The Indonesian government has announced a waiver of the Building Construction Permit (PBG) for low-income housing. This waived building permit fee policy will be implemented nationwide, easing financial burdens on qualifying homeowners once the official government circular is issued.
What Does the Building Approval Levy Waiver Mean?
Indonesia’s Minister of Home Affairs, Tito Karnavian, confirmed that a government circular formalizing the waiver of the Building Construction Permit fee will be released within the next 10 days.
“I will issue a circular within 10 days at the latest to remove the Building Permit Levy specifically for low-income housing to prevent any confusion. We will invite all regional governments, the Bank Tabungan Negara, and real estate representatives to ensure that this low-income housing program, as mandated by the President, is carried out by Pak Maruarar. We urge regional governments to foster a movement of social solidarity to support those who are less fortunate,” stated Tito, as quoted by detik.com on Saturday (11/09/2024).
For reference, the Building Construction Permit Fee is a permit issued by the government to a building owner or their representative, allowing them to begin construction, renovation, maintenance, or modifications according to approved plans.
This Building Construction Permit (PBG) replaces the previous Building Construction Permit (IMB), as established under Law No. 11 of 2020 on Job Creation and Government Regulation No. 16 of 2021.
How is Building Permit Fee Calculated?
According to the Ministry of Public Works and Housing’s SIMBG, the Building Construction Permit (PBG) is issued by the government within a maximum of 28 working days, depending on the building’s function and classification. The process follows these steps:
- Submission
- Technical Plan Review
- Levy Calculation
- Building Approval Levy Issuance
The fee amount varies by region, but certain components remain consistent:
- Type of Building (e.g., temporary, semi-permanent, steel frame)
- Building Function (e.g., residential, commercial, industrial, schools)
- Building Area (in square meters)
- Building Height (number of floors or height of the building if it is more than 6 floors)
- Number of Units (or number of buildings)
For example, in one local area, constructing a 36 m² single-story home may have previously incurred a Building Permit Fee of around IDR 600,000.
Real Challenges of Building Permit Process
Junaidi Abdillah, chairperson of the Indonesian Association of Housing Developers (APERSI), applauded the policy. However, he noted that the levy itself is a minor portion of overall costs. The real challenge lies in the time-consuming and costly steps that come before applying for the building permit.
“The Building Construction Permit fee is actually quite affordable, averaging around IDR 1 million, so its removal isn’t a big issue. The real challenge is the cost and complexity of the steps leading up to obtaining the Building Construction Permit which involve processing fees across multiple parties—developers, regional governments, consultants, and others. These processes require time and incur costs without any standardization,” said Junaidi, as reported by Detik Properti on Sunday (11/10/2024).
Similarly, Ari Tri Priyono, head of the Public Housing Developers Association (HIMPERRA), highlighted the high costs from unofficial fees during the application process. These added fees, often involving consultants and local agencies, can inflate total expenses significantly.
“The application process is actually made most expensive by unofficial fees, often due to arrangements between consultants and local government officials. For example, an initial fee of IDR 3 million can increase to IDR 5 million if a consultant is hired to expedite the process,” he explained.
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Source: Detik.com
Image: via PrimeDrafting