Thursday, June 3, 2010

Will Indonesia allow expats to own houses?

Will Indonesia allow expats to own houses? Maybe after uphill battle, says RI Vice President Boediono.
Andi Haswidi, The Jakarta Post, Nusa Dua | Mon, 05/31/2010 9:25 AM |

At an international property industry gathering in Bali last week, Indonesia was presented as an emerging market with great potential and growing demand for development in the real, residential and commercial property sectors.

Indonesia is doing what it can to open its real estate market to foreign ownership, Vice President Boediono said to delegates from more than 60 countries at the opening of the 61st. World congress of the International Real Estate Federation (Fiabci).

What is the International Real Estate Federation FIABCI?

* Business club of real estate professionals in 60 countries
* Federation of 100 national real estate associations
* Special consultant with NGO status to the Economic and Social Council of the United Nations Organisation (ECOSOC)

FIABCI represents all real estate disciplines

* brokerage
* property management
* valuation / appraisal
* property development and consulting
* lawyers
* insurers
* architects
* urban planner
Two RI projects win Fiabci awards

The International Real Estate Federation (Fiabci) has chosen 12 winners and 12 runners up from 54 nominees as recipients of the most prestigious award in the property industry, the Fiabci’s Prix d’Excellence Awards.

Regatta the Icon, a collaboration between home developers PT Intiland and PT Global Eka Buana, emerged as the winner of the Bali Congress Award, a category made especially for the 61st Fiabci World Congress, held in Nusa Dua, Bali, from Thursday to Friday.

Another project in Indonesia, the Jakarta Garden City by PT Mitra Sindo Sukses, was named the second-best low-rise residential complex in the world in this year’s accolade.

The Regatta is a property development that includes 10 apartment towers with an aqua park, hotel and a serviced apartment, located on an 11-hectare plot at Pantai Mutiara beach in Ancol, North Jakarta.

The structure was designed by Tom Wright of Atkins, an architecture design consultant based in Epsom, United Kingdom, that is famous for global landmark buildings such as the Burj al Arab in Dubai.

President of the Fiabci Prix d’Excellence Awards 2010, Yeow Thit Sang, said the purpose of the awards was to encourage property developers to continue innovating while maintaining high standards.

“Indeed, the quality of the projects submitted prior to the competition was of a very high standard,” Yeow said.

One fact that stood out was that the environmental assessment category counted for more this year, up to 25 percent from 20 percent last year.

Johannes Tulung, head of the environmental issues at the Indonesia Real Estate Association said that the winners had been selected in a transparent process where each judge on the panal evaluated each project independently.

“It means that we don’t know who the other judges are. I was assigned to evaluate a project without knowing who the other judges were,” he said.

The winning projects were from 11 countries. Asia contributed the most nominations with 40 projects from eight countries, followed by Europe with 11 projects from two countries, and the United States with two projects.

The independent judges are real estate industry professionals from 18 countries. Among them were presidents of a number of Fiabci chapters in different areas, former Fiabci presidents and reputable property professionals such as architects, surveyors, appraisers and developers.

The committee chairman of the 61st Fiabci World Congress Bali, Pingki Elka Pangestu, said Indonesia had had a large number of properties evaluated for the esteemed accolade.

Some of those constructions, Pingki said, were of excellent quality, boasting world-class designs and building material.

“I also believe that the Prix d’Excellence is an effective way to improve consumers’ confidence in getting the best products,” Pingki concluded.
However, it will be an uphill battle, he added.

Foreign ownership of property is impossible under Indonesian law. Non-nationals can now rent real estate for 25 years and may extend leases two subsequent times, for 20-and 25- year periods respectively.

Investors may lose the value of their investment over long-period leases, and many foreigners complain about corrupt offi cials and Indonesian bureaucracy when processing lease extensions.

Public Housing Minister Suharso Monoarfa said the bureaucratic issue stemmed from the regional governments’ narrow perspective on ways to generate government revenue from the property market.

A permit goes through layers of approvals, which makes the process subject to abuse by corrupt officials, he said.

Suharso said the central government was attempting to raise awareness among governors and regents of generating real estate revenues and regional economic growth through more creative ways, such as simplifying procedures and providing clear city planning.

Regional governments should also be open to foreign ownership, which will result from Indonesia’s
agrarian reform program, he added.

“This is the era of globalization. People move freely across the globe. Limiting foreign ownership is no longer the right approach,” Suharso said.

He said that opening Indonesia to foreign ownership would generate investment between US$3 billion
and $6 billion per year.

The government is drafting a regulation that will partially open the market to foreign investment in
certain types of real estate, such as luxury apartments and high-value properties.

The proposed regulations will permit foreigners to initially lease real estate for up to 70 years, instead
of extending the lease two additional times.

However other countries in the region allow foreigners to lease land for up to 90 years.

The government’s draft regulation will face a huge stumbling block because it must adhere to the agrarian and foreign investment laws, legislator Ganjar Pranowo of the Indonesian Democratic Party of Struggle (PDI-P) told The Jakarta Post in a telephone interview.

“The government tried a similar approach to manage investment by foreign corporations in 2008. They tried to simplify the land-use extension, but [the effort] was rejected by the Constitutional Court,” he said.

Ganjar said that the House of Representatives did not oppose foreign investment in the property market, but investment must be in-line with the national interest, which is defined by multiple parties.

No comments: