World Economic Weakening Impacts On Property Sector, Government Prepares Incentives And Administrative Cost Assistance

Coordinating Minister for the Economy Airlangga Hartarto. (Photo: Doc. ANTARA)

JAKARTA - The government continues to work in various ways to maintain the resilience and resilience of the national economy so that it is ready to face increasingly uncertain conditions in the future. One of the focuses of the government is the property sector.

Coordinating Minister for Economic Affairs Airlangga Hartarto said the world economy, which is still experiencing weakening as well as various risks and uncertainties that are still overshadowing the global economy, encourages the government to continue to make various efforts to maintain resilience and resilience of the national economy.

One of the focuses of the government is the property sector.

During the 2018-2022 period, the property sector (Construction and Real Estate) was able to create an added value of IDR 2,349 trillion-IDR 2,865 trillion per year or equivalent to 14.6 percent-16.3 percent of GDP.

The property sector has also been able to absorb 13.8 million Manpower per year or about 10.2 percent of the total employment workforce in 2022.

Airlangga said that to anticipate the impact of weakening the world economy and encourage increased demand for Housing, it is necessary to prepare a fiscal stimulus policy for the purchase of the Komersil House.

"In a follow-up meeting related to VAT for Housing, to encourage the Housing sector with low GDP growth, Real Estate only grew 0.67 percent, and GDP Construction only grew 2.7 percent, a policy was needed to revive the Housing sector," said Airlangga in his statement, Wednesday, October 25.

Airlangga said the property sector has a large contribution and multiplier-effect in the national economy, where the contribution to GDP is 14-16 percent, and the contribution to tax revenue is around 9.3 percent or Rp. 185 trillion per year, and contributes to regional revenues (PAD) of Rp92 trillion or around 31.9 percent of the PAD of the provincial government and district/city governments.

Airlangga said that the housing ecosystem also still faces various challenges, so it is necessary to encourage alignment between supply and demand, and effective fiscal policy interventions are needed to meet aspects of availability, affordability, accessibility, and sustainability.

"Earlier, the President decided to carry out the VAT DTP (government-borne) program for the purchase of Commercial Houses at a price below Rp. 2 billion. And this will be valid until June next year (2024) the VAT is 100 percent Borne by the government. After that (June to December 2024), the VAT is 50 percent Borne by the government," said Airlangga.

The government is preparing a policy to provide assistance to Low-Income Communities (MBR) by providing Administrative Fee Assistance (BBA) of IDR 4 million as a reduction in contract fees.

"Approximately administrative costs including BPHTB and others are around Rp. 13.3 million, and the government will contribute by providing a reduction of Rp. 4 million, until the end of 2024," Airlangga concluded.