The country’s housing programs have never been successful, even almost 70 years after the Housing Congress in 1950. During the congress, one of the founding fathers, Muhammad Hatta, set a target of 40 years to adequately house all Indonesians.

Yet, housing affordability in the country’s big cities is at a critical stage. Reports reveal that with the continuous rise in house prices, millennials will never be able to afford adequate housing. Most people cannot afford to live near their workplaces in the cities. Institutional commitment has also faltered from a full separate ministry to three directorates general within a larger Public Works and Housing Ministry.

House prices always rise at a higher rate than that of anything else in cities. Housing subsidies logically lead to speculative rises. Imagine a subsidy for car purchases. It would similarly increase vehicle prices. Moreover, when a subsidy is channeled through the supply side (the developers) as it is now, it becomes greatly mistargeted and far from effective, because only 3.72 percent of home owners buy their homes from developers (and almost 70 percent build their own houses), according to a 2016 nationwide survey by Statistics Indonesia (BPS).

The fundamental mistake is that subsidies have been granted for people to own property, including landed houses, which is an even greater evil. This is analogical to subsidizing people to buy private cars. In transportation, subsidies are instead used to build and maintain public transportation and the operation of it. In housing, subsidies should also be used to build and manage social housing, and its use.

Social housing here means housing that is not meant to generate a profit, which should be made available to middle- to lower-income groups. This means people pay rent at different rates proportionate to their income levels. A certain level of maximum income should be set as an eligibility limit, as housing is a basic need, one of the human rights firmly stated in the Constitution, the Housing Law and the 1999 Human Rights Law, along with our 2005 ratification of the International Covenant on Economic, Social and Cultural Rights.

Nowadays, it is an essential step to suppress speculation, which has led to many vacant (even if sold out) apartments.

Consider protests in cities like Berlin and Paris. Berliners demanded a referendum for the German city to expropriate thousands of vacant apartments. The city, which has a population of 3.7 million, has 466,000 social residences consisting of 280,000 public housing residences (managed by government-owned companies) and 186,000 residences managed by 80 housing cooperatives. That is 28 percent of the city’s total housing stock. Jakarta has a total of 27,000 public residences for its 10.5 million population.

Social housing takes two basic forms. The first type is public housing. It is usually managed by local governments. The second is managed by nonprofit organizations such as foundations, cooperatives or other forms of
association. In 1961, driven by Hatta’s speech at the Housing Congress, Indonesia managed to build 12,640 homes through 200 nonprofit foundations. It stopped not because of its inherent mistake, but because of hyperinflation and regime change.

Subsidies have been fundamental instruments to provide basic needs, especially for goods and services essential for the dignity and productivity of a society. For the transportation sector, the Jakarta administration’s 2018 subsidy reached Rp 2.8 trillion (US$197.81 million) through PT Transportasi Jakarta. It has allocated Rp 3.2 trillion for 2019.

For Jakarta’s new MRT, every single end-to-end trip is subsidized at Rp 23,159 per passenger, totaling an estimated Rp 423.03 billion for its first year of operation. This is only to help cover operational costs, not its construction. Therefore, it is a matter of priority to also subsidize the housing sector.

A subsidy for providing a roof over everyone’s head is even more fundamental and urgent. Housing rights are attached to many other rights. A secure residence enables the exercising of political rights. Most contagious diseases are related to dwelling environment. A good education and learning among children cannot be achieved without adequate housing. Dignified social and cultural interactions require dignified homes.

Most of today’s public housing is of low quality. But this can be improved, physically and institutionally. Improvement is indeed a must. In many countries, social housing projects are prestigious, designed by excellent architects.

A public apartment complex in Gifu, Kitagata, Japan, was designed, for example, by noted architect Sejima Kazuyo.

To conclude, a strategic move in the housing sector for the next government would be to reorient all subsidies to social housing schemes. Improvement in institutional set up, including agrarian reform, and physical quality should follow suit.

Nothing will change or be achieved if we continue with the current misguided subsidies for home ownership, which only worsens the situation by encouraging speculation.

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The writers are independent urban researchers.

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