Housing construction to grow 35% next year, minister says

Rendi A. Witular, The Jakarta Post/Jakarta

Housing construction by the private sector is forecast to grow by at least 35 percent next year based on a total investment of trillions of rupiah, in line with stronger purchasing power due to better economic condition.

"With more people earning more money, we estimate that the number of houses built by the private sector will grow from 200,000 units this year to 270,000 units next year," said Minister of Public Housing M. Yusuf Anshari at the Presidential Palace on Friday.

The figures include all types of houses, from the most modest ones to the most expensive, with 80 percent of the houses being targeted at low and middle-income purchasers, with the remainder being aimed at the high end of the market, added Yusuf.

The figures exclude the construction of apartments, and houses for tsunami victims in Nanggroe Aceh Darussalam.

For the tsunami victims, Yusuf said, it was estimated that some 30,000 houses would be jointly built by the government and the private sector this year and at least another 30,000 next year.

Yusuf said the private sector was expected to invest at least Rp 8.1 trillion (US$812 million) in new houses at an average price of Rp 30 million each.

The Indonesian economy, Southeast Asia's largest, is forecast to grow by 6.5 percent next year, with government-sponsored investment in infrastructure expected to play a key role in stimulating the economy, alongside consumer spending and exports.

Yusuf said the growth in house construction would also be spurred by a plan by his ministry to establish what he termed a house purchase guarantee certificate scheme.

The certificates would be available to state employees, including civil servants, and military and police personnel, to enable them to seek housing loans from banks based on a government guarantee.

In a bid to make banks more willing to extend loans to state employees without worries about the possibility of additional non-performing loans, the guarantee scheme would be backed by insurance.

"We want state employees to be 'bankable', so that they can buy houses. That is why we are now designing ways to give some kind of a guarantee for them when seeking housing loans, without having to burden the state budget," said Yusuf.

There are currently about six million civil servants, 500,000 soldiers and 125,000 police officers, with most of them unable to buy their own houses due to low salaries and their inability to access the banking sector.

The government and the House of Representatives are discussing plans to raise the take-home pay of state employees, with the increase being in the range of 30 percent for first and second- level employees, 15 percent for third and fourth-level employees and 7 percent for top echelon officials, such as the directors general of ministries.