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

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