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)