5 days ago
Developers slam housing offtake agency scheme
JAKARTA: Property developers have pushed back on the government's proposal to form an offtake agency for the social housing project, calling it a mismatch with the actual problems on the ground and suggesting the government focus on improving financing access for both developers and consumers instead.
First presented on July 25 by Deputy Public Housing and Settlements Minister Fahri Hamzah in a meeting with the State-Owned Enterprises Ministry, the proposed agency would function similarly to the State Logistics Agency (Bulog) in rice distribution, only applied to the housing sector.
Fahri said the new entity would purchase subsidised houses, specifically those built on government-approved land as part of the 'three million homes' project, and then resell them to the market.
In fulfilling this function, he said, the offtake agency would address market absorption for subsidised homes and help tackle the housing backlog as key hurdles in the sector.
He also suggested reorienting state-owned developer Perum Perumnas to serve as the housing offtake agency.
'With a backlog of 15 million families, the housing demand is very clear. There's no need to think about marketing. What's needed is for the state to prepare an offtake institution,' Fahri said in a statement.
The scheme could mirror public housing models like Singapore and Hong Kong, where dedicated government agencies take the lead in providing homes for citizens.
Developers have hit back at the proposal, saying that such an offtake agency would only skim the surface of the housing crisis and not address its root cause.
Bambang Ekajaya, vice-chairman of industry association Real Estate Indonesia, pointed to weak purchasing power as one of the major issues contributing to the long-standing backlog.
'What the government needs to do is improve people's purchasing power, because they can no longer afford to buy a house,' Bambang told the The Jakarta Post.
He also cautioned against applying the same approach used for rice procurement to housing, as the two sectors were fundamentally different.
As goods, rice is a fast-moving staple commodity whereas a house is typically a long-term, once-in-a-lifetime investment.
Moreover, establishing a new institution would require additional funding, personnel and infrastructure, Bambang said.
He also questioned how the government would finance a housing offtake agency, especially amid the range of large and ambitious projects underway.
He urged the government to focus instead on implementing existing plans, improving funding and financing access for developers and ensuring that the housing programme was well-targeted.
Bambang clarified that 'existing plans' included the government's recent decision to expand this year's target for the housing finance liquidity facility (FLPP) from 220,000 to 350,000 units, as well as the subsidised housing programme to cover higher-income groups.
He noted that the price ceiling for subsidised homes was expected to rise as the government broadened homeownership access for the middle class, making a further rise in the FLPP target essential.
'The government should stop creating new plans and experimenting, and instead ensure that the existing ones are properly executed,' Bambang emphasised.
Swandy Sihotang, a property developer at PT Nims Mutiara Indonesia, also highlighted a particular need to focus on improving financing access for consumers to encourage sales of subsidised homes.
He also recounted that some prospective buyers of subsidised homes had been hindered by their poor credit ratings in the Financial Information Service System (SLIK) of the Financial Services Authority, a key reference for banks to assess borrowers' creditworthiness.
'I don't see the positive impact of establishing an offtake agency yet because we have no problems with sales, except for consumers' SLIK checks,' Swandy told the Post, noting that most potential buyers of subsidised homes were low-income earners who often struggled to maintain good credit scores.
He also raised concerns that the role of developers in the housing market could diminish if the government moved forward with the plan.
'If this so-called housing Bulog is realised and it ends up buying housing units from developers, then what does that make us? We would be reduced to mere contractors whose only task is to build homes,' he said.
Anton Sitorus, head of research at real estate firm CBRE Indonesia, also criticised the proposal, saying an offtake agency would only create inefficiencies in the housing market due to its two-pronged business model. —- The Jakarta Post/ANN
