Developers build houses on industrial estates

Developers build houses on industrial estates

JAKARTA (JP): The Federation of Industrial Estates admitted
yesterday that some of its members have been building housing
estates and golf courses on land initially acquired to establish
industrial estates.

Federation Chairman Halim Sahab made the admission in a
statement during a hearing of House Commission VI for industry
and investment, in response to legislators' concerns over the
increasing number of golf courses and housing estates sprouting
on land originally planned for industrial estates.

Halim said, however, that industrial estates which have
changed their land utilization have done so legally and with
support from local administrations.

"The change in land utilization is possible because local
administrations have been willing to change the companies'
permits to ones that allow for the construction of housing
estates or golf courses," he said.

"Additionally many industrial estate companies use part of
their industrial areas to build housing estates or golf courses
and do so under a different company name," he added.

Halim highlighted that there is currently no law against this
and pointed out that any changes in land utilization permits are
made under the auspices of the Ministry of Justice.

He said that local administrations will usually allow such a
change if it conforms with the local site plans.

"Since the legality is given by a local administration, it is
no longer a problem for the federation," he said.

Legislator Iskandar Mandji of the Golkar faction expressed
concern over such changes because it reduces the size of
industrial estates.

"The government has issued many deregulatory measures to
stimulate activities in industrial estates and encourage
manufacturing firms to move into the estates, but what good is
this if the estate companies themselves do not make use of this
chance," he said.

Iskandar said industrial estate companies lack
competitiveness, as shown by the reluctance of many manufacturing
companies to set up factories in industrial estates.

According to the federation's figures, 2,969 hectares of land
in Jakarta have been allocated for industrial estates under the
management of four companies. From this total, 99.12 percent has
so far been acquired. However, only 453.93 hectares or 15.4
percent of the acquired land has been sold to manufacturing
corporations.

In Tangerang, West Java, nine companies with a total land
allocation of 2,150 hectares have managed to acquire 48.84
percent of the land they want. But they have only managed to sell
80 hectares, or only 7.62 percent of the acquired areas.

In Serang and Karawang, both also in West Java, 24 industrial
companies have so far managed to sell only 16.24 percent and
14.15 percent of their acquired land respectively.

In Batam, in Riau province, and East Java, 18 industrial
companies have managed to sell 16.02 percent and 24.5 percent of
their acquired land, respectively.

Iskandar said the small percentage of areas sold to
manufacturing firms shows that industrial estate firms have not
yet met the expectations of manufacturing firms.

Apart from changes in land utilization, he said, another
reason that the estates are uncompetitive is the expensive prices
of the individual sites.

Halim said the high prices are due to high land acquisition
costs, caused by legal and illegal fees as well as the need to
build infrastructure facilities and supporting facilities such as
health clinics and sports venues.

"There is also a law which says that in an acquired area, only
70 percent can be used for industrial purposes, while the
remaining 30 percent must be allocated for non-commercial
purposes and infrastructure facilities," he said. (pwn)