Developers pocketing subsidies: Minister
JAKARTA (JP): Many developers of small and very small basic houses have pocketed some of the government subsidy designated for buyers of low-cost houses, Minister of Agrarian Affairs Soni Harsono said yesterday.
Soni, who is also chairman of the National Land Agency, said his office has subsidized the fees of land certificates for simple and very simple houses.
The intended use of the subsidy is to reduce the sales price of small houses so that those who are entitled to buy the houses can benefit indirectly from the subsidy.
However, Soni said, the end users can hardly enjoy the subsidy because the house prices continue to increase. He alleged that the subsidy is enjoyed by developers who build the small houses.
"What then is the point of a subsidy for the needy if the subsidy is enjoyed by the developers, not by the buyers?" Soni queried at a seminar on community-based housing organized by state-owned Bank Tabungan Negara.
Soni admitted that the rise in small house prices is due to the rise in prices of building materials.
However, Soni said developers often enjoyed abnormally high profits by raising sales prices disproportionally to the costs of building materials.
He said the prices of houses built by developers in Greater Jakarta stands at 360 percent of the prices of houses built by firms which do not obtain subsidies from his office.
Soni explained that the prices of small houses built by developers in Greater Jakarta should average Rp 300,000 (US$131) per square meter. However, several developers often charge customers between Rp 400,000 and Rp 750,000 per square meter.
"Those developers must be forced to give cross subsidies to low-income buyers. Otherwise, low-income people will never be able to buy even tiny houses," Soni said.
The government has required all developers to build six small low-cost houses and three medium-size houses for each luxury house they construct. However, critics have said that many developers have not complied with the ruling. (rid)