Tax income from areas near Senayan very low

Tax income from areas near Senayan very low

Bambang Nurbianto, The Jakarta Post, Jakarta

Although land in the area close to the Senayan sports complex in
Central Jakarta is assessed by the tax office as being worth up
to Rp 10 million per square meter, the sports complex management
can earn only Rp 15 billion to Rp 16 billion in royalties from
the private sector parties that occupy 66.74 hectares (ha) of the
land.

This means that the royalties on one ha, or 1,000 square
meters, of land in the strategic area, which is under the control
of the Bung Karno Sports Complex Management Board, is only about
Rp 239 million per year.

The 66.74 ha forms part of the 279.1 ha of land which were
originally allocated for sports and related facilities as well as
open areas needed as green "lungs" for the city.

But the sport facilities now occupy only 146.57 ha of land,
which was cleared prior to the fourth Asian Games in 1962, while
the rest has been used by the private sector and government
offices.

Urban observers and environmental activists have expressed
concern over the continuing encroachment onto open land at the
sports complex by private companies as it has reduced the green
areas of the city.

Executive chairman of the Bung Karno Sports Complex Management
Board Yasidi Hambali said that cooperation between his office and
a number of private companies was based mainly on build-operate-
transfer (BOT) agreements that last 30 years to 40 years. Some
other parties occupied the land after they obtained land use
permits (HGB) from the National Land Agency.

Asked about the small amount in annual earnings from the
private sector, Yasidi argued that the monetary value of the
royalties is not the only benefit that accrues to the management
board.

He said that apart from paying annual royalties of US$400,000,
PT Kajima Overseas Asia, which built Plaza Senayan on a 19.85-
hectare site, also built Hotel Atlet Century Park for the Bung
Karno Sports Complex Management Board as compensation.

The hotel is included in the list of sports facilities, even
though most of the guests are not normally athletes.

"The most important thing is that the buildings on the land,
which are now being managed by the private sector, will be handed
over to the managing board when the BOT agreements expire,"
Yasidi told The Jakarta Post on Wednesday.

The decision to develop the area, which used to be called
Senayan sports complex, was made in 1958 after the Asian Games
committee appointed Indonesia to host the games.

Based on Presidential Decree No. 79/1962 on the Establishment
of Senayan Sports Complex foundation, the land could be used for
sports and sport-related purposes, such as recreation, parks,
health centers, and a television station.

Occupation of the land by the private sector officially began
when former president Soeharto issued decree No. 4 in 1984,
allowing the management board of the sports complex to work in
cooperation with the private sector to use the land.

But even before the decree's issuance, there were violations
against the land use plan when several private sector parties
constructed buildings in the area after securing land use
permits. Those buildings include Hilton Hotel and Ratu Plaza on
Jl. Jend. Sudirman.

The entry of the private sector into the area was facilitated
by an agreement between the Jakarta governor and the management
of the sports complex as part of the basic plan of the sports
complex's development in 1994.

Yasidi said the money yielded from the cooperation with the
private sector ought to be used to finance major maintenance and
development of new sport facilities, as from 1984 the government
did not made any budgetary allocation for the sports complex.

As for routine operating expenses, such as electricity bills,
staff salaries, minor maintenance and taxes, which, in total
amount to Rp 12 billion to Rp 13 billion, these can be covered by
the earnings from admission charges for the sports facilities at
the sports complex.