Govt to build 200,000 low-cost houses next year

Evi Mariani, The Jakarta Post, Jakarta

The central government has signed agreements with about 40 municipal and regency administrations throughout Indonesia to provide low-cost housing next year, but the Jakarta administration has refused to take part in the program.

The program will provide 200,000 low-cost houses for families with a monthly income of less than Rp 1.5 million (US$176.47). It will kick off next year to fill the huge gap in the demand for low-cost housing.

Jakarta's refusal to provide land for low-cost housing was because of the skyrocketing price of land in the 661,000-hectare city. The city administration has opted to boost the development of commercial complexes as opposed to low-cost housing.

"The price of land in the capital is very expensive for low- cost housing and all municipalities here will only provide land for the development of low-cost rented apartments," said Director General for Housing and Settlements at the Ministry of Settlements and Regional Infrastructure, Aca Sugandhy, at Tuesday's press conference on the national low-cost housing program.

The administration's eviction policy has been criticized for leaving 20,000 people homeless within only two months. Most evictees demanded the administration provide them with land or housing.

The latest government's estimates show that six million of more than 50 million families in the country do not own houses while the demand for housing is growing steadily at 800,000 houses per year.

In the agreement between the municipalities and the central government, the former has committed to provide vacant land while the latter along with the banking sector will provide the funds.

Some densely populated municipalities like Batam in Riau and Cimahi in West Java have agreed to provide land only for the construction of low-cost rented apartments.

Such agreements are part of a national program on the one- million low-cost housing development launched by President Megawati Soekarnoputri in Bali in commemoration of World Habitat Day on Oct. 9.

In the program, the government in cooperation with regional administrations, private and state-owned developers and banks are scheduled to construct 200,000 new low-cost houses nationwide in 2004.

The construction of the new houses will absorb Rp 11.04 trillion of which Rp 10.5 trillion will be provided by the developers and banks while the government will allocate Rp 540 billion from the state budget to subsidize housing loans.

"Bank BTN has committed to channel loans for 60,000 houses next year," said Minister of Settlements and Regional Infrastructure Soenarno.

"The average interest rate will be not far from the current rate of 15 percent."

He expected other banks to also channel loans for low-cost housing at lower rates than that offered by BTN.

Besides houses, the program will also provide 3,000 low-cost apartments.

The program also aims to renovate about 600,000 houses. The government will push the banking sector to channel housing micro credit for communities to renovate their houses, particularly those related with sanitation facilities.

For houses in slums, the government has allocated Rp 540 billion from the state budget to improve the quality of 200,000 houses in at least 30 municipalities and regencies next year.

Aside from renovations, the program also aims to improve infrastructure like streets in the targeted neighborhoods, drainage, sanitation and clean water facilities, electricity and public transportation in the areas around the renovated houses in 2004.

I-box Source of funds and assets for the national program in 2004 1. Constructing 200,000 new low-cost houses Banking sector : Rp 10.5 trillion State Budget : Rp 540 billion Regional administrations : Vacant land

2. Constructing 3,000 units of low-cost apartments Banking sector : Rp 74 billion State budget : Rp 148 billion Reg. adm. : Vacant land

3. Renovation of 600,000 houses Banking Sector : Rp 1.75 trillion State budget : Rp 202 billion Reg. adm. : Rp 36 billion

4. Renovation of 200,000 houses in slum areas State budget : Rp 540 billion

5. Improvement of the environment of low-cost housing areas State budget : Rp 850 billion Reg. adm. : Rp 500 billion

Source: Ministry of Settlements and Regional Infrastructure