Proliferation of trade centers could cause problem: Ciputra

The property sector is an important measure that is used to gauge a country's economic development. In Indonesia, just like everything else, the sector was virtually crippled by the severe crisis in the late 1990s. But now, with demand on the rise, and many developers having completed their debt restructuring, things have gradually improved.

PT Ciputra Development, a leading player in the business, is included in that category. Ciputra, the president and founder of the company, shared his views with The Jakarta Post's Dadan Wijaksana in a recent interview. The following is an excerpt of the interview:

The property sector, especially housing, has been on the rise recently. Is it fair to say that the sector is recovering from its slump caused by the crisis?

Usually, for developed countries, the boom cycle in the real estate sector takes about 10 years, as against about 7 years in developing nations.

In Indonesia, we reached a peak in 1997, prior to the crisis, so if we take the normal path, we should reach a new peak by 2004. With the crisis, however, I think we'll experience a peak again in 2007.

How are things at your company?

Well, today is the time when the company is facing its the greatest challenges and hopes. We have now completed the restructuring of our domestic debts and nearly finished the restructuring of foreign debts. It has provided us more space to make our moves and develop.

We have also established a grand strategy for the company's future.

First and foremost, we shall continue to concentrate on the housing sector, while commercial construction, such as shopping buildings, will be complementary. So, we'll keep building new community centers with sufficient facilities such as for sports, schools, malls and so on.

While expanding our operations to outside Java, we also aim to tap into the property share market outside Indonesia.

Outside Java, we have now started new operations in Bali, Manado (North Sulawesi), Pekanbaru (Riau) and Medan (North Sumatra), in addition to around three or four other projects outside Java that are still under negotiation.

But make no mistake, the focus of our operations remains in Java.

How about projects abroad? Have you started operations there, and in what countries?

Yes, we have started operations in Hanoi, Vietnam, and are planning to do so in Myanmar, China and India. We are focusing our attention on Asian countries. You will see the results of those projects in the next few years, because we started in 2002.

We encourage Indonesian developers to look into opportunities overseas, as developers in Malaysia, Singapore, Hong Kong and Thailand have been doing thus far.

Another strategy -- also important -- is that we must always strive for innovation and become a leader in the sector. This means we don't just follow trends without proper consideration.

What do you mean by that?

For example, if we look at current trends, in which the establishment of trade centers is flourishing, I find this phenomenon worrying. There are too many already. Ideally, one trade center, or maybe two, will be enough for one area.

However, we see trade centers being built everywhere now; this is dangerous. You won't see this in Thailand, Singapore, Malaysia or other countries.

I find this trend a total mistake; I fear it might cause a crash, which will lead to many people suffering. That's why the Ciputra Group has tried to avoid this.

A trade center might be successful in Mangga Dua, Tanah Abang or Kelapa Gading, and a few other areas in Jakarta, but it couldn't be located anywhere and there shouldn't be too many.

However, the increase is incredible. In Jakarta alone, about 10 more trade centers are due to be opened this year and next, with a lot more under construction. That's far too many.

Community development projects are among the main things that differentiate your group from others. Could you mention what kind of projects you have been working on in this regard?

At present we have been undertaking projects to support the community -- mostly sport centers and education facilities. They have been built sporadically, but we want them to eventually be available in all our housing projects.

For instance, we're building badminton sport centers in Citra Raya housing complex, Surabaya, while here in Jakarta we're building similar facilities at Pondok Indah and Bintaro Jaya (housing complexes), and also Citra Raya in Tangerang. They will add to the one we've already built at Jaya Raya Ramawangun.

We also plan to add five schools within our housing projects. Two will be in Surabaya, namely in Bukit Palma and Citra Harmoni, which will add to the one we already have in that town -- at Citra Raya.

The other three will be built here, at Citra Raya Tangerang, Citra Garden and Citra Indah, Jonggol.