Vice President Boediono says new estates are springing up to meet growing demand without taking infrastructure needs into consideration. (Antara Photo)
Nusa Dua, Bali. Vice President Boediono on Thursday called for the central and local governments to adopt a more “rational” approach while developing a grand strategy for urban planning, especially in housing.
Boediono said such an approach was needed to mitigate the undesirable effects of the rapid urbanization resulting from surging economic development.
“We often feel and see that the growth of housing in Indonesia has no clear and rational design,” he said. “Numbers-wise, the growing demand is being met, but it is growth without rational design.”
He was speaking at the opening of the International Real Estate Federation’s (FIABCI) 61st world congress in Bali. The congress adopted the theme of Save the World: Green Shoots for Sustainable Real Estate. It focused on eco-property, green tourism, nature’s limits and opportunities and innovations in real estate.
“We need to evaluate whether [development] is sustainable for the middle and long term as housing sustainability is important for all of us, not only for the government but also the industry and the people,” Boediono said.
The housing sector has become one of the main drivers of economic development, contributing 9.3 percent of GDP and 73 percent of total investment last year.
Boediono acknowledged that it had direct and indirect effects on economic growth and was a major source of income for the central and regional governments.
Not surprisingly, most growth in the sector comes in urban areas. Government data shows that between 1995 and 2005 the urban population grew 55 percent, which caused a corresponding massive increase in demand for housing.
“We realize that housing development is one important aspect for us in tackling the poverty problem, mainly in urban areas,” Boediono said.
“Many developing countries, including Indonesia, have a combination of strong demand, incoherent national policies and weak urban development plans that cannot cope with the situation. This is not a sustainable combination and it is our job to fix it.”
Commenting on Boediono’s criticism, Public Housing Minister Suharso Monoarfa said the central and regional governments should work together to integrate the housing sector into the broader urban planning process.
“The housing sector is developing regardless of urban planning,” he said. “It should be part of a city’s whole development, a key factor in urban policy.”
He said he would support all regions in revamping their urban planning by introducing effective bylaws.
“Housing should not be scattered. We should follow the plans that we have tended to ignore,” Suharso said.
Boediono went a step further, saying there should be a grand strategy for urban planning, including coordination between the housing sector and infrastructure development.
“The impact will be huge if we fail to do this,” he said. “People are reluctant to commute because it takes them so long because there is no coordination between the transportation system and housing needs. According to surveys, in many big cities transportation costs are becoming families’ biggest expense.”
Boediono said the government should also address the country’s sharp economic growth cycles when developing a planning strategy.
“In Indonesia, if GDP increases, the housing and construction sectors grow faster than GDP, and when the GDP takes a downward turn, those sectors contract faster than the economy,” he said.
“This is our national economic problem and we have to reduce the sharp fluctuations of the housing and construction sector. For that reason, government should try to balance the need to speed up the supply of shelter to meet the large demand while avoiding bubbles that could create a crisis and affect the economy.”
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