Jakarta strikes new low-cost housing deal

Mustaqim Adamrah, The Jakarta Post, Jakarta

Less-affluent families in the capital may have a reason to smile after the signing of a memorandum of understanding (MOU) between the Jakarta chapter of the Indonesian Real Estate Developers Association (REI) and the Jakarta administration on Tuesday.

Under the MOU, 28 REI Jakarta members will build eight towers containing 100 low-cost apartments in each as compensation for failing to meet their responsibilities under a gubernatorial decree.

The towers, to be built in North Jakarta's Marunda area, will contain apartments priced at between Rp 144 million (US$15,700) and Rp 150 million.

The administration and developers are yet to agree on the exact start date of construction.

REI Jakarta chairman Tulus Sawoso said the MOU was drafted in line with the obligation of the association's members to construct low-cost housing in the city.

"Due to sluggish business and the current economic climate, 28 developers are yet to construct low-cost housing as required under a gubernatorial decree," he said at City Hall after signing the MOU.

"However, their commitment to provide these facilities is now evident with the signing of the MOU."

The decree stipulates that developers who build structures on 5,000 square meters of land or more must allocate 20 percent of the area for the construction of low-cost apartments.

Tulus said developers were expected to build the apartments, while the administration and related institutions would install supporting infrastructure such as water and electricity.

Governor Fauzi Bowo said such apartments, to be managed by the city administration, would be used predominately to house Jakartan squatters with city ID cards living on riverbanks, under elevated roads and in other restricted areas.

"In addition to the planned 800 low-cost apartments, we will build 1,000 apartments in Marunda," he said.

The administration is planning to build a total of 3,820 low-cost apartments on 41.8 hectares of land in Marunda, 6,560 units on 41 hectares of land in Rorotan and 1,700 units on 17.83 hectares of land in Rawa Bebek, all in North Jakarta.

The head of the planning division at the city housing agency, Putu Indiana, said at least 11,300 low-cost apartments were needed in Jakarta.

However, he said the administration was only able to build 1,100 units in 2007 with the Rp 400 billion allocated for the purpose in the 2007 city budget.

He said between 1985 and 2006, more than 23,000 low-cost apartment units were built in the city.