The Cause Of Sluggish Property Business Even Though Incentives Have Been Flushed By Sri Mulyani: Only For Houses That Are Ready Stock

New residential illustration. (Photo: By courtesy)

JAKARTA - CEO of Indonesia Property Watch (IPW) Ali Tranghanda said the main factor causing the sluggish housing business despite being given a Value Added Tax (VAT) discount is that this policy targets properties that are ready stock, aka not pivot.

According to him, the property business is a business activity with a relatively long term and process. In addition, the regulation, which was enforced until August 31, is considered to have not given enough time to catch up with unit availability.

To that end, he hopes the government will expand the rules of the game by also stipulating housing that is currently in the construction stage, aka pivot.

"Some things still need to be added regarding the 0 percent VAT reduction so that it is not limited to ready stock houses but also for pivot sales, although certain progress must be limited, so it cannot be just empty land," he said in a statement, Tuesday, March 30.

Ali added that the regulation is judged to only benefit housing developers who already have an abundant stock of units and not to target the property business segment as a whole.

"If those who have stock, they just need to wash the warehouse and use up the existing units. But, what about other developer friends? " he said.

Furthermore, he encouraged the government to be willing to extend the validity period of the VAT incentive up to 0 percent until December 31, 2021. The reason is that the longer time limit is considered to provide space for developers to pursue the availability of units so that they can be marketed to consumers.

"If possible, the time should not be six months but until the end of the year, because the decision of people to buy a house is also not short and there is a process that must be passed," he said.

In addition, he saw that many developers had actually slashed their prices by providing a 0 percent down payment program before the PPN relaxation regulation was enacted by the government.

"Even without waiting for the government, the developers have already installed the DP rate of 0 percent," he added.

In addition, he also highlighted the lack of socialization by stakeholders regarding this program. This can be seen from a recent survey conducted by IPW on tax incentives for the property industry.

"As many as 91 percent of the public do not know about this relaxation policy," he said.

For information, Finance Minister Sri Mulyani set a tax discount on the housing sector from March 1 to August 31.

In detail, residential houses or flats with a maximum selling value of Rp. 2 billion will be given a VAT exemption of up to 100 percent.

Then, a site or apartment with a sale value of between Rp. 2 billion to Rp. 5 billion will be given a 50 percent VAT exemption.

To obtain this facility, consumers are only allowed to buy one type of property within a period of one year, and cannot be resold within one year. Then, it does not apply to pivot properties and must be a handover of the building from the developer to the owner.