Government encourages law-cost housing

Government encourages law-cost housing

JAKARTA (JP): Akbar Tandjung, the minister of public housing,
has been active in political organizations since he studied at
the University of Indonesia in 1960s.

Being active in the college senate made him popular among
youths and students. As a student activist, he was elected
chairman of the Association of Indonesian Moslem Students (HMI)
in 1971. He was one of the activists who signed the Indonesian
Youth Declaration in 1973 and one of founders of the National
Committee of Indonesian Youths (KNPI).

This paved the way to his appointment by President Soeharto as
state minister of sports and youth affairs from 1988 until 1993.
He chaired KNPI for the 1978 to 1981 period. He is also one of
founders of the Indonesian Younger Generation for Changes (AMPI),
a youth group affiliated with the ruling Golkar.

Born in Sibolga, North Sumatra, on Aug. 14, 1945, Akbar
graduated from the University of Indonesia's school of
engineering. He is to married Christina Maharani and has four
daughters.

He was a member of the House of Representatives and People's
Consultative Assembly for the 1977-1988 period. He was a former
chief editor of the Pelita daily and is secretary of Golkar's
development board.

In an interview with The Jakarta Post last week, Akbar
discussed Jakarta's housing problems and the need for low-cost
housing.

The government has three housing categories: cheap houses
(which cost between Rp 4.9 million and Rp 9 million), modest
houses (between Rp 10 million and Rp 50 million) and luxury
(above Rp 50 million).

The government requires developers to follow the 1:3:6
regulation, which obliges developers to build three modest houses
and six low-cost houses for every luxury home.

"The government is consistent in enforcing the regulation. We
will take action against any developer who violates the
regulation. Those who fail to carry out the development in due
time and those who appropriate land in order to sell it for
higher prices must be punished," he said.

Akbar is aware of the great demand for low-cost housing in
Jakarta, but he also understands why such houses are not
available.

"It's apparently impossible to build houses or apartments that
cost less than Rp 10 million per unit in the city, where the land
prices are more than Rp 100,000 per square meter.

"Developers are able to build those types of houses but they
must cost more than the government-set prices," he said.

Land prices are not the only disincentive.

"Developers also have to spend a lot of money on official and
unofficial fees during the land acquisition and permit
application process," he said.

The government has been trying to provide housing for the
poor, he said, but is difficult to meet the demand for affordable
housing in urban areas like Greater Jakarta.

Akbar said there is a demand for 1 million units of low-cost
housing units a year: 600,000 units in rural areas and 400,000 in
urban areas. So far, the government and private developers have
only been able to provide 100,000 units annually.

"The target for the Sixth Five Year Development Plan, which
ends in 1998, is only 600,000 units," he said.

He added that 300,000 would be built by private developers,
200,000 by state-owned Perum Perumnas, and 100,000 by
cooperatives.

Perum Perumnas has built 150,000 low-cost units and expects to
eventually reach its target. The cooperatives and private
developers have reached their targets. Cooperatives have built
more than 100,000 units and private developers have built more
than 300,000. By the end of the Sixth Five Year Development Plan,
private developers will have built another 150,000 units.

The ministers of public affairs, home affairs and agrarian
affairs have issued a joint decree to phase out all
administrative, applications and building permit fees for low-
cost housing, Akbar said.

One of the ways the government encourages private developers
to develop affordable housing in urban areas is by providing them
with incentives and subsidies through central bank credit. It
also provides developers with logs seized from illegal logging
activities.

Despite the government's efforts, he acknowledged that many of
the low-cost houses still do not meet quality standards, due
primarily to the weak supervision of developers and government
officials.

"Many houses were not constructed in line with the quality
standards because the development process is complicated and the
government does not have enough personnel to control quality," he
said.

A further complication is that developers often subcontract
their housing projects, which are again subcontracted to smaller
subcontractors, he said.

Control is also difficult because not all developers are
members of Real Estate Indonesia (REI).

"In many cases, many developers, who are not grouped in REI,
have offered non-existent houses to deceive consumers," he said.

Akbar said the development of satellite cities around Jakarta
has helped reduce problems triggered by rapid population growth
in the capital.

"The development of satellite cities is in agreement with the
government's policy to reduce the flow of commuter movement
between the satellite cities and the capital as well as to help
minimize problems caused by the population growth such as
housing, transportation and traffic congestion," he said.

He said the development of townships in Bogor, Tangerang and
Bekasi had the support of local administrations trying to
encourage development in the region.