Property sector needs healthy banks: Expert
JAKARTA (JP): The country's ailing property sector is reliant on the success of government-sponsored bank restructuring to recover, an executive of a publicly listed property developer said on Monday.
PT Ristia Bintang Mahkotasejati (RBM) president Richard Wiriahardja said successful bank restructuring, including giving fresh equity to ailing banks, would enable local banks to resume extending loans.
"It is impossible for the property sector to recover without the banking sector's support in providing housing loans," Richard said after the company's annual shareholders meeting.
Most domestic banks have stopped extending housing loans since the economic crisis started, Richard said, adding that state Bank Tabungan Negara (BTN) still approved housing loans but the bank's lending capacity was insufficient to fulfill the demand.
Richard attributed the company's net loss in 1998 to the scarcity in housing loan facilities, complicated by people's weak purchasing power.
RBM, a medium-size real estate developer, suffered a net loss of Rp 1.78 billion in 1998, compared to a net income of Rp 6 billion the previous year.
The company's revenue fell drastically last year to only Rp 14.8 billion from Rp 41.5 billion in 1997.
RBM's shareholders approved on Monday the management's proposal to forego dividends for the 1998 financial year.
RBM's subsidiary PT Ciptojaya Kontrindoreksa (CK) -- which focuses on small-scale housing -- performed better than its parent company in 1998.
The company booked a Rp 648 million net income in 1998, a 74 percent decrease from Rp 2.48 billion the previous year.
"From the 1999 target of selling 470 houses, 250 houses have been sold, and they were through BTN's housing loan facilities," CK president Tanto Wibowo said after the company's annual shareholders meeting on Monday.
Tanto said the target would be reached easily because there were about 400 would-be buyers already in the administration process.
CK's shareholders agreed not to distribute dividends but instead use the proceeds from the 1998 net income to strengthen the company's working capital.
The company had its initial public offering (IPO) last month.
"From the company's IPO we received Rp 15.9 billion, of which Rp 12 billion was used for debt repayment and the remaining for working capital," Tanto said.
Property has been one of the worst-hit sectors during the crisis. The sector was negatively affected before the crisis due to oversupply caused by aggressive expansion.
Weak purchasing power, a yet to stabilize interest rate and the weak banking sector are challenges to the property sector as well as other sectors in the economy.(udi)