. "Some are daring to enter Indonesia at the risk of
\nbreaking the law."<\/p>\n
Yopie S. Batubara, the deputy chairman of Indonesian Real
\nEstate, argued that Indonesia should change its law and allow
\nforeigners to buy land.<\/p>\n
He recalled that Japanese and Canadian investors pulled out of
\ntheir plan to invest in Nias Island off the western coast of
\nSumatra due to uncertainties in the property law. (03)<\/p>",
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"sponsor": "Okusi Associates",
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