In Public Housing, the Rot of Corruption

Jakarta Globe, Mar 12, 2014

A housing complex is being completed in the Greater Jakarta area.
(JG Photo/Safir Makki)

The Public Housing Ministry has come under the public glare as officials in East Nusa Tenggara investigate the possible embezzlement of funds allocated for the construction of houses for low-income residents in nine districts there.

Mangihut Sinaga, the chief judge of the East Nusa Tenggara High Court, said on Wednesday that his office had launched in inquiry into the allegation that as much as Rp 1 trillion ($88 million) had been embezzled from the fund between 2011 and 2013.

Mangihut called the case “interesting,” citing a number of irregularities that his office had uncovered in the building project, starting from the specification of the houses, to the timeline for the project, up to the use of funds for the project.

He said the funds alleged to have been embezzled covered the construction of new housing as well as other aid programs that were connected to the housing project.

“Aside from the partners and the managers of those funds, anyone in the Public Housing Ministry who is involved will be investigated, because the funds came from the ministry,” Mangihut said.

Court investigators will also be looking at the individuals responsible for the implementation of the project, with Mangihut noting that the ministry typically appointed a working unit that would have the authority over the use of funds in the region.

The court has reportedly investigated Felix Soba, the head of Ngada district, who confirmed that there was an inquiry under way into the housing project.

Felix said that under the project, 300 homes were to be built in Ngada, although only 150 units had to date been built.

“As for other issues, I cannot explain in detail because we have been questioned by the prosecutor,” he said, adding that the questioning had focused on information about the progress of the throughout the three-year period.

The court said it was also expanding its investigations to eight other districts and their top officials, including Kupang district and Kupang municipality, South Timor Tengah district, North Timor Tengah district, Belu district, East Flores district, Alor district and Central Sumba district.

The Atambua High Court in Belu is also gathering information about the public housing project in Belu and Malaka districts in 2012, according to a report on Wednesday by Tribunnews.com. The court is reportedly targeting 57 contractors involved in the project as part of its investigation.

Roberthus Takoy, the chief judge, said on Tuesday that investigators had questioned dozens of witnesses linked to the case and had decided to pursue a full criminal investigation.

“We are now focusing on the contractors handling the supply and installation of energy-saving lights and low-voltage electricity for the five villages of Saenama, Wesey, Faturika, Bisesmus and Rinbesihat,” Roberthus said, referring to the two of the programs that were part of the wider housing project.

Tribunnews.com reported that the condition of the houses that had already been built in Haliwen ward in Kupang, the provincial capital, were very poor, with most of them consisting of rusty iron frames, while others were only half-built.

Similar conditions were reportedly found in Fatubenao and Manumutin wards, where only the frames of the houses have been built, most of which have also started rusting due to the rainy season.

“The frames were built in August 2013,” said Yosep, a resident.

“Back then, they came unloading sand three times, without cement. Those working on the project even asked for our old houses to be demolished for them to be able to build new ones, but we refused.”

East Nusa Tenggara is not the only region suffering from the alleged misuse of funds in the government’s regional housing projects.

Last month, the West Kalimantan High Court detained two corruption suspects contracted by the Public Housing Ministry — Tri Eddy Nuryanto, the managing director of builder Pilar Persada, and Eko Wahyudo, an official from the company’s branch in Pontianak, the West Kalimantan capital, Inilah.com reported.

The two men were arrested on charges of alleged graft in the construction of special housing in Bengkayang district, which was included in the Public Housing Ministry’s 2012 budget.

The government has reportedly disbursed 100 percent of the Rp 6.7 trillion contract for the construction of 100 homes there, out of which only 66 were built.

In East Java, the Pamekasan High Court is also reportedly looking into alleged embezzlement of funds for a similar project targeted for some 313 low-income households in the region.

Each household reportedly received just Rp 3.5 million of the Rp 7.4 million worth of aid allocated to them by the Public Housing Ministry.

Earlier this year, Firdaus Djaelani, the executive chief for non-banking financial industry monitoring at the Financial Services Authority (OJK), said Indonesia’s need for housing stood at approximately 800,000 units annually, adding that the government still had a backlog of 15 million housing units.

The number of houses built using the Housing Finance Liquidity Facility (FLPP) — a mortgage program subsidized by the ministry to help low- and middle-income families own homes — stood at 87,765 units, or 72.5 percent of the targeted 121,000 units for 2013.

Efforts to provide more affordable housing units for low-income families also remain hampered, with the public housing savings bill, which is meant to offer an alternative and more affordable funding scheme, still being deliberated at the House of Representatives, despite Public Housing Ministry Djan Faridz declaring late last year that it would be passed by January.

In a report by Kompas.com, Panangian Simanungkalit, the executive director of the Indonesian Center of Property Studies, deplored the lack of coordination by the ministry in organizing its programs.

“The public housing savings bill is actually very vital because it has the potential to expand [Indonesia’s] capacity in funding the construction of public housing. The capacity of the FLPP has the potential to grow. If it isn’t ratified, Indonesia’s housing deficit will only grow,” he said as quoted by Kompas.com.

“The Public Housing Ministry is very weak in its coordination, not just with the House of Representatives but also with other ministries. The Public Housing Ministry is taken lightly, so it doesn’t have the government’s strong support.”

Although some supported the postponement of the bill’s passage, Panangian said the move could worsen the public’s negative perception of the government.

“The public will continue to remain apathetic and will always be negative toward housing policies and programs,” he said.

Speaking at the Public Housing National Assembly last month February, public policy expert Andrinof Chaniago dubbed the government’s public housing policy an “anomaly.”

“This anomaly in housing developments and policies is very clear,” he said.

He cited public housing policies in Singapore, Hong Kong and South Korea, which he said were much clearer compared to that of Indonesia, where the government’s policies had failed to improve the welfare of the people.

“Landed homes predominate [in Indonesia], but how does this impact the people’s welfare?” he said.

“The cost of living is very high and the existing mechanism forces people to live out in the suburbs as they are haunted by the illusion that land prices will be much cheaper in those areas.”

Andrinof said that in a country as densely populated as Indonesia, the government should build more apartment blocks for its people, which could also put the brakes on rising land prices.

“We have to realize that our problem is in adopting the wrong paradigm from the 1980s up until now,” he said.

“Otherwise, our backlog will continue to grow.”