Real estate developers hope the Indonesian government’s recent push to attract investment through regulatory reform will help revive the property sector, which has spent years in the doldrums.

Indonesian Real Estate Developers Association chairman Soelaeman Soemawinata said many property companies had begun to develop new projects as they believed improvements to the investment climate would boost economic growth that would, in turn, drive demand in the property sector.

“There are hopes the property sector will recover. Many developers have taken the initiative to kick start projects so that the property [sector] can flourish again,” Soelaeman said in Jakarta last week.

The downturn in the real estate sector was close to its lowest point, he said, adding that industry players expected to see a turnaround soon.

He said the wait-and-see attitude shared by businesspeople should begin to wane, as President Joko “Jokowi” Widodo had retained his seat in office and formed a Cabinet with the top priority of attracting investment to create jobs.

Statistics Indonesia data shows that the real estate sector posted 3.58 per cent growth last year, the lowest rate since 2014 after which the sector averaged five per cent growth per year.

However, recent data show signs of recovery. In the third quarter this year, the real estate sector grew 5.73 per cent year-on-year, higher than the gross domestic product growth rate of 5.02 per cent during the same period.

The Ministry of Finance recently rolled out several incentives to stimulate growth in the real estate sector, including raising the threshold of property value subject to income tax and luxury goods tax to 30 billion rupiah ($2.13 million) from previously ranging between five and 10 billion rupiah, while also lowering the income tax rate for selling such property from five to one per cent.

Bank Indonesia has also introduced policies to stimulate the real estate sector by recently relaxing the loan-to-value requirements for mortgages by five per cent, while environmentally friendly housing will get an additional five per cent relaxation.

The policy, which came into effect on Monday, is expected to have an impact within three months of implementation, Soelaeman said.

He added that the government’s recent efforts to make the investment climate more welcoming, including a planned omnibus law on job creation that will amend more than 70 laws considered to be hampering investment, was very much welcomed by the sector.

“It [the government’s regulatory reforms] will be very helpful as too much time is spent taking care of licensing even though red tape could be cut. What we really need is what the government is already working on, namely deregulation to welcome investments,” he said.

Minister of Agrarian Affairs and Spatial Planning Sofyan Djalil said the government was currently brainstorming ways to simplify licensing procedures without reducing good governance standards.

“Our country was being held ransom by the many rules [governments have] made, which had no added-value. That’s why we will look at the essence of each regulation. If the same thing could be achieved through [enforcing standards], why does there need to be a permit?” Sofyan said.

THE JAKARTA POST/ASIA NEWS NETWORK