Increasing prices of land hamper housing development

JAKARTA (JP): Problems related to land acquisition are hampering the development of low cost housing for civil servants under a compulsory savings scheme, Minister of Public Housing Akbar Tanjung says.

In a hearing with Commission V of the House of Representatives (DPR) here yesterday, the minister said that only Rp 4.3 billion (US$1.98 million) out of Rp 352.81 billion in funds collected had been used for home development, as of August.

The funds are now deposited at Bank Tabungan Negara (BTN), the state-owned bank specializing in housing loans.

The minister admitted that the land price increase was a major constraint to administering the funds, which are supposed to finance the development of low-cost housing for civil servants.

He said he had appealed to local authorities throughout the country to help provide plots of land at low prices for developers of low-cost housing.

"Besides that, the bank will look into the possibility of increasing the credit ceiling for land appropriation given to developers, from 50 to 75 percent of the total land appropriation costs," he said.

Widigdo Sukarman, the president of Bank Tabungan Negara, said yesterday that his bank will lower each of the interest rates on its low-cost housing loans by one percent, to a range of 15 percent and 16 percent per annum. The change will go into effect next month.

Widigdo said that the planned reduction of the interest rates is also aimed at encouraging developers to build low-cost housing.

He acknowledged that developers generally faced difficulties in providing low-cost housing due to high interest rates and the increasing land values.

The government has cut civil servants' monthly salaries by between Rp 3,000 and Rp 10,000 ($1.38 and $4.61) each to collect funds for their housing facilities since early last year.

The government expects to collect Rp 457 billion by and until the end of the second semester of this fiscal year, from around four million civil servants across the country.

Some 60 percent of the collected funds will be provided for housing facilities, while the rest will be deposited into finance programs for the improvement of civil servants' future welfare.(05)