Affordable housing in Jakarta: A movement required to house residents in apartments
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
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10 November 2019
By: Mutiara Nabila
Bisnis, Jakarta – Land in Jakarta is increasingly scarce and expensive, while citizens of every income class need a place to stay. One of the ways to solve the problem is by making Jakarta ‘vertical’.
One of the solutions that the government wants to implement through the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN) is land consolidation.
Land Consolidation Director of the Ministry of ATR/BPN Doni Janarto Widiantono explained that land consolidation was the effort to organise land plots.
Land consolidation is different than land acquisition. The government does not purchase the resident’s land, so the public can still own their land. However, the land can be utilised under a cooperation with private companies, and it can be sold to interested parties, which adds to the passive income of the land owner.
“Hence, Jakarta residents do not need to move to the suburbs. Do not move to Bekasi or Tangerang just because your land was offered at a high price. This situation is often experienced by residents that should have been able to stay in Jakarta,” he said during a discussion titled Mewujudkan Hunian Terjangkau di Tengah Jakarta (Realising Affordable Housing in the Middle of Jakarta) on Tuesday (12/11).
The Ministry of ATR/BPN does not relocate residents that are offered land consolidation to low-cost rent apartments, but the ministry builds low-cost apartments instead.
“Land owners that are offered land consolidation for their land still have ownership at a low-cost apartment. Those who have a unit of landed house can own 2 or 3 units of multi-level housing, and [the units] can be rented to newcomers, which will benefit the land owners,” Doni continued.
Land consolidation is required to acquire lands that are large enough for the construction of multi-level housings. In addition to organising slums, the target is also to organise elite areas such as the ones in South Jakarta.
Through the Regulation of Minister of ATR/BPN Number 12 of 2019 on Land Consolidation, Doni said that the Ministry of ATR/BPN had started to work on a modelling at Pasar Manggis under a cooperation with the World Bank which had been initiated gradually from 2018.
Modelling, such as this one, can be carried out from a report of a resident that states that their environment is no longer suited for living.
“The RDTR [Detailed Spatial Layout Plan] for the location is finished, and we have also met the residents twice. Afraid of their lands taken away, they set a high price. Meanwhile, we want the residents to stay at the location,” he revealed.
Mixed-use development will be implemented in the area, which means that there will be a market, a shopping centre, and other business at the location besides housing. Hence, the public will have an opportunity to create new jobs and continue existing businesses.
Besides Pasar Manggis, the Ministry of ATR/BPN is preparing the same program at 21 other slums in Jakarta.
He said that the government is boosting the Vertical Land Policy (KTV) for priority urban areas, urban village areas, areas around economic centres (markets, industries, and terminals), and housing around the air side (rivers, lakes, and coasts).
Jakarta Property Institute (JPI) Program Director Mulya Amri added that land consolidation must be fitted with plans for TOD (transit-oriented development). Hence, citizens that are offered land consolidation will prioritise travelling by public transportations instead of private vehicles. “So, even if [housing] is focused [at one location], it will not increase Jakarta’s traffic jam.”
Increase Density
Mulya said that the spatial layout policy of increasing density was the answer to housing crisis and would make vertical housing in the middle of the city affordable. Jakarta Government, which holds full control over RDTR, is playing the major role.
He said that Jakarta still had a lot of space to build vertically to fulfil the government program, which was the One Million Houses Program that had reached 1.25 million units this year.
Mulya continued that only certain parts of Jakarta had high density, while the rest were still occupied by landed houses.
“The lack of a KLB (Floor Average Ratio) limits supply, which makes housing prices expensive. Hence, workers in Jakarta are forced to purchase houses that are far from their workplace,” he said.
He added that that would cause urban sprawl and other urban problems, such as traffic jam and pollution.
Mulya hopes that the Jakarta Government will be active in constructing housings, especially affordable multi-level housings on regional government lands. “The government has many lands in city centres and [other] strategic [locations], but they are underutilised. For example, markets and terminals can be made into a multi-level housing that has a market under it,” he said.
To build the multi-level housing, Mulya said that the government could use developer funds. The funding is an obligation in the License of Space Utilization Principle (IPPR) for developers constructing multi-level housings.
Urban housing expert from Universitas Indonesia Joko Adianto added that a movement of housing residents in Jakarta was required to provide a more affordable housing, as there were many residents whose salary was below the regional minimum wage (UMR).
“The slums show the government’s failure in providing affordable housing for the public. Take a look at the One Million Houses Program, the largest contribution is not from the government, but it is from private companies and citizens. Truthfully, the government is still having difficulties implementing their tasks,” he said.
The problem is, with increasing land prices, construction costs are lowered, and that affects the building quality. Moreover, the abundance of the informal sector makes the risk of default higher. Hence, subsidy is required.
Joko said that, if citizens were housed in apartments, the supply of houses would increase. The price of houses will be more affordable as there will be more supply. Hence, Jakarta residents can own houses with affordable prices without having to relocate.
