Friday, 23 Augst 2019 | 01:07 WIB

Indef: Govt May Imitate Singapore in Slashing Housing Backlog

Mweyel House

JAKARTA, NETRALNEWS.COM - Institute for Development of Economics and Finance (Indef) assessed the need for a real breakthrough so that the backlog (difference in demand and supply) of housing can be suppressed.

Indef's researcher Bhima Yudhistira explained that the government can provide land banks which are not too far from urban areas, to be built by the private sector.

"Land bank is actually owned by many central government and local government. On the other hand, in fact, there is already a rule if private [sector] builds luxury homes, it must also build a subsidized house, the problem is property entrepreneurs often build [the subsidized houses] instead elsewhere. This happens because there is no firm sanction," Bhima said to the media in Jakarta, Wednesday (8/2/2017).

He said the government could emulate Singapore where the government and the private sector are collaborating. Land is provided and has been released by the government, so that the private sector becomes more freely in building.

Concerning land during the period it is indeed a major constraint for developers because of the complexity of land acquisition. Not to mention the lengthy administration for construction permit.

"So the permit in the central [government] is long, whereas the backlog in Jabodetabek is the worst. So long as there is a land bank scheme, there should be many private sector interested," said Bhima.

For that reason, short-term land bank schemes could be chosen to allow more and more private entities to build subsidized houses. So far, incentives for developers are still relatively small. The government can issue another policy package specialized for low-cost housing development, if deemed less able government may give tax allowance.

In terms of components of housing development, from Indef's research, land factor is still the main component of cost formation.

"It is the number one is land. The highest cost component. In terms of price of building materials, relatively the same," he said.

On the other hand, the government also in minimizing the backlog, can see various innovative breakthroughs in the property sector.

Because, there are many new technology models that can be adopted, such as wooden houses with high technology, earthquake resistant, waterproof, ability to absorb light so that more energy efficient and in terms of  price it is much cheaper. (*)