The government’s annual three million homes development program has lured the attention of foreign investors that Indonesia needs to soon have comprehensive set of regulations to support and protect their interests.
Deputy Minister of Housing and Settlement Areas, Fahri Hamzah, said that demand in the housing sector is still high, citing the shortage of houses at 9.9 million units by the end of 2023, but the government needs to address three main challenges − land issues, licensing, and financing − in order to achieve the target.
“The government has, therefore, coordinated with the Ministry of Finance, Bank Indonesia (BI), the Financial Services Authority (OJK), and stakeholders to adress the issue. The results will be summarized in a financing scheme that will later be regulated in a comprehensive law,” Fahri spoke at the Katadata Indonesia Policy Dialogue held in Jakarta on Wednesday, December 11, 2024.
He said further that the regulatory scheme that is being prepared is expected to be the forerunner of a comprehensive Law on Housing and Residential Areas.
“This will be a complete legal basis for solving the problem of housing needs,” he cited.
Fahri revealed that Qatar and the United Arab Emirates have expressed their interest to invest billions of US dollars in the government’s housing development program.
“Investors from the United Arab Emirates and Qatar have agreed to provide one million housing units per year. However, I insist that their investment interest rate must be lower than that in Indonesia so that house prices will remain affordable,” he said.
Philosophy
On the occasion, Fahri also revealed the philosophy behind the three million homes development program targeted by President Prabowo Subianto.
“One million houses in the city, one million in the villages, and one million at coastal regions,” he said, while citing that the program is launched not only to overcome the shortage of houses, but also encourage the property and construction service sectors to become drivers of the national economy.
The Public Housing Savings Management Agency (BP Tapera) has assessed that the housing sector has great potential for investment. In addition to foreign investors, funding will also be supported by saving schemes and the capital market. Since its launch on June 14, 2021 until the end of 2022, BP Tapera, which is planned to become the National Housing Investment Agency, has managed funds of Rp8.12 trillion (US$509 million).
