T

he legislature is deliberating a bill on apartments that will give foreigners the right to longer leaseholds, ranging from 70 to 90 years, to boost the property market.

Yusuf Yuniarto, the public housing minister’s expert staff on spatial planning, land affairs and settlements, said foreigners in Indonesia could buy apartments without having to regularly renew the right to lease as previously.

“We want to create a wider market for our apartments, especially among foreigners,” he said. After the bill is enacted, more foreigners will hopefully invest in Indonesia by buying property such as apartments, he went on.

The move also aims to boost both the flow of foreign capital into the country and tax revenue, he said.

“Buying and selling activities in property will bring more revenue into the country, either in the form of foreign capital flow or tax revenue,” he told The Jakarta Post.

Article 52 (1) of Law No. 1/2011 on housing and settlements, passed into law recently, stipulates that foreigners living in Indonesia can live in Indonesian property by renting, hak pakai (right to use) or leasehold.

The government and the House of Representatives are deliberating the bill on apartments that will further regulate the foreign ownership of apartments.

The government estimates that Indonesia will need about 5.4 million housing units, landed and high-rise, in 2010-2014. Of the total needs, the government may be able to develop about 2 million units.

Indonesia still uses Law No. 5/1960 on land management that prohibits foreigners from owning lands or landed buildings. Foreigners are neither allowed to buy apartments built on hak milik (freehold) land.

They, however, can buy apartments built on leasehold estate.

Leasehold estate is ownership of a temporary right to land or property.

Real Estate Indonesia (REI) board chairman Setyo Maharso said many countries had been able to attract foreign investment by offering leaseholds of up to 90 years for foreigners.

“This has been successful in attracting investment since they have the right to occupy land or a building for the given length of time, which is longer,” he told the Post. For example, China offers leasehold property for 99 years, while Singapore offers 90-year leaseholds.

“A leasehold of under 70 years is no longer attractive to investors,” Setyo said.

He referred to Government Regulation No. 41/1997 that stipulates that foreigners can have leasehold property for 25 years that can be extended for another 25 years and 20 years, or 70 years in total.

Setyo said the bill on apartments being debated had yet to regulate the 90-year leasehold, whether a holder would have to obtain it by extending it several times as before or not.

Facing difficulties in owning property, many foreigners who have Indonesian spouses use their wives’ names on the property deeds, said Setyo.

All foreigners will be able to own leasehold property once the bill on apartments is passed. “This is the first time foreigners in Indonesia will be allowed to have a leasehold on apartments,” Setyo said.

Juliani Wistarina Luthan, an activist from Aliansi Pelangi Antar Bangsa (APAB), a mixed-marriage group, praised the government policy to offer broader property rights to foreigners.

“It doesn’t matter for us whether we can occupy the houses by using leasehold or freehold. Living in our own house is the most important thing,” she said.