Developer rating system demanded

JAKARTA (JP): Ciputra, one of the country's most successful property developers, suggested Thursday a special rating agency to assess property and housing developers be established.

Ciputra, the Ciputra Group's founder, said a rating agency was needed to assess the credibility and financial strength of property and housing developers.

"It will help protect housing or other property buyers," he said after a panel discussion here on how to become a conglomerate.

Ciputra was responding to a suggestion by Minister of Public Housing, Akbar Tandjung, that insurance companies help eliminate fraud in the housing industry.

He said if developers failed to finish their projects, insurance companies would be responsible for paying back buyers. "For this, the developers should pay the insurance premium," he added.

Developers have frequently failed to build houses that buyers have paid down payments on, because of financial difficulties. Some have even disappeared with the money.

Ciputra said the proposed agency should be independent and must be closely overseen by the housing ministry.

Although he agreed with the insurance idea, Ciputra said the proposed measure must not burden developers, especially small ones, with high additional costs.

"What is more important is to inform customers of the range of properties available and to appraise companies' to show their credibility," he said.

Ciputra said there was a need for the Indonesian Real Estate Association (REI) to screen its members well before accepting them.

REI must guarantee that all its members are dependable so consumers can trust the developers, he said.

President Soeharto earlier proposed developers give home buyers bank guarantees to insure payment in case the developers fail to build the houses.

Many developers disagree with the proposal saying it would overburden small developers.

In the discussion, Ciputra also said his three companies would strengthen their financial divisions including Bank Ciputra, and Asuransi Ciputra.

"The financial division contributes about 5 percent of business in all three of the companies now, and it will take about 10 years before it can compete with the other core businesses," he said.

All big multi-business corporations must have a strong financial division to back them up, he said.

The Jaya, Metropolitan and Ciputra Groups operate in property, construction, consultancy, industry, finance, tourism and information. (02)