Developer rating system demanded

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)