Jakarta. The Indonesian government will not set a minimum value on homes that foreigners will be allowed to purchase, with a senior official saying the only restriction will be a prohibition on purchases of state-subsidized dwellings.
Ferry Mursyidan Baldan, the minister of land and spatial planning, said on Wednesday that his office was drafting a regulation on the matter and would dispense with a previously proposed restriction that foreigners should only be allowed to buy property valued at Rp 5 billion ($373,500) or more.
“I don’t think we need to have that minimum value,” Ferry told reporters at the State Palace in Central Jakarta, adding that with property prices constantly increasing, the restriction would be quickly outdated.
“We shouldn’t set any [price] limits. As long as [the buyer] has a residence permit, they should be able to choose wherever they want [to live],” the minister said.
“If we’re talking about houses built by property developers, [houses on] the open market, then there’s no need to mess with price limits. Just as long as no houses [built] with government subsidies [are sold to foreigners]. That’s not allowed.”
The government’s opening up of the property sector to foreign buyers comes after lobbying from Real Estate Indonesia, the country’s biggest association of property developers, who have expressed concern about flagging domestic demand as purchasing power wanes amid an economic slowdown.
Under the current regulation, foreigners holding a right of use certificate, or hak pakai, must renew their permit every 25 years. The new regulation will abolish the time restriction and allow foreigners to pass the property down to their children. Still, foreigners will not be entitled to the highest form of property ownership, hak milik, or freehold.
Ferry’s insistence that there will be no minimum property value marks a U-turn from previous statements by the minister and other officials, including Finance Minister Bambang Brodjonegoro, that foreigners will only be allowed to purchase luxury homes costing at least Rp 5 billion.
His statement that foreigners will also be allowed to own property “wherever they want” also contradicts an earlier statement by Franky Sibarani, the head of Indonesia’s Investment Coordinating Board (BKPM), that such purchases would be restricted to a handful of special economic zones.