Coordinating Minister Airlangga: Employment In The Property Industry Reaches 19 Million People, Ready To Support National Economic Recovery

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

JAKARTA - Indonesia's economic growth in the second quarter of 2021 of 7.07 percent (yoy) is a recovery momentum that provides optimism for all economic players. From the external side, the trade balance was in surplus for 16 consecutive months and reached USD 4.74 billion, the highest since December 2006.

Not only that, the relatively stable exchange rate condition and foreign exchange reserves which reached US$144.8 billion at the end of August 2021 indicate that the resilience of the external sector is quite strong.

"Positive growth in all sectors and increasing demand indicate that the Government's efforts are on the right track. This recovery achievement is in line with the increasingly effective COVID-19 handling program and the trend of adding daily cases at the national level continues to decline. As of October 2, 2021, the positivity rate national level per week by 0.98 percent," said Coordinating Minister for Economic Affairs Airlangga Hartarto at the Properti Indonesia Award event, virtually on Wednesday, October 6.

The sustainability of the property business sector is one of the main focuses of the government in national economic recovery. Currently, the urban population in Indonesia has reached 56.7 percent, which is predicted to reach 66.6 percent in 2035 and 72.8 percent in 2045.

In addition, there are still 15.5 million people living in inadequate houses in 2020. For this reason, the property sector continues to be encouraged to continue to actively contribute to the provision of decent housing and appropriate strategies are needed in the COVID-19 pandemic situation.

"The property sector has a multiplier-effect both in terms of forward-linkage and backward-linkage to 174 industrial sub-sectors, either directly or indirectly. Direct labor absorption in the property industry also reaches up to 19 million people," said Coordinating Minister Airlangga.

Various incentives that have been provided by the Government include the Loan to Value (LTV) and Financing to Value (FTV) policies of 100 percent for property loans. In 2021, the government has also issued a VAT incentive policy which has been given from March to August and has been extended until December 2021.

"The VAT policy borne by the Government has had an impact on market movements in the upper middle-income segment and sales growth occurred significantly in the housing segment with prices ranging from Rp500 million to Rp1 billion and above Rp2 billion," said Coordinating Minister Airlangga.

As a result, in the second quarter of 2021 the GDP on the production side of the real estate services sector was able to grow 2.82 percent and this was higher than the previous quarter which was 0.94 percent. Meanwhile, the construction services sector also grew by 4.42 percent on an annual basis. In terms of investment, Gross Fixed Investment grew by 7.54 percent on an annual basis, supported by building growth.

"To property businesses and other economic development stakeholders, I ask that you remain optimistic and continue to be enthusiastic to support the national economic recovery. The current economic growth engine is on an improving trend and the pandemic situation is getting more under control. Simplification of regulations and permits, including in the property sector, has also been implemented. regulated in the Job Creation Act," explained Coordinating Minister Airlangga.

On this occasion, Coordinating Minister Airlangga hoped that the property industry in the country should be able to take lessons from cases of default on debt from international companies.

"The first lesson is prudence when expanding a business which must be accompanied by realistic revenue projections and avoiding aggressiveness in debt. The next lesson is that the industry must prioritize transparency in its financial reporting and implement good and sustainable corporate governance practices," concluded Coordinating Minister Airlangga.