A Need of Clarity on Foreign Ownership on The Eve of FIABCI


The issue of foreign ownership in the Indonesian property must be resolved before the World Congress by the International Real Estate Federation (FIABCI) in Bali next May 2010. This issue is urgent to solve as the future of Indonesian property lies in it as one of its foundation.

This was stated by the State Public Housing Minister, Soeharso Monoarfa; the Indonesian Real Estate central board chairman, Teguh Satria; and deputy chief of property from the Indonesian Chamber of Commerce and Industry (Kadin), James T. Riady, Tuesday.

The State Public Housing Minister, Soeharso Monoarfa confirms that the issue of foreign ownership is still under consideration, and of course the sooner it's resolved the better. While Teguh Satria, REI central board chairman, hopes that the regulation that allows foreign citizens to own Indonesian property can be ratified before the FIABCI congress in Bali.

Currently the Indonesian property business is not as competitive as those in other Asian countries, such as Singapore, Malaysia, Thailand, and China, and in the United Arab Emirates (UAE). "Property rights in Malaysia and Singapore can be valid for 99 years, or even for 999 years," said Teguh Satria. In Malaysia there is a "my second home" program, Thailand has "long stay" program, the Philippines the "retired" program, all of which invite foreigners to own property there. "Only Indonesia is left behind due to unconducive regulations on the property industry."

James Riady: make it 80 years

The deputy chief of property from Kadin, James T. Riady, believes that the government should resolve three issues before the FIABCI World Congress in Bali starts.

"First the Kadin asks that the right of every citizen with a residence or house to be respected. That's so the citizen's main asset can have a high value and can be made into a business capital.

Therefore the Building Rights on Land should be made for 80 years. Currently people always extend it. Imagine if every valuable asset of the people can be pledged to start a business."

Second, said James, who is also the CEO of Lippo Group, foreign ownership should be allowed for 70-80 years. "In Singapore it can be for 99 years, or even 999 years. We'll be giving way for foreign parties to build in Indonesia. This has been done on other Asian countries, including China and the UAE."

The point is, he stated, not to restrict foreign parties, but to give insentives. For example, inspection at airports shouldn't be complicated. "Foreigners bring a tremendous domino effect. They have (need for) house-keepers, drivers, doctors, and other things."

Third, the land title strata for offices and apartments, and land use rights, should be joined into just the land use rights. "If the government can do all three before the FIABCI Congress in May, the Indonesian property industry will roll. So far the property industry has not moved on in Indonesia, while in many countries it already is." James added that this can be realized without waiting for the regulations.

He said that foreign ownership for Indonesian property should be limited to over 100,000 US dollars or around Rp. 1 billion, referring on the prices of premium apartments in Jakarta which are around 10 to 20 million US dollars. This policy will motivate new infrastructure constructions and, most importantly, the property industry would become more lucrative.

James also believes that the government should set aside 5 percent of the gross domestic product for infrastructure constructions. "Currently it's only one percent. Indonesia is definitely behind Singapore and China that both allocate 5 percent of their GDP for constructing infrastructures."