TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
REI expects property to recover next year
Real estate developers hope the government’s recent push to attract investment through regulatory reform will help revive the property sector, which has spent years in the doldrums
Change Size
R
span>Real estate developers hope the government’s recent push to attract investment through regulatory reform will help revive the property sector, which has spent years in the doldrums.
The chairman of the Indonesian Real Estate Developers Association (REI), Soelaeman Soemawinata, said many property companies had begun to develop new projects as they believed improvements to the investment climate would boost economic growth that would, in turn, drive demand in the property sector.
“There are hopes the property sector will recover. Many developers have taken the initiative to kick start projects so that the property [sector] can flourish again,” Soelaeman said in Jakarta on Nov. 27.
The downturn in the real estate sector was close to its lowest point, he said, adding that industry players expected to see a turnaround soon.
Soelaeman said the wait-and-see attitude shared by businesspeople should begin to wane, as President Joko “Jokowi” Widodo had retained his seat in office and formed a Cabinet with the top priority of attracting investment to create jobs.
According to Statistics Indonesia (BPS) data, the real estate sector posted 3.58 percent growth in 2018, the lowest rate since 2014 after which the sector averaged 5 percent growth per year.
However, recent data show signs of recovery. In the third quarter this year, the real estate sector grew 5.73 percent year-on-year (yoy), higher than the GDP growth rate of 5.02 percent during the same period.
The Finance Ministry recently rolled out several incentives to stimulate growth in the real estate sector, including raising the threshold of property value subject to income tax (PPh) and luxury goods tax (PPnBM) to Rp 30 billion (US$2.13 million) from previously ranging between Rp 5 billion and Rp 10 billion, while also lowering the income tax rate for selling such property from 5 to 1 percent.
Bank Indonesia (BI) has also introduced policies to stimulate the real estate sector by recently relaxing the loan-to-value (LTV) requirements for mortgages by 5 percent, while environmentally friendly housing will get an additional 5 percent relaxation.
The policy, which will come into effect on Dec. 2, is expected to have an impact within three months of implementation, Soelaeman said.
He added that the government’s recent efforts to make the investment climate more welcoming, including a planned omnibus law on job creation that will amend more than 70 laws considered to be hampering investment, was very much welcomed by the sector.
“It [the government’s regulatory reforms] will be very helpful as too much time is spent taking care of licensing even though red tape could be cut,” Soelaeman said. “What we really need is what the government is already working on, namely deregulation to welcome investments.”
Agrarian and Spatial Planning Minister Sofyan Djalil said the government was currently brainstorming ways to simplify licensing procedures without reducing good governance standards.
“Our country was being held ransom by the many rules [governments have] made, which had no added-value,” said Sofyan. “That’s why we will look at the essence of each regulation. If the same thing could be achieved through [enforcing standards], why does there need to be a permit?”
