What are the government’s intentions in order to address the current housing shortage?
Indonesia’s current government under the Jokowi administration have thrust housing to the top of the agenda. A topic which has seen less activity in former governments. Now there is a clear direction to address the housing shortage. This is being achieved under ‘Nawacita’, nine priorities that Jokowi has set out for the future of the country.
In 2015 the government commenced their housing initiative. 70 percent of the one million housing scheme was geared towards low income families. Indonesia has five different categories of housing. These are classed as public housing, self-build housing, special-needs housing, government and commercial.
Actions
As part of the program the government improved terms for building under the Economic Policy Package in 2016. This included reducing permit fees by 70 percent. Plus reducing the approval time period from between 770 to 980 days to just 40. Alongside these drastic measures which aimed to boost the housing deficit, the government played their part by increasing the state budget by half a percent to 1 percent.
In order to help those wishing to get onto the property ladder, the government introduced finance schemes. These would be applicable to either vertical or landed property through rented or buying schemes.
However it is not just low income families who struggle to buy property. The lower-middle income bracket also face similar challenges. Hence millennials also find it hard to afford property too. Hence this segment needs assistance too.
In an attempt to help the situation the government plan to build more ‘Rumah Susun Sederhana’ known as rusun or low cost apartments. First introduced in the 1970s, according to research by Savills not enough have been built to meet demand. The real estate firm estimate that there are only 31,000 in existence in Jakarta which equates to 1.2 percent of all households. Many are in poor condition so the government intend to develop over 14,000 rusun this year alone.
On top of this the government have made a bid to improve the management of buildings and also to make sure that future projects mix social classes. This is being achieved in a scheme in Serpong, South Tangerang where low most and private sector housing will be built side-by-side.
Will it work?
Savills believes that the current housing situation can be addressed in Indonesia. But it will need to, “Resolve issues of unaffordability, housing shortage and urban sprawl, including the widening gap between income and residential price, particularly among the young population – the Millennials, as future leaders of the country”.
There is a strong emphasis on moving away from building property under the private sector. The government can overcome these issues by implementing initiatives but also responding to changing societal demands.
