Govt to keep lid on cheap housing prices

JAKARTA (JP): Minister of Public Housing Akbar Tandjung said yesterday the government would not let the cost of cheap housing rise, despite developers' requests for adequate profit.

The government would maintain existing policies on cheap houses, Tandjung said after a hearing of House Commission V for housing, transportation and tourism.

Tandjung presented a statement to the hearing which said that the main problem with cheap housing was a supply and demand imbalance.

He said there was cooperation between government agencies to try and match supply and demand for cheap houses. The government was using Tangerang, which needs 350,000 rooms a year for factory workers, as a test case for cheap housing.

Tandjung said the government has decided to maintain existing policies because of requests by the Indonesian Real Estate Association and small developers, who have thin profit margins because of rising land and materials prices in the last two years.

The policies include the 1:3:6 allocated ratio of land program -- which means that six cheap houses must be built for every three medium-priced houses and one expensive house. This policy also regulates partnerships between large and small developers.

Tandjung said that, under the land ratio program, developers could subsidize cheap houses from the proceeds of sales of expensive houses.

But developers and the association have urged the minister to increase the Rp 4.9 million (US$ 2,002) base price of cheap houses by 15 percent so that developers could make sufficient profit.

Tandjung said the government was trying to help developers by cutting administrative and permit fees.

"The government remains committed to prioritizing affordable housing for low-income people," he said.

He said that should demand for cheap housing rise, he would re-coordinate Bank Indonesia Credit Liquidity's finance for cheap housing. He plans to discuss this with the Ministry of Finance and Bank Indonesia (the central bank).

He said he welcomed the possibility of new forms of housing credit for poor people.

Tandjung said he hoped that the state-owned Bank Tabungan Negara's mission would continue to finance cheap housing to anticipate increased demand for it even though the bank would merge with state-owned Bank BNI.

He said his ministry was setting up methods of management for cheap-housing developments under state-owned or private companies.

Bank Tabungan Negara's credit director, Pandamsih, said her bank had 1.3 million debtors who owed Rp 8 trillion ($3.27 billion). She said the bank had Rp 1.6 trillion ($654 million) worth of outstanding home loans.

She said that of Rp 800 billion specifically allocated to cheap housing, Rp 700 billion had actually been lent. (01)