Indonesia to slash permits and speed up infrastructure

Indonesia has announced plans to massively cut the number of permits, time and cost to approve housing development. Developers must currently apply for 33 permits before starting work on housing projects, which take between two to two and half years to obtain.

“We will deregulate the 33 permits, reducing the requirement to 11 permits. The 981-day processing time will be reduced to 44 days,” said Darmin Nasution, Coordinating Economic Minister.

The government also plans to cut the costs of getting the permits by 70%, he said. The high costs and long-winded process has made developers “reluctant” to build affordable housing for the population, he added.

A new regulation to cut permits will be proposed to President Joko Widodo, and is expected to be signed in the next 10 days.

“We will simplify procedures to lower the cost”, Nasution said, and “boost the business climate for [building] affordable houses”.

The move is part of the Jokowi administration’s latest policy package to boost economic growth. The President last year launched a programme to build 1 million houses for poor families by the end of 2015.

The government is trailing behind this target, having completed 600,000 units last year. Property development projects take three to four years to complete on average, according to an analyst at Bank Mandiri.

There is a “backlog” of 15 million houses in Indonesia’s property market, she wrote in the Jakarta Post. Indonesia is ranked 109th out of 189 countries in the World Bank’s Doing Business 2016 report.

This is far behind its neighbours with Malaysia ranked at 18th, Thailand at 49th and Singapore at the top.

Image by Schristia, licensed under CC BY-SA 2.0