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Vice President Jusuf Kalla says the state will subsidize
interest payments on loans taken out by developers for the construction
of low-cost housing to the tune of about Rp 15 trillion (about US$16.4
billion) over five years.
"The government will provide interest-payment subsidies to developers,
and work hand-in-hand with local administrations to simplify permits
and eliminate various types of unnecessary local taxes," the Vice
President told reporters Thursday in Jakarta as quoted by Bloomberg.
Kalla said the President had signed a decree to accelerate the
construction of such homes.
"There's too big a gap in our cities between the rich, with their big
houses, and the poor who cannot afford to buy homes," he said.
The government plans to build 1,000 low-cost apartment buildings in 10
cities over the next five years, with each building expected to consist
of 100 apartments.
"Each apartment will cost Rp 150 million," Indonesian Real Estate
Developers Association (REI) chairman Lukman Purnomosidi said.
Speaking separately, Indonesian Chamber of Commerce chairman Mohamad S
Hidayat, who also owns a real-estate business and once served as REI
chairman, said that Kalla had given REI a mandate to put the low-cost
housing program into effect.
"It just so happens that the Vice President has a background in
business. You get the chance to talk and make suggestions to him. He is
very eager to see this housing program being realized," Hidayat told
the REI's annual conference Thursday at the Sultan Hotel, Jakarta.
Hidayat said that providing housing for low-income groups had been one
of the REI's priorities for decades.
"I remember when only Bank Tabungan Negara was interested in providing
loans for low-cost housing developments. But now, more and more state
and private banks are participating, offering various credit schemes
for low-income groups," he said.
"I hope that this program will be supported by the banking sector
through lower lending rates," he said, while at the same time
criticizing the tardiness of the banking sector in reducing lending
rates in line with the reduction in the central bank rate to 9.75
percent.
Currently, the country's state and private banks are offering loans at
rates ranging between 13.5 and 17 percent.
According to Bank Indonesia figures, loans have contributed to 33.6
percent of total investment by the property business this year, with
this contribution expected to grow to 36.5 percent in 2007.
Also speaking at the meeting, the consumer-affairs director of
state-owned Bank Rakyat Indonesia (BRI), Toni Soetirto, said that BRI
would provide subsidized budget housing loans for those with incomes of
less than Rp 2 million per month. The loans would be available from 486
BRI branches around the country.
Aware of the complex paperwork required for securing a loan, Toni said
that BRI would introduce a centralized approval process to speed up the
process.
"The growth in budget housing loans has been low in Indonesia. The
ratio is only 1.4 percent to GDP, while in Thailand the equivalent
ratio stands at 4.4 percent, and in Malaysia at 27.7 percent," he said.
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