Govt to buy property overseas on credit
Govt to buy property overseas on credit
Adianto P. Simamora, The Jakarta Post/Jakarta
In an effort to use the funds allocated to rent
offices/residences abroad in an "efficient manner", the
government will continue purchasing new property for its
diplomatic missions and staff by borrowing money from a state
financier, according to the Ministry of Foreign Affairs on
Friday.
The ministry said the government would apply a system, under
which it buys property with third party money and uses the
budget-allocated rent money to repay the debts over time.
"We don't budget for the purchase of properties overseas.
Instead, we use the monthly installment fee to buy (a property)
and after 10 to 15 years, it will become a government asset,"
Ministry spokesman Marty Natalegawa revealed during a weekly
press conference.
The country currently has diplomatic missions in 191 countries
with 325 properties that are being used as either offices,
residences or schools.
"Of those 325, Indonesia owns 233 permanent buildings, while
92 are still rented," Marty said.
He said that the government had been paying, on average, a
whopping $10,000 per month per building in rental fees.
"We can imagine that the installment fee for the 92 offices
overseas reaches $920,000 per month," he said.
"In facing such a condition, as long as Indonesia is a
sovereign country and has diplomatic ties with other countries,
we need the representative offices, we need the property," he
said.
Marty also denied a media report that the ministry had
proposed a budget of Rp 1 trillion (about US$133 million) to buy
new buildings in 12 countries.
The Koran Tempo newspaper reported on Thursday that the
foreign ministry had proposed Rp 1 trillion to purchase new
offices and it would pay an amount of Rp 175 billion soon in down
payments for a number of properties.
Also during the press conference, Freddy Sirait, a ministry
official stated that state-owned Bank Mandiri had agreed to
provide cash to finance the purchase of the buildings.
"Bank Mandiri will provide cash to buy ambassadorial offices.
We then repay the bank in monthly installments allocated for the
respected office," he explained.
He did not elaborate on the total amount of cash that had
already been disbursed by Bank Mandiri.
He added that the government would purchase property in
Helsinki (Finland), Guangzhou (China), Lima (Peru), Athens
(Greece), Amman (Jordan), Bandar Seri Begawan (Brunei), Sofia
(Bulgaria), Tashkent (Uzbekistan), Tunis (Tunisia), Oslo
(Norway), Tripoli (Libya) and Chicago (the United States).
"The finance ministry has agreed to the purchases of three
offices located in Helsinki, Peru and Guangzhou," said Freddy,
adding that they had also bought land in Brunei.
He said the ministry would pay US$16,000 per month to the bank
for Peru office and $12,000 for the Guangzhou office.
"With the monthly installment fee, the two offices will be the
permanent state assets in the next 11 and 15 years,
respectively," he said.
The purchase of property overseas was conducted in a
transparent manner, involving independent appraisals to estimate
the price of the building, claimed Marty.
The appraisals were usually from local government sources and
real estate agencies, in the area where a property is located.
"This was the case in the purchase of the villa in Geneva,
there were two independent appraisals from the local government
in Switzerland, so it would have been impossible to mark up the
price of the villa," he argued.
Indonesia purchased a controversial villa in Geneva,
Switzerland worth over $8 million. Many, particularly Swiss
media, have raised concerns over the price amid financial
difficulties faced by the country especially in the aftermath of
the tsunami disaster.