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City looks to private sector for housing
The Jakarta administration is encouraging the private sector to take a role in the provision of affordable housing in the capital as part of efforts to tackle the housing backlog in the city, which currently stands at 302,319 units
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span>The Jakarta administration is encouraging the private sector to take a role in the provision of affordable housing in the capital as part of efforts to tackle the housing backlog in the city, which currently stands at 302,319 units.
The administration has set a target of building around 14,000 housing units as mandated by Jakarta’s 2018 to 2022 medium-term development plan. While the remainder must be provided by cooperation with the private sector.
In order to entice private firms to join in, the administration is set to announce several proposed incentives for private developers by the third quarter this year, the head of the program’s technical management unit at the Jakarta Housing Agency, Dzikran Kurniawan, said. Such incentives could include construction loans with competitive interest rates and subsidized utilities.
For instance, the administration could provide a subsidy for the construction of infiltration wells, as by year-end development is expected to shift to “green construction”, promoting water conservation and sustainability, Dzikran said.
“Another example of cooperation could be if [private firms] built on land owned by the administration, or the administration built on privately owned land,” he said in a seminar in Central Jakarta on Wednesday.
Because of the shortage of available vacant land in the capital, the idea of taking over stalled apartment development projects has been raised.
City-owned developer PD Pembangunan Sarana Jaya president director Yoory C. Pinontoan concurred in the plan but suggested conditions did not support its implementation.
“It would be a very good idea only if the underlying problem was financing but we have to be very careful. We have found that many stalled projects are as a result of legal problems, so we cannot take them over,” he said.
The handover of keys for the first 780 apartments in the Samawa program’s Klapa Village project in Pondok Kelapa, East Jakarta, is expected in July. The project is the city’s first and flagship zero down-payment housing project and was launched in October last year by Jakarta Governor Anies Baswedan.
To support the program, Sarana Jaya is preparing the ground-breaking on another project of 900 apartment units on a 2.9-hectare site in Cilangkap, South Jakarta.
The firm is also in the process of land acquisition for a 4-ha site in Pulo Gebang, Cakung, East Jakarta, to build more affordable apartment units.
The administration has also been examining potential sites in West Jakarta and South Jakarta.
“With the existing 780 and upcoming 900 units, it is still well below target. Therefore, we need to accelerate the development. Hopefully, the administration can establish collaboration with private firms,” Yoory said.
The chairman of the East Jakarta chapter of the Association of Indonesian Young Businessmen (HIPMI) Andre Tirtoadji claimed that businesses welcomed the collaboration idea, calling the zero down-payment housing program a contribution to society.
However, business players are not able to take further steps, as there are not yet clear and beneficial rules for them.
“What should be highlighted is ‘what are the rules?’ We have yet to see clear ones. Thus, we cannot consider how to invest in the program,” he said.
He said clarity in particular was needed in terms of the financing scheme especially because developers would not get any income during the development.
“[The units] are sold very cheaply and Jakarta’s land is very expensive. This confuses us,” Andre added.
When asked about the proposed incentives, Andre said such efforts would be very helpful from a business point of view and the association was open for any discussion regarding the rules.
The zero down-payment housing program was one of Anies’ campaign promises during the 2017 gubernatorial election.
The apartment units are aimed at tenants who have an income of Rp 4 million (US$272) to Rp 7 million per month and married couples have priority.
Jakarta Housing Agency has reported that 2,482 people have signed up for the Samawa program, and the first 780 prospective tenants will be short listed after the agency verifies the documents submitted with relevant agencies, such as the population and civil registry agency, as well as tax agencies.
Dzikran said registration would reopen for the program sometime next month even though the number of applicants was already higher than the unit availability.
“We will open registration through a website where applicants can update their information anytime. We are preparing the mechanism to learn about the number of Jakartans who need housing. In that way the private sector can see how interesting this sector is,” he said.
