Govt to limit land for housing developers

JAKARTA (JP): The government will limit the size of land that can be acquired by housing developers throughout Indonesia because many of them have purchased land much larger than what was required for their housing projects, a minister said.

"The government will soon issue a regulation on the size of housing land that can be cleared by developers," State Minister of Public Housing Akbar Tandjung told The Jakarta Post yesterday.

He was commenting on the problem of bad loans, which according to analysts, was partly caused by the fact that developers bought land much larger than their capacity to construct houses.

The analysts estimated that bad loans in the property sector would reach Rp 5.25 trillion (US$2.3 billion) this year.

Because most land sites are purchased with bank loans, developers have to pay high interest rates, even though they have not yet built houses.

Tandjung said that the regulation will stipulate, among other things, that land procurement for housing will be limited in every city and that it will be set according to the developers' needs.

According to Tandjung, besides the regulation on the maximum acreage of land to be acquired, the government will also issue a regulation on the establishment of a state-owned company to manage the cleared land sites for housing construction.

"This state-owned company will be under the supervision of the office of the minister of public housing," Tandjung told the Post.

He added that the draft regulations had been submitted to the state secretariat and they are expected to be issued before the end of this year.

Tandjung said that the bad loans in the property sector were also caused by a market slump and high interest rates.

"Currently, the demand for medium and luxury houses is decreasing, while the interest rates remain high. Developers, therefore, find it difficult to repay their loans," he said. (13)