Evictions highlight lack of proper housing policy

Marco Kusumawijaya, Indonesian Coalition for Social Housing, Jakarta, marcokw@centrin.net.id

A series of forced evictions have taken place in several places in Jakarta recently. The most interesting incident was the eviction of squatters who occupied a plot of land belonging to state-owned housing company (Perumnas) in Kampung Baru, Cengkareng, West Jakarta.

The eviction drew attention given the involvement of Perumnas, a state company in charge of providing housing for the poor. The evictions highlighted the company's failure to execute its mission.

If Perumnas has failed in its mission, what is it for? If it cannot house poor people, then who can?

The scene of evictions is even more bizarre as we celebrate World Habitat Day on Oct. 6 and approach World Poverty Day on Oct. 17.

Perumnas, established in 1974, is tasked with building houses for low-income citizens. Until the mid-1980s Perumnas was loyal to its mission.

Before 1983 45.93 percent of total housing loans issued by Bank Tabungan Negara -- the state-owned bank designated to provide housing loans for low-to-middle income groups -- were for Perumnas-built housing. In the period of 1984-1988 the share dropped to 20.23 percent.

By 1989 it had acquired a total of 4,654 hectares of land and the construction of houses for middle-income people was accepted as a means to cross-subsidize the construction of homes for the poor.

But years after the trend obviously changed when middle-income and high-income houses became more dominant as Perumnas was drawn into market competition with private developers.

The demand for housing among the poor, who earn less then Rp 1.3 million per month, reaches around one million units per year. More than half of the families in that income bracket earn between Rp 350,000 and Rp 850,000, thus classified as those of very low income or "vulnerable poor".

Over the decades, the formal sector has supplied only 15 percent of total demand, of which up to 30 percent of that demand is in urban areas. Before 1997, housing loans covered only 120,500 units per year at best.

This low capital performance in the formal sector is clearly illustrated by Bumi Serpong Damai (BSD) township established 14 years ago in southwestern Jakarta. BSD has since then housed only about 14,000 households or 80,000 people.

The investment portfolio in 1999-2001 showed very little hope: Of all insurance companies, only 2.3 percent of investment was in land and construction; of all pension funds, only 7 percent was invested in that sector.

This conservative trend is due partly to the tighter regulation after misuse by former president Soeharto's cronies, apart from the economic crisis and low market confidence. For the housing sector to recover, if tight regulation is politically more acceptable, some discretionary policy is required to relax it for projects to house the poor, which will be sufficient to drive the housing sector as a generator of growth.

Theoretically, competition should keep profit lower. But in housing, as the demand is so high and supply is so short, competition has little meaning.

This is the result of state policy between 1980 and 1990, that only big developers were allowed to acquire land for housing. For the next 20 to 25 years, only a few developers will control most of the urban and suburban lands in Jakarta, Bogor, Depok, Tangerang and Bekasi, making the market extremely inefficient, which will grossly inflate land prices.

The question is then how to prevent the rich or moneyed groups from taking available resources (land) at will. It is morally and socially unacceptable that while the state has failed to provide the poor with proper housing, and many families cannot build a shelter for their domestic and social needs, many land brokers are pursuing their own profit.

An alliance involving politicians, bureaucrats, experts, businesspeople, beneficiaries and other stakeholders is required to control possible monopolistic practices by those groups and to promote a state housing system.

The Indonesian Coalition for Social Housing, set up in December 1999, has proposed four strategies to this end. The proposal was put forward in a 2002 book by the coalition, and discussed again in talks on a social housing system in July this year.

Firstly there is a need to review our collective consensus about social standards to be achieved in the provision of housing. This needs to be clearly specified in legal documents, as studies show that it is not so, for example on the role sharing among major players in society and the government.

Secondly, the informal sector is the most strategic base to build a social housing system that is not over-dependent on the state, and which is also capable of mobilizing the immense and yet under-developed but proven potential of civil society.

Community-based, non-profit housing operations utilize local capital making it resistant to globalization on one hand, and reduces dependence on state subsidies on the other.

That brings us to the third strategy: Building a social housing system is inseparable from the overall social reform movement, both as a supporting factor, and a goal of, social housing. A social housing system requires that society understands housing as a basic right and a collective problem.

Slums are not just produced by the dwellers, but reproduced by the societal system as a whole. Any piecemeal approach as is conducted by Jakarta will simply not work in the long run.

At the other end of the perspective, a social housing system is a powerful instrument to increase solidarity, stronger cohesion, and autonomy. However, it is obvious that the state's role is not to be dismissed. On the contrary, it is important to facilitate the development of a social housing system.

The fourth strategy is for state authorities at different levels to establish rules and regulations, and to take actions to facilitate a greater role for society's different components, and to consistently secure equal access to resources.

The current investment concentration in malls in major cities such as Jakarta, Bandung, Surabaya, is too early to be regarded as a recovery of property business. With other sub-sectors dormant, retail is the only area for speculation.

Hopes loom at the other side of the economy, the informal sector. Studies have long established that the informal sector supplies the lion's share of housing. It also provides much more varied products in terms of size, quality, tenure (from rental to ownership), financial schemes and location.

With the formal market so unproductive and abused, why can't this high-capacity informal sector be given more opportunity, funds and space?

The informal sector should at least be given equal access to resources. These would comprise secure land tenure and equal access to land, improved access to credit facilities, improved social integration and participation in decision making -- basically all the things mentioned in the recommendation of the 2nd Habitat Summit in Istanbul in 1996.

To bring those together means nothing less than building anew, or at least the reform of, a comprehensive social housing system.