Developer urges higher house fees

Developer urges higher house fees

JAKARTA (JP): A developer and former developers association
executive suggested raising the fees for the construction of
expensive homes and using the balance to cover the costs of
constructing cheap houses.

Mohamad S. Hidayat, former chairman of the Indonesian
Association of Developers (REI), was responding to earlier REI
requests for the government to reduce at least 28 percent of the
costs of building cheap homes.

"If the government is really committed to providing low cost
homes, the costs could be zero," Hidayat said yesterday.

The fee increase for the construction of homes 36 square
meters or more could cross-subsidize building cheap homes to make
them cost-free.

"The scheme would alleviate the fears of regional governments
that significant revenue would be lost if certain costs were
reduced.

"We're talking about consumers earning Rp 150,000 (US$62.87) a
month. Surely they should not be burdened," Hidayat said.

Yesterday State Minister of Public Housing Akbar Tandjung said
the ministry was studying REI's proposal.

"REI has listed all the costs involved and we are studying
them to see whether any of them can be reduced," Akbar said after
a ground breaking ceremony at the Graha Niaga II building in
South Jakarta.

REI chairman Edwin Kawilarang had said developers were
reluctant to build low cost homes because of the steep costs
involved compared to selling prices.

The 28 percent REI members want reduced comprises 10 percent
taxes, 5 percent for legal documents, 3 percent in fees and 10
percent for both permits and levies.

Meanwhile the government has set prices for low cost homes.
Twenty-one-square-meter homes are Rp 4.9 million and 36-square-
meter homes are Rp 6.9 million.

Last year the government ruled that developers building low
cost homes no longer have to apply for building permits, which
may reduce part of the costs. Sources say the rule has yet to
come into effect.

Private developers have been criticized for avoiding building
low cost homes. A 1995 government rule states six low cost homes
must be built to every three middle level homes and one luxurious
home.

Hidayat added regencies should set targets for low cost homes.
The government planned to build 500,000 units in four years. On
Monday President Soeharto announced the government had allocated
Rp 1.5 trillion to support the building of more such homes, or
110,000 houses in the 1997-1998 period. (anr)