Sunday, February 14, 2010

Probability Foreigners Allowed to own Property in Indonesia

New Hopes within the Entrepreneur relating to the probability of Foreigners to own property in Indonesia. This news emerged as good hopes for the Property Business players in Indonesia. During the Year of 2008 - 2009 according to Rhenald Kasli in Kompas Newspaper of  8 February 2010 there are property owners who are still hit by Crisis. However, if it is open according to the Minister of Peoples Housing there will be Foreign Investment coming in to Indonesia in the amount of USD 3 billion - 6 Billion per Year. 
The question which arises is as to whether is it true that Property are attractive for Foreigners and whether this plan is attractive to the business players in Indonesia says Rhenaldi Kasali in his Economic Analysis in Kompas News Paper of 8 February 2010. According to him, The Foreign Buyers of property in Indonesia in fact is not a new issue. In Karawang and Bekasi, West of Jawa there are plenty of Indian and Korean who are staying in said area. They said that they are the owner of such property. However,  from the answer  upon question to the developer,  it shows that such foreigners  which had already stayed for 10 Years is purchasing such property on behalf of the Company according to Rhenald Kasali.




In  Bali there are also many of Properties being build by Italian, French, Australian and Brasil. However, according to Rhenaldi the lands and buildings are on the name of certain personThese are also found in Batam and Bintan, where the owners are from Singapore and HongKong     In the island of Mentawai where the waves are good for surfing,  according to Rhenaldi,  many tourists are staying in the Boats. This is not because it is more comfort but since it is not easy to build or own property whch is suitable for  foreign tourists  who are regularly traveling there. 

If the above are ignored, the state for sure will loose the opportunity to get tax income since there are so much opportunities which are thrown away and loose from attention.

Regulations 

That Foreigners are not prohibited to own  property is actually known. However, according to Rhenaldi, we are used to make rulings which are blocking rather then opening. In the old rulings it is said that
Foreigners who  are allowed to buy property are those " who is domiciled in Indonesia". The words " domiciled in Indonesia" if we further check is more saying "No" then "Yes". Why is in not just shortened to become " Person who are allowed to purchase property. Point ?.

Furthermore according to Rhenaldi, the Right to use is limited only for 25 Years. For buyers which viewed the property as instrument for Investment, this ruling for sure is less attractive if compared with the rulings  applied in other countries within the similar Area. 

In Malaysia and Singapore, they can be provided with 99 Years, there are even being granted the rights for 900 Years. 

Furthermore countries which are desiring for the incmoing of foreign investment, the Property Policy are in line with other Policies, such as imigration, Buisiness Licenses/Permits, citizen status etc. In Indonesia such vision is not yet in line.

" Debottlenecking Mindset"

Rhenaldi says that there are lots of reasons why foreigners are attracted to purchase property in a country. Besides the need of having a place to stay, is for the schooling of their children, health care or medicare, working placement, or trading and also for investing.

There are lots of foreign traders who frequently entry and exit carrying products made in Indonesia to abroad electing to have a house in Indonesia by doing illegal manner rather then staying in the Hotel.
However, on the other side, the property in Indonesia is in fact attractive for Investors in the Asean Region. The pricing of property in Indonesia    in the main roads with the average quality is still ranging 20% of the similar property in Singapore.

Rhenaldi syas that as a comparison the pricing of 5 star Property in Singapore had reached Rp.150 million per square meter. In Indonesia with the same Class maximum  price is only Rp 30 million per square meter. Besides that the increasing price of property is interesting. Thus the potential is there according to Rhenaldi above writing.

For Japanese who had retired, felt that  the expensive living cost in their Country had driven such retired  person to seek for a staying place location in other country. Indonesia is included as the country who they are interested., however they frequently failed to get, resulting they choose Philipine and Thailand.  

The existing experienced shows that there are still " plenty of Bottle necking Mindset" which has to be solved to guide the new Governments Regulation, to enable the incoming of new investments within the property sector says Rhenaldi.

These Bottle necking Mindset is founded in several sectors in the Government, Parliament (DPR and DPRD/The House People Representative), The Chamber of Commerce and Industry ( Kadin), the entrepreneurs, and public.

  • Firstly,  the new rules and regulations must be attractive enough by the Investors. The Use Right does not need to added other words which gives the perception that it is just making up something which in unnecessary, for instance it is said " can be extended 2 times each 20 Years after certain Years.
  • Secondly, Bottlkenecking mindset in the elevant department, such as immigration, manpower, financing and banking
  • Thirdly,  Bottlkenecking mindsetblock. This bottlenecking block according  to Rhenaldi are fears or  exesive nationalism, which resulted more of Restriction rather than Boosting -Pushing such as that ideas of limiting foreigners not to allow purchasing property above Rp1.5 milliard, and may only purchase new houses.  
  • The latest mindset is that the worrisome that the need of people to own houses is still high which is 800,000 Unit.  However from the data form Panagian Simanungkalit and Associates shows that new houses which are being built had  reached  only 257.365 Unit in the Year 2010.
    • Rhenaldi syas that we have to understand that the property market in not only determined by " the Need" or the desire to purchase, but also the preparation to buy and the power to purchase.
    • Rhenaldi says that rather than raising about matters which has already  a market mechanisme, why are we not limiting on startegic matters such as prohibition to purchase property in the strtaegic area, border or area which can damage the natural resources. 
    The above are my reading on Rhenaldi Economic Analysis relating to Probability Foreigners Allowed to own Property in Indonesia, as found in the Kompas Newspaper of 8 February 2010.


                 

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