Housing board to get tough with delinquent developers

Housing board to get tough with delinquent developers

JAKARTA (JP): The newly established National Housing Board
announced that it plans to get tough with cunning developers.

The board has plenty of homework to do. Many developers have
neglected the obligation of building low cost houses. House
buyers have also complained about dishonest developers.

The housing board, a non-structural agency overseen by State
Minister of Public Housing Akbar Tandjung, held its first meeting
on Thursday. Its members include the ministers of public works,
home affairs, social services and the state ministers of national
development planning (chairman of the National Development
Planning Board or Bappenas) and Agrarian Affairs (chairman of the
National Land Agency).

Akbar told reporters after the meeting that the mechanism to
supervise private, state-owned and cooperative developers would
be established without interfering in the companies' activities.

"We have to make sure the companies don't do anything
disadvantageous to their clients," he stressed.

The meeting studied the possibility of improving the
implementation of the "balanced housing" concept and redefined
the role and responsibility of the Board.

The "balanced housing" concept, which was signed in Nov. 1992
by the ministers of home affairs and public works and the state
minister of public housing, stipulates that for every luxury
house developers build they must also build six "very low-cost"
houses and three "medium" houses.

The board is entrusted with finding and securing the plots
needed to implement the program, called the 1:3:6 plan.

Akbar explained that the Board has stipulated the plots must
be at least 200 hectares to enable the concept to be implemented.

Within this area, he said, the very low-cost, medium and
luxury houses are grouped to enable their tenants "to establish a
sense of social solidarity."

Regulations

Akbar admitted, however, regulations for the concept, which is
expected to be carried out and monitored by the provincial and
city governments, have yet to be formulated.

"In the future, the whole concept will be reflected in the
city's site plan, in the requirements to obtain a building permit
and in other rulings," he said.

Ever since the concept has been announced, however, developers
appear reluctant to comply with it and many refuse to build the
very low-cost houses, largely because of the low profit margin.

The government up to now has only gone as far as threatening
to punish errant developers but has failed to state exactly what
type of punishment would be imposed.

"We will figure that out later... punishments can range from
warnings, fines to a cancellation of their business permits," he
said, adding that he would personally handle recalcitrant
developers and question their failure to fulfill their
obligation.

Akbar explained that with less than 200 hectares of land, the
1:3:6 concept can still be implemented, with part of the houses
-- mostly the very low-cost types -- built in another area.

"A 200-hectare plot can ensure that the government gets a low
price for the land, which in turn will allow cross-subsidization
of funds from the luxury houses to the very low-cost and medium
units," he reasoned.

During the meeting, State Minister of National Development
Planning Ginandjar Kartasasmita also explained the current
situation of cement supplies.

Cement prices have now eased with the arrival of the first
imports. The prices soared in September because of shortages,
fanned further by stockpiling.

Many developers said they simply ceased construction of low
cost houses because the higher cement prices slashed the small
profit margin they were allowed by the government.

Prices have now dropped but are still higher than the
"official reference price" and the housing construction business
has not fully recovered.

"The government will allocate second-class, lower grade cement
for the construction of very low-cost and medium houses... the
good-quality, locally-produced cement will be exported," Akbar
said, quoting Ginandjar.(pwn)