Low-cost apartment developers seek incentives

JAKARTA (JP): Private developers urged the municipality yesterday to provide more incentives in developing low-cost apartments.

One of the developers, Soekardjo Hardjosoewirjo, said that incentives were badly needed to help speed up low-cost apartment development.

Soekardjo, who is also chairman of the Indonesian Chamber of Commerce and Industry (Kadin) city-chapter, said incentives developers wanted included a reduction of fees for processing necessary permits for buildings and land use, and for water and electricity facilities.

"We hope there will be fixed fees set for private developers interested in developing low-cost apartments," Soekardjo told reporters after a meeting with Governor Surjadi Soedirdja.

Soekardjo met the governor to report on a plan by Kadin's Jakarta office, the Indonesian Real Estate Association city- branch and the municipality to hold a seminar on the opportunities and challenges in developing low-cost apartments on July 23.

Soekardjo said the seminar would present problems encountered by developers in developing low-cost apartments and to help find solutions.

Surjadi ordered officials last year to simplify permit processing procedures, but the order did not cover specific fees for low-cost apartment development.

Soekardjo said many developers were actually interested in building low-cost apartments.

"But more incentives are still needed because developing low- cost apartments is different from constructing middle-class apartments, which have more promising market potential," Soekardjo said.

"The governor himself said that all Jakartans, whether they like it or not, should live in apartments due to a land shortage," Soekardjo said.

He also said developers urged the government to reduce loan interest rates of between 20 percent and 22 percent.

"Interest rates are too high. Ideally, interest rates for low- cost apartment developers should be set between 14 percent and 16 percent," Soekardjo said.

The city's assistant secretary on economic and development affairs, Prawoto S. Danoemihardjo, said recently that the city was boosting the development of low-cost apartments to help eliminate slum areas and provide adequate housing for the poor.

Due to financial problems, however, the administration has only managed to build 3,150 low-cost apartments per year, far lower than the annual demand of around 10,500 apartments.

In an effort to meet demand, the administration issued gubernatorial decree No. 540/1990, which requires developers to set aside 20 percent of commercial sites for low-cost apartments.

Fadjraa Oemar, president of apartment-building company Permata Kebayoran, said that the city should standardize prices of low- cost apartments.

"Existing standards are not clear," he said.

Oemar said there should be a price range for low-cost apartments, just like government-set prices for low-cost houses.

The price for a 21-square-meter house, for example, is set by the government at Rp 4.9 million (US$2,008) and Rp 6.9 million for a 36-square-meter house.

Data from the city housing agency shows that each year, demand for housing in Jakarta reaches 70,000 homes.

Due to a land shortage, housing officials say 30 percent -- or about 23,000 homes -- should be in the form of vertical housing.

So far 50 percent of vertical housing is provided by private developers, but those built by developers are mostly made up of apartments for middle and upper-income groups.

The city has so far built 12,356 low-cost apartments for slum area residents. (ste)