REI members build 289,000 cheap houses

JAKARTA (JP): The Indonesian Developers Association (REI) said yesterday its members had built 289,000 low-cost houses in the past three years, exceeding the government's target of 200,000 houses for the current five-year development plan.

Association chairman Edwin Kawilarang said the government set a target of 500,000 low-cost houses with an average cost of Rp 5 million (US$2,120) per unit, in the sixth five-year development plan which ends in 1999.

"The association is required to build 200,000 houses of the total target," he told Commission V of the House of Representatives hearing. The commission V oversees transportation, housing and public works.

The remaining 300,000 would be built by state-owned public housing company Perumnas.

Edwin said he was optimistic the REI's members could develop 400,000 low-cost houses in the 1993-1999 development plan.

During the hearing, presided over by the commission's chairman Anwar Datuk, Edwin said REI's members could build even more houses if lending rates were lowered and other obstacles eliminated.

One obstacle was government levies, legal and illegal, which amounted to 13 percent of house prices, Edwin said.

The illegal levies included bribes imposed on developers so that they could obtain licenses quickly, he said.

Some local administrations still demanded bribes because they were not committed to developing low-cost housing in their areas.

To increase the development of low-cost housing, the government issued a decree in 1992 requiring real estate developers to build six low-cost and three medium-cost houses for every luxury house they build.

Edwin said the concept could not be applied in many cities in Java because some local administrations gave developers the choice of building low-cost houses or paying the administration compensation instead.

Edwin said some local administrations, such as East Timor and West Kalimantan, had a stronger commitment to developing low-cost housing.

In East Timor, developers obtained free land for low-cost and very low-cost houses, while in West Kalimantan, developers might pay for the land after houses were sold.

Edwin hoped other local administrations might do the same. (jsk)