Providing Public Housing

KOMPAS/FERGANATA INDRA RIATMOKO

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The public housing demand has not been fulfilled for several reasons, one of which is that the housing prices increase faster than people’s salaries.

As of 2010, the housing backlog stood at 13.5 million units, with housing demand at around 80,000 units per year.

This daily’s coverage, published from early this week, has found that the government’s capacity to provide housing is highly limited. The “one million houses per year” program launched in 2015 has only met 20 percent of the housing demand. The remaining gap has been plugged up by people building their own houses.

Several issues have caused delays in fulfilling the people’s basic right to housing, which is guaranteed in the Constitution, including licensing, land availability and the people’s purchasing power.

The price of a house is increasing faster than the ability of people to purchase them, even among formal workers. Salaries among the millennial generation – those born after 1980 – who most need housing as they mature, are increasing slower than the price of houses.

This is not a problem specific to Indonesia. The gap between housing supply and demand also exists in many cities around the world. One of these cities is Tokyo, which has one of the highest land prices in the world.

The central government has streamlined the licensing for housing development through several efforts, including its 13th economic package policy. The impact is not yet visible, as not all regional administrations have implemented the policy at the same time, because of financial reasons. The government has also prepared a financing scheme for low-income households (MBR) and subsidized bank loans, but the scheme depends on the banks and the developers.

Several things need to be done to speed up the provision of housing for low-income people and those slightly above the poverty line who are unable to buy non-subsidized housing.

The most basic issue is to ensure that the 1960 Agrarian Law, which states that land has a public function, is truly implemented in spirit. Land must not be an object of speculation; nor should it be used as a primary source of income for regional administrations through increased land taxes.

Thus, the government needs to create a land bank that can be used by state-owned enterprises and regionally owned companies. Establishing a land bank should be able to offset the trend of big property companies buying up land.

Regional administrations can involve small and medium-scale property developers to build housing for low-income people, which will in turn create jobs and entrepreneurship opportunities in the regions. Of course, creating quality jobs to grow people’s purchasing power remains the work of the government.