The change of administration in a country always brings new hopes for something better. No exception for the winners of the 2024 Indonesia presidential election, Prabowo Subianto and Gibran Rakabuming.
Prabowo, who will be inaugurated as the new President of Indonesia on October 20, plans to establish a Ministry of Housing. What are his plans?
Tackling Housing Backlog
During President Jokowi’s administration, the housing sector was under the responsibility of the Ministry of Public Works and Public Housing. However, the pandemic emerged, which led to a backlog issue in public housing. This means there is a gap between the number of houses built and the number needed. This issue is reportedly what prompted Prabowo to plan the formation of a new Ministry of Housing to address the backlog.
The hint about the plan to establish the Ministry of Housing was revealed by Hashim Djojohadikusumo, Prabowo’s younger brother, who is also the Deputy Chairman of the Board of Trustees of the Gerindra Party, where Prabowo serves as the Chairman.
“We have already included the figure in our proposed State Budget for next year. The initial amount we set is IDR 53 trillion, and Pak Prabowo has agreed. We will establish the Ministry of Housing as it used to be,” said Hashim in Jakarta, 3 September 2024.
The budget is expected to facilitate the revitalization of the housing sector starting in 2025, including the construction of 3 million houses per year, consisting of 2 million houses in rural and underdeveloped areas, and 1 million houses in urban areas.
“That shows the commitment of Prabowo and Gibran to advancing development,” said Hashim.
Hashim also added that Prabowo had appointed him as the Head of the Housing Task Force in the Prabowo-Gibran Government Transition Team four months ago.
Boosting ‘Propertinomics’
The plan to establish a Ministry of Housing has been met with enthusiasm by the real estate business in Indonesia. In addition to addressing the housing backlog, which exceeds 9 million units, property industry players believe that this new ministry will be a breath of fresh air that drives ‘propertonomics’ to boost economic growth.
Property business players also believe that the property sector will become a national strategic project as this commitment is included in the 17 Priority Programs of the Prabowo-Gibran administration.
Positively, policies in the property business will be more orderly and focused. In ‘propertinomics,’ one of the pillars is how policies or regulations in the property sector can be friendly to the market needs. Therefore, the government must implement relaxation, simplification, and harmonization.
Given the current Minister of Public Works and Housing, Basuki Hadimoeljono, has an excellent track record in infrastructure development across Indonesia, property business players hope that the appointed Minister of Housing will also come from a professional/practitioner background with direct experience, such as from a developer association. This way, the policies in place can meet expectations.
Opportunities and Challenges
Indonesia’s newly established Ministry of Housing offers significant potential to transform the country’s property sector, but it might also face several challenges. Bureaucratic overlap with existing ministries and insufficient funding could hinder its progress. However, with the right support, the ministry can overcome these obstacles and achieve positive outcomes.
By streamlining development policies and fostering stronger public-private partnerships, the ministry can create a more coherent and efficient environment for both public housing and the property business. Additionally, it can prioritize infrastructure development and improve affordability, benefiting both residents and investors.
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