Govt says foreigners can buy homes

JAKARTA (JP): The government has pledged to eliminate bureaucratic barriers in the sale of property to foreigners in a bid to help revive the country's sluggish property market.

State Minister of Land Affairs Hasan Basri Durin reiterated on Tuesday that foreign nationals were entitled to own properties in the country as stated in a 1996 government regulation.

"Selling properties to foreigners is a way to raise foreign exchange earnings and to help our ailing property industry, Therefore foreigners must face no barriers from buying property here," Durin told a property forum.

Durin said government regulation No 41, 1996, allowed foreigners with legal permits to stay in the country to buy property.

However, since the law was enacted in 1996, followed by several implementation guidelines issued by the Office of the State Minister of Land Affairs as well as by the Office of the State Minister of Housing in 1997, the law had not been successfully implemented, he said.

"The regulation exists, but not many people are aware of it," he said.

According to government regulation 41 in 1996, foreign nationals with permanent stay permits and those who regularly or seasonally visit the country on business trips are allowed to own one property in the country.

The regulation cites that, during their stay in Indonesia, the foreigners must "give benefits to the nation's development ... (and help boost) the economic growth and/or create jobs".

These include those who conduct businesses or who invest in the country, and those who are involved in improving people's welfare, or in education, religion, science and technology, law, politics, communication and mass media, defense and security.

Each foreigners is permitted to buy either a home, a condominium, or an apartment unit.

They can only purchase homes larger than 70 square meters with adjoining land of no smaller than 200 square meters. If buying an apartment it must be no smaller than 54 sq m.

The houses or apartments must not be in low-cost projects subsidized by the government.

Durin, however, acknowledged that many potential foreign buyers were hampered by bureaucratic procedures regarding the title of the property.

The regulation cites that the foreigners can obtain property complete with a land-use rights (the rights to use) certificate.

There are four other land titles existing in the country: the ownership land title, the building-use title (the rights to build), the business property title and the lease title.

In Indonesia, most property owners hold the building-use title, instead of land-use title, he said.

Before a foreigner can make a purchase, the property owner must switch the property's building-use title to the land-use title so that the sales can take place, the process of which could take about six months time.

This often discouraged the buyers to purchase the property, he said.

During said the property owners and local buyers still prefer to hold building-use certificate instead of the land-use title, although the differences between the two are very small.

Land-use title is good for 25 years, after which it can be extended for 20 more years. The title can be renewed for another 25 years, so that in total, property owners can have 70-years of land-use title.

Building-use titles are effective for 30 years and can be extended for another 20 years, after which they can be renewed for another 30 years.

However, holders of building-use title can eventually convert their land titles to ownership title while holders of land-use title can only be switched to building-use title.

The property sector is among the worst-hit by the prolonged economic turmoil.

The rupiah's loss of 70 percent of its value against the U.S. dollar since August last year had diminished people's buying power, slowing down property sales, as well as inflating much of the property developers' offshore loans. (das)