Investment Climate Property Development: Tough Permit Process
The Indonesian government aims to provide affordable housing for the nation's poorer (low-income) households through the One Million Houses program, a program that was launched in mid-2015 by Indonesian President Joko Widodo. However, property developers complain that in most regions it is tough to obtain all necessary permits to construct the houses.
The Indonesian government had devoted one economic policy package specifically to the development of housing for low-income households. In the 13th economic policy package, released on 24 August 2017, the government implemented deregulation for residential property projects for low-income families in a bid to speed up the One Million Houses program and create a more just society.
Recently Widodo praised nine regional heads who succeeded in slashing the number of permits (and time) to start the construction of low-cost housing.
However, despite the package and limited local success, there are reports that these deregulation measures are not being fully implemented by most local governments and therefore have resulted in the delay of several projects. Developers complain that it can take months before certain permit are issued in some regions and this causes headache.
Another problem for Indonesia's One Million Houses program is that some developers have been reluctant to construct houses on locations that are rather isolated or lack public facilities (including water supply and transportation systems/access). The advantage of these locations is that land prices are lower. However, it is also tougher to find end-buyers.
Currently there is a shortage (backlog) of 11.4 million houses in Indonesia.
Indonesian Minister of Public Works and Housings Basoeki Hadimoeljono said the government will double the budget for the One Million Houses program in the 2018 State Budget.
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