The monetary and fiscal
policy which tend to be tight to improve the Indonesia Balance of Payment [NPI]
particularly in terms of current transaction had negative effect on various
sectors which were directly affected. Take for example the property sector.
Chairan of the Indonesia Real Estate [REI] Setyo Maharso
stated that they objected BI’s policy who lately made regulations which were
not supportive to property growth.
And yet the real sector in Indonesia, according to
research exercised by the University of Indonesia played positive role and
contributed significantly in propelling Indonesia’s economic growth, i.e. by
26%-28%.
Setyo stated that if the contribution of housing sector to
economic growth in Indonesia was high, then support of the Government and the
monetary authority’s would be needed so the housing sector could keep growing
and be the locomotive of growth, considering that backlog had come to 15
millions units.
Recently BI decided to increase BI rate by 25 bps to
become 7.5%. According to property circles the policy must be watched on
because it would have negative effect on the business sector including real
estate. Previously BI had issued a circular letter effective as per October 1,
2013 to restrict LTV and KPR indent.
As known, many parties understood well that the monetary
policy adopted by BI signaled BI’s cautious stance against Deficit in Current
Transaction and global adverse condition. However the business circles
underlined that BI’s action must be balanced with monetary control over the
real sector as it might trigger chain effect which threaten economic growth.
Real estate developer circles rated that increase of BI
rate was a fearful thing especially for people who had not owned homes. The
dream to be able to buy a house with banks credit would be a far cry. To the
people who could afford to buy a house by mortgage, were haunted by heavy
life’s burden due to high credit interest.
It was expected that the Government would adopt a policy
which was more accommodative to the businessworld particularly small and medium
developers. The Government’s policy and monetary authority should be
synchronous and non contra-productive to bank’s partners. To the banking
sector, they also pled not to be hasty in increasing bank interest.
The Government was urged to make a regulation which was
against domination of mortgage by brokers for investment so fulfillment of
public need for houses was below expectation. The Government had their
objective to promote the property sector whereby to enable people own decent
homes. But what happened was people having difficulty in having homes due to
monetary policy.
On the other hand, property business was much dominated
by certain people, even foreigners as investment. The property sector was
growing, but did not meet people’s need for homes, especially the lower-middle
class group.
Indeed there is problem in the property sector in
Indonesia, where need was high, but supply was limited. In other words, there
is backlog. Naturally people buy houses for sale or for rent. This sector also
needed change in regulations in regard to foreign ownership as foreign
ownership in the property sector for investment or business was alarmingly
growing.
This condition needed to be observed more closely by the
Government as Indonesia had to join the AEC free market community 2015. In that
era, automatically developers from Asean would enter Indonesia. They would need
homes; unless there was the right regulation, the might pose as danger. For
example if there was any foreign developer entering Indonesia and offer low
interest rate from their country of origin, local developers would be in
trouble because they would lose competition.
The Indonesian Real Estate Association [REI] also asked
for the stakeholders in the real estate sector to support small and medium
developers. Again developers were urging the Government and monetary
authorities not to issue counter productive policy packages wwich would harm
that very sector.
In this case two economic propeller sectors: property and
automotives, had to face serious pressures in the post monetary and fiscal
policy era. Therefore the Ministry Industry Moh. Saleh Hidayat said that growth
in the two economic sector must not be hindranced as it was feared they would
hindrance national economic growth as a whole.
About the property sector, the Government believed that
the sector had tremendous potential and high multiplier effect. Moreover, the property
sector was labor intensive and capital intensive so close collaboration among
all parties would be necessary.
It seemed right if the Government continued to analyze
various incentives, fiscal and non fiscal to promote the property sector.
Besides, the Government also encouraged REI to actively participate in the
Domestic Products Use and Upgrading Program.
The Ministry of Industry’s policy was response to
developers through REI that the housing sector could serve as locomotive of
national economic growth which had been well underway.
In the past two or three decades, the housing sector
contributed significantly to the growth of nations including Indonesia. Some
world’s surveys also disclosed that the contribution of housing sector to GDP
was great.
Broadly speaking businessplayers of all sectors must
adjust their business expansion plan next year in accordance with BI’s plan to
put brakes on economic growth by slowing down credit growth to the level of 15%
- 17% for 2014.
By slowing down economic growth through adjustment of
business growth percentage, demand for imported raw materials and auxiliary
goods for industry could be reduced. This coulf help to minimize deficit ratio
and ease pressures. Automatically inflation would cool down as well as imported
inflation was reduced.
However the effort of monetary authority must be
accompanied by Government’s serious effort to put brakes on import of oil fuel.
Development of cheap transportation mode must begin soonest. Diversification of
non fossil energy fuel like bethanol, bio fuel, and bio diesel must be
enhanced. Restriction of oil fuel consumption must exercised immediately
whereby to reduce oil importing.
Business News - December 4, 2013
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