Builders told to subsidize customers

Builders told to subsidize customers

JAKARTA (JP): Indonesian Real Estate (REI), the association of
real estate and housing developers, has called on members to
subsidize their customers.

REI chairman Edwin Kawilarang said Wednesday the subsidy could
be given by offering interest rates lower than what the banks
charged.

"If the developers do not provide the subsidy, people will
stop buying houses under the current tight monetary policy. As a
result, developers will not be able to pay their loans to the
banks," he said.

Edwin said with the current lending rates of 25 percent to 30
percent no one would buy houses and those who had bought one
could not exercise their routine loan installment.

If this happened, housing developers would receive no money
from their buyers to pay their loans, he said. "As a result, they
could collapse," he added.

He said subsidizing the buyers would pose a financial problem
to developers, but it would be better than a downfall.

The loss, he said, could be offset from their previous gains.

Bank Indonesia raised its key interest rates early last week
to between 20 percent and 30 percent to stabilize the falling
rupiah. Commercial banks also raised their deposit rates 20
percent to 30 percent. As a result, analysts estimated lending
rates could reach between 24 percent and 35 percent as compared
to 21 percent to 24 percent last month.

Subsidizing customers would only be a temporary measure, he
said, because if developers were required to give a subsidy for a
long time it would be detrimental to their businesses.

He therefore called on the government to ease the tight
monetary policy as soon as possible. (aly)