Rising land prices in Java slowing housing program
JAKARTA (JP): Soaring land prices in Java are hampering the government's effort to build inexpensive houses, according to State Minister of People's Housing Akbar Tanjung.
Akbar told reporters after reporting to President Soeharto at Bina Graha presidential office yesterday that the government's housing program is progressing according to schedule in all parts of Indonesia except on Java.
He explained that about two-thirds of the inexpensive houses which the government hopes to build in the current Sixth Five Year Development Plan (Repelita VI) are on Java.
The government, he added, could only afford to pay up to Rp 7,000 or Rp 8,000 a square meter for the land on which to build inexpensive houses. This means that on Java, it could only build in areas far from the urban centers.
The government is counting on the help of private developers to realize its ambitious Rp 2.9 trillion ($1.38 billion) program to build 500,000 units of inexpensive houses during the Repelita VI which began on April 1.
It is compelling developers to build six "Very Simple Houses" for every three "Middle Houses" and one "Luxury House".
Akbar said a number of developers in Jakarta and Surabaya have pledged to abide by this program, but they are having problems now because the high land prices are eating into their already small profit margins.
The selling prices of inexpensive houses are set by the government.
The government is now looking at ways of overcoming the problems of soaring land prices, Akbar said.
Alternative
One alternative being considered is to give developers greater leeway in using the credits they receive from the state owned bank BTN. If they are presently allowed to use up to 50 percent of the credit to clear the land, this ceiling could be raised to 75 percent, he said. This is being discussed with the bank.
The government is also pondering ways to stabilize the price of cement, which is also a main component in the cost, and for this Akbar said his office is setting up a "Cement Team" to coordinate the supply of cement throughout Indonesia.
Another suggestion, this one by President Soeharto, is using timber seized from smugglers and illegal loggers which is now piling up, according to Akbar.
The minister said he is still optimistic that the government's housing program will be realized despite the problems in the field.
The demand is already there and it will continue to increase especially now that the terms for the home ownership loan scheme for civil servants have been eased and that those who have already worked for five years are entitled to apply.
For Jakarta and other cities like Medan and Surabaya, the government is encouraging the construction of low cost apartments instead of houses because of severe land shortages, Akbar said.
He said the state housing developer Perum Perumnas is now discussing with the Real Estate Indonesia, the association of developers, the prospect of building low cost apartments.
Most of the apartments that are now being built in Jakarta and Surabaya are destined chiefly for the wealthier members of society. (emb)