Expatriates reluctant to buy RI property

Expatriates reluctant to buy RI property

JAKARTA (JP): State Minister of Agrarian Affairs/Chairman of
the National Land Agency Soni Harsono said yesterday the
government needed to improve its property regulations to
encourage foreigners to buy property in the country.

Soni said the government had issued 1996 Regulation No. 41
which allowed foreigners to buy property in the country, but
foreigners were still reluctant to make purchases.

"When the government issued the regulation last year, people
were afraid that foreigners would control the country's property
market. But what was then feared has not become reality," he said
after meeting with Vice President Try Sutrisno.

Soni said foreigners were reluctant to buy Indonesian property
because they believed there was not any legal certainty in the
country and were confused about some rules later issued by the
local administration to explain the government's regulation.

He said foreigners also considered the property market
uncompetitive.

Soni said the government needed to make improvements to
encourage foreigners to buy, noting that the purchase of property
by foreigners was a good solution to the current lack of
liquidity in the property market.

Many developers have reportedly almost gone bankrupt due to
weak sales amid the economic turmoil, he said.

"They (foreigners) are very correct in the rules of game. They
want legal guarantees and certainty," said Soni.

Government Regulation No. 41 allows foreigners residing in
Indonesia to own one house or apartment built on state land
acquired through a transaction with the owner of the land title.

The house/apartment ownership right is valid for 25 years and
is extendible for another 25 years.

The regulation defines foreigners as those whose residence in
Indonesia benefits national development.

The regulation is rather flexible in its definition of
residence in Indonesia, stipulating that a businessperson who
occasionally visits Indonesia for business purposes is also
entitled to house/apartment ownership.

Certainty

Property analyst Panangian Simanungkalit also noted
foreigners's lack of interest in Indonesian property, saying only
that Batam had thus far managed to sell some property to
foreigners.

Even Jakarta could only sell a few properties to foreigners,
he said.

Panangian said foreigners disliked the fact that they had to
go through a long and tedious bureaucratic procedure to buy
property.

"Also they don't feel secure with the Indonesian law. The fact
that many rich Indonesians prefer to buy property overseas only
strengthens their initial doubt over Indonesia's legal security,"
Panangian said.

Panangian also questioned the government's seriousness in
promoting the sale of Indonesian property to foreigners.

"Is the government seriously offering the country's property
to foreigners?" Panangian quipped.

The government could show its seriousness by involving several
ministries and governmental offices to make uniform regulations
on property ownership by foreigners, he said.

Several offices and ministries which should be involved
include the Directorate General of Immigration, the Office of
Agrarian Affairs, the Directorate General of Tax, the Ministry of
Home Affairs, the Office of Public Housing and the central bank.
(jsk/prb)