Good Governance and Provision of Affordableffordable HousingHousing inin DKI Jakarta, Indonesia CASE STUDY Danang Widoyoko Partnering to COMBAT CORRUPTION Series Editor: M. Sohail Good Governance and Provision of Affordable Housing in DKI Jakarta, Indonesia Good Governance and Provision of Affordable Housing in DKI Jakarta, Indonesia A case study Danang Widoyoko Jakarta, Indonesia 2007 Water, Engineering and Development Centre Loughborough University Leicestershire LE11 3TU UK © WEDC, Loughborough University, 2007 Any part of this publication, including the illustrations (except items taken from other publications where the authors do not hold copyright) may be copied, reproduced or adapted to meet local needs, without permission from the author/s or publisher, provided the parts reproduced are distributed free, or at cost and not for commercial ends, and the source is fully acknowledged as given below. Please send copies of any materials in which text or illustrations have been used to WEDC Publications at the address given above. A reference copy of this publication is also available online at: http://www.lboro.ac.uk/wedc/publications/ Widoyoko, D.. (2007) Good Governance and Provision ofAffordable Housing in DKI Jakarta From the Partnering to Combat Corruption series Series Editor: M.Sohail WEDC, Loughborough University, UK. ISBN: 978 1 84380 116 0 Please note: The views expressed in this document are not necessarily those of the Department for International Development or WEDC, Loughborough University. Designed and produced at WEDC Acknowledgements The authors and the series editor gratefully acknowledge the many different people who have willingly contributed in knowledge, opinion and time to the development of this series. It is very diffi cult to provide an exhaustive list of contributors who developed this series. We would like to thank particularly DFID for funding this project. Our special thanks to Professor Susan Rose- Ackerman of the Yale University, USA for providing valuable comments on some documents in the series. Thanks to Dr. Sue Cavill for providing academic support to the series editor and to Jane Lanigan for technical editing. We thank all of the people who have provided us information confi dentially on such a sensitive issue as corruption. Special thanks to the people from the low-income settlements in the various case locations who have contributed to the research and have provided their perspectives on the issues. We feel greatly indebted to them. Contents List of tables.......................................................................................................................... v Glossary…………………………………………………………………………………………..vii 1. Housing Policy in Indonesia ...................................................................................... 1 1.1 The need for housing in Indonesia ............................................................................. 2 1.2 Secondary Mortgage Facility ...................................................................................... 4 1.3 Ministry of People’s Housing ...................................................................................... 7 1.4 Impact of crisis ............................................................................................................ 9 1.5 Housing for the poor .................................................................................................11 1.6 Housing finance policy..............................................................................................11 1.7 Corruption and its impacts in the housing sector .....................................................13 1.8 Case study of Jabotabek ..........................................................................................15 1.9 Research Methodology.............................................................................................16 2. Corruption in Housing Sector Raises Costs..........................................................17 2.1 High Cost Licensing Practice....................................................................................17 2.2 Corrupt practice allegations in Perum Perumnas.....................................................24 3. Housing in Jabotabek...............................................................................................28 3.1 Transportation...........................................................................................................29 3.2 Flooding ....................................................................................................................30 3.3 Housing in Jakarta ....................................................................................................34 3.4 Analysis of Jakarta regional budget..........................................................................36 3.5 Illustration of licensing bureaucracy in Jakarta Province .........................................38 4. Best Practice Good Governance: an Experience of Solok District .....................41 5. Conclusion.................................................................................................................51 Appendix……………………………………………………………………………………......53 List of tables Table 1. Estimation of housing need (in thousands).......................................................3 Table 2. Settlement in Indonesia.....................................................................................7 Table 3. Plan and target of State Ministry of People’s Housing......................................8 Table 4. Capitalization of comercial projects during 2000 – 2005P (IDR billion)..........10 Table 5. Types of provision of housing assistance for low income society ..................12 Table 6. Corruption Perception Index Survey 1998 - 2005...........................................14 Table 7. Indonesian Corruption Barometer 2004..........................................................23 v Table 8. Indonesian Corruption Barometer 2003..........................................................23 Table 9. Detail of population in the area of Jabodetabek..............................................28 Table 10. Urban Hierarchy of Jabotabek Metropolitan...................................................29 Table 11. Bodies of water in Jakarta that have changed function..................................32 Table 12. Catching areas in Jakarta that have changed function ..................................32 Table 13. Composition of Regional Revenue of Jakarta Province during 2000-2005 (in IDR billion)..................................................................................................36 Table 14. Composition of Regional Expenditure of Jakarta Province based on Types of Expenditures during 2000-2004 and Draft Regional Budget 2005 (in IDR trillion) ......................................................................................................37 Table 15. Regional Expenditure of Jakarta Province based on Fields of Development during 2003-2004, Draft Regional Budget 2005 (in IDR billion).....................37 Table 16. The kinds of service available through One-Door Public Service Station......44 Table 17. Information contained in the Public Service Station brochure........................46 Table 18. Results of service questionnaires...................................................................48 Table 19. Land prices in Perumnas Bumi Cengkareng Indah, 2001..............................53 Table 20. Total area of land in cooperation with BCKP Ltd............................................54 Table 21. Revenue of Perum Perumnas on KSPP Cooperation Agreements...............56 Table 22. Estimation of Loss of Perum Perumnas .........................................................57 Table 23. Prices of houses in Mutiara Taman Palem.....................................................60 Table 24. Price of Land Parcel in The City Resort .........................................................61 Table 25. Summary of Perumnas corruption allegations ...............................................68 vi Glossary BPS Central Statistic Bureau BTN Bank Tabungan Negara GBHN Garis Besar Haluan Negara - Main Guidelines of State Operation GCG Good Corporate Governance KPR Kredit Pemilikan Rumah - House Ownership Credit KSPP Kerja Sama Pembangunan dan Pemasaran - Cooperation of Construction and Marketing NJOP Selling Value of Tax Object PAD Original Regional Revenue REI Regional Board of Indonesian Real Estate RSS Healthy Simple Houses SMF Secondary Mortgage Facility SPPT PBB Land building tax YKPP Foundation of Housing Welfare for Soldiers and Civil Servants of Ministry of Defence vii 1. Housing policy in Indonesia Housing is one of the basic needs of human beings, on a level with food, education and health. The need for housing is therefore one of those that have to be fulfilled by the state. The United Nations has also included the right to housing in the International Covenant on Economic, Social and Cultural Rights in Article 11, which states: The countries taking this Covenant acknowledge the right of everybody to an adequate standard of living, including the right to food, clothing, and housing… The countries will take measures to guarantee the realization of these rights… The Covenant is binding to Indonesia as it was ratified in 2005. Apart from that, in the Indonesian Constitution, the right to housing is one of the basic rights guaranteed by the state. Article 28H (1) of the Constitution 1945 as amended stipulates: All people are