Govt, Developers to Speed up Construction of Cheap Houses

April 10, 2017, The Jakarta Post

The Ministry of Public Works and Public Housing is working with developer association Indonesian Real Estate (REI) to accelerate the construction of cheap housing (MBR) as part of the One Million Houses program launched in 2015.

“We appreciate that the REI has been at the forefront in the development of public housing. With its commitment to helping low earners own a house through the MBR housing program, we are optimistic that we will be able to archive the target of one million houses this year,” Minister Basuki Hadimuljono said on a recent working visit to Bali.

He explained that in the cooperation scheme, the big developers would buy land in regions where the MBR houses would be built, while local developers would handle the marketing.

According to Central Statistics Agency data, the backlog of house ownership nationwide has reached 13.5 million units.

In its 2015 to 2019 national development plan, the government aims to reduce the backlog to 6.8 millions units by the end of 2019. It also aims to decrease the number of houses deemed to offer no decent living quality from 3.4 million to 1.9 million.

In 2015, the One Million Houses program saw the construction of only 699,770 houses, both of the MBR and non-MBR type. In the following year, the number of houses built under the program increased to 805,169, and the government has expressed its determination to actually meet the one-million target this year.

To further accelerate construction, the government has teamed up with other stakeholders to ease the financing as well as to improve infrastructure and public facilities in the housing areas. The government provides some facilities, including guarantees for infrastructure financing, incentives for banks and liquidity facilities for house financing (FLPP) for applicants to the MBR program. Developers, meanwhile, receive support with licensing.

The minister said he was optimistic that the One Million Houses program would perform better this year thanks to support from more stakeholders, including banks and developers, as well as a higher state budget allocations.

“We have more support for the program this year. The ministry’s directorate general house provision has allocated Rp. 9 trillion [US$647.41 million], and the FLPP program has provided Rp. 19 trillion. BTN has launched its micro-credit program for informal sector workers, and REI would also focus more on the MBR program,” Basuki said.

The ministry has allocated 8.39 percent of its total budget to the One Million Houses program, with the directorate general for houses provision receiving Rp. 9 trillion an the directorate general for house financing receiving Rp. 240 billion

With those funds, the ministry plans to build 263,056 houses this year, up from 113,442 houses it built last year.

Data from the directorate general for house provision show that of the total 805,169 houses built under the One Million Houses program last year, 569,382 were MBR houses (against the targeted 300,000).

The ministry is banking on the higher budget funds to help it build on the improvement of last year to build one million houses this year.

REI chairman Soelaeman Soemawinata said the association had set a target of building 200,000 houses for the MBR housing program this year.

“To speed up meeting the target, we encourage big developers to cooperate with smaller developers in the regions,” he said.

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