The government has encouraged property development to become more professional, innovative, and committed in a bid to expedite national economic recovery.
One of the efforts undertaken by the government is regulation reformation through the Job Creation Law to facilitate the licensing service mechanism for businesses related to building construction, Coordinator Minister for Economic Affairs Airlangga Hartarto remarked.
The multiplier effect arising from the forward and backward linkages in the property industry also becomes the fundamental consideration for regulation and incentive formation, he noted through a statement on Friday.
The property industry is capable of absorbing workforce and providing a multiplier effect for other industries, he remarked.
In addition, development of the property sector is necessary, given the growth of the urban population that currently stands at 56.7 percent.
This figure is estimated to rise to 66.6 percent in 2035 and will reach 70 percent by 2045.
The property demand projection can also be seen from the National Socioeconomic Survey’s (Susenas’) data in 2020.
It shows that the figure for home ownership backlog has reached 12.75 million, and it potentially rises along with the growth of new households that reaches 700-800 families every year.
The government will also expedite the Building Construction Approval (PBG) service through issuance of the Joint Circulation Letter (SEB) supported by aid from regional governments.
The government also provides incentives in the form of Loan to Value (LTV) and Financing to Value (FTV) up to 100 percent for property credit, Hartarto remarked.
This is given to banks that fulfill the Non-Performing Loan or Non Performing Financing requirements, he remarked.
These incentives also include the extension of value-added tax incentive of a maximum of 50 percent for a house or unit, with the highest selling price of Rp2 billion.
This extension also applies for 25-percent incentive for a house or a unit, with a selling price above Rp2 billion to Rp5 billion. The government extension applies until September 2022.
In addition to incentives for the people, the government strives to support property businessmen in increasing demand over subsidized housing.
Moreover, the government is conducting adjustment to the Agrarian Affairs and Spatial Planning Minister’s Decision related to establishment of Protected Farm Land (LSD).
It is expected to be carried out along with housing construction that is part of the One Million House Program.