30% of Jakarta housing developers go bankrupt
JAKARTA (JP): Some 30 percent of Jakarta's 900 developers are currently bankrupt due to the monetary crisis, an official said Saturday.
Yan Mogi, head of the Jakarta chapter of the Indonesian Real Estate Association (REI) told The Jakarta Post that the bankrupt developers had stopped operating over the past four months.
There are some 2,400 developers throughout the country.
"Most of them could not survive as the prices of building materials have soared and customer interest in property has fallen to a low," Yan said.
REI is currently compiling information on the collapsed development companies and will publicly announce its findings in a bid to prevent possible malfeasance actions by developers, he said.
"We want to avoid nasty action by irresponsible parties that eventually could hurt the people.
"It is possible that, for instance, a developer which has actually gone bankrupt could sell all of its property at a very cheap price and then run away from its obligations. People may not know anything and could become victims."
He also said only 10 developers had met their obligation to join the city's low cost-apartment development program as stated in Gubernatorial Decree No. 540/1992.
The decree states that each developer is obliged to set aside 20 percent of its property to build low-cost apartments.
"Currently, we are discussing this matter with the municipality because many developers have wrapped up their businesses for good and obviously cannot meet their obligations."
Yan also urged the government to delay the implementation of Law No. 21/1997, which imposes a 5 percent tax on buyers and sellers engaging in land transactions. He said the law could discourage property sales.
The regulation covers the sale of property worth Rp 30 million and above.
"It's not that I'm against the idea of taxes. But I think to implement this policy at this time will only discourage people from becoming investors in the property sector.
"They will certainly feel reluctant to pay such a large tax. It would be different if we were in a normal economic situation."
The law was set to be implemented last January but was delayed for six months, making it officially effective in July.
"I urge the government to further delay the implementation of this law until the economic situation gets better," Yan added.
The head of the city branch of the National Land Agency, Rizal Anshari, supported Yan's opinion saying that the regulation, if implemented during the crisis, would discourage people from buying property.
"Suppose you have a 200 square meter plot of land valued at Rp 1 million per square meter based on the value of taxable properties.
"But under Law No. 21/1997, if you decide to sell it, the buyer and you have to pay a tax amounting to 5 percent of Rp 200 million. In this tight economic situation, who would want to pay such a tax?" (edt)