Government lowers low-cost housing prices

Government lowers low-cost housing prices

JAKARTA (JP): The government announced yesterday that it will
reduce the prices of low-cost housing in line with its recent
decision to bring down cement prices.

State Minister for Public Housing Akbar Tandjung told a press
conference that his office has decided to revise a ruling on the
increase of low-cost housing prices issued on April 11 to
accommodate the changes in cement reference prices.

"In order to sustain the development of low-cost housing, it
is considered necessary to revise (the ruling)," he said after
meeting with housing developers.

Before the revision, the public housing ministry's ruling
divided low-cost houses into "modest" and "very modest"
categories, based on the quality of conditions. It also
calculated their prices based on the initial 40 percent hike in
the reference prices of cement.

The very modest category covers houses of 21, 27 and 36 square
meters, while the modest are 18 and 21 square meters.

The government, following harsh criticism for the 40 percent
increase, announced on Monday that retail prices of the material
should be set 10 percent below the new reference prices.

Yesterday, Akbar announced that the newly revised ruling
established the prices of "very modest" houses sizing 21 square
meters at Rp 4.9 million (US$ 2.220) each, a Rp 100,000 reduction
from the initial price.

The price of 27 square-meter houses is now set at Rp 5.4
million, while the price for 36 square meters is set at Rp 6.9
million.

The old ruling set the price of very modest houses of 21
square meters at Rp 5 million (US$2,260) each, those of 27 square
meters at Rp 5.5 million and those of 36 square meters at Rp 7
million.

The revised ruling is retroactive as of April 1, Akbar said.

He also explained that the decision was taken after careful
consideration of the newly-reduced cement prices, and
consultation with housing developers.

With the newly reduced prices of low-cost houses the
developers can still expect a profit margin of around 5 percent,
he said.

The initial profit margin for housing developers, based on the
unrevised ruling, was estimated at around 5 to 10 percent, he
said.

Akbar said he had held a meeting with the Association of
Cement Producers, the state-owned developer Perum Perumnas, the
private association of Real Estate Indonesia (REI), and the
Association of Employees Cooperatives.

Akbar said that cement producers have agreed to guarantee an
adequate supply of cement, which is around 1 million tons/year,
for the development of low cost houses during the ongoing Five
Year Development Plan period.

The type of cement they would provide is "mix-cement" which is
of lower quality. The cement producers would set the mix-cement
price at Rp 6,500 per 40-kilogram sack.

For the sixth Five Year Development Plan period of 1994-1999
the government has set a construction target of at least 500,000
low-cost houses.

The state-owned developer Perum Perumnas alone is committed to
building 250,000 low-cost houses, while private developers
grouped in the Indonesian Real Estate Association promised to
construct 300,000 units. Cooperatives pledged to build another
60,000 units.

REI chairman Enggartiasto Lukito yesterday said developers
would "obey" the government's decision to reduce housing prices
but also called on it to provide them with other facilities in
compensation.

"We ask the government to safeguard the supply of cement and
monitor the prices," Enggartiasto said. "We also ask that the
government help us in other matters by easing procedures on land
appropriation or for obtaining bank loans." (swe)