Housing for the Poor

 

The Indonesian Constitution stipulated that every citizen is entitled, among others, to live in a decent housing.

In order to implement this stipulation, since the 1970's the government has given subsidy for the development of houses with minimum building area of 21 square meters specially for low income citizens.

However, after 2011 low income citizens cannot buy such kind of houses anymore, because the Housing Law No. 1/2011 does not allow the building of such kind of houses anymore.

According to Kompas, Article 22(3) of the said Law stipulated that the floor area of houses should at least be 36 sq. meters. 

As a consequence, the government could not provide financial subsidy, therefore banks would not provide soft housing loans for buyers of houses with area less than 36 sq.meters.

The Minister of People's Housing Djan Faridz was quoted as saying that this Law will not inflict financial losses to the people. He said that the Law does not contradict with Article 28(1) of the Constitution. And based on the Indonesian National Standard for City Housings, the minimum building area is 9.6 sq.m for an Adult and 4.8 sq.m for a Child. So, the minimum total building area for a family would be 36 sq. meters.

The Minister also said that the Law is in accordance with Art. 2 (1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR) which has been ratified by Law No. 11/2005, and United Nations Charter on Human Rights Art. 25 (1) regarding the Rights to Adequate Housing.

However, the Association of Indonesian Housings Developers said that the Law will make it impossible for low income citizens who earn less than Rp. 2.5 Million/month to own houses. Considering this fact, the Association has requested the Constitutional Court to Review Art. 22 (3) of the Law.

As the price of land is increasing, it would be very difficult for lower income citizens, which happen to be the majority of people, to buy houses. Therefore, I hope that the Constitutional Court would review the said Law.


Photo: Courtesy of Shutterstock

Billionaires almost Doubles in 1 Year

More than 12 years ago, Indonesia was struck by one of the worst global economic crisis that toppled the 32-years of authoritarian rule of former President Soeharto.

Since then, Indonesia became one of the largest democratic country in the world, and a very liberal economic system was adopted. Politics became top priority and the economy became less important..
 
This sudden change has caused mismanagement of the country, so many bad things occurred i.e. abuse of power and corruption by government officials, members of parliament and the legislative bodies.    

Due to the said mismanagement, the country's very rich natural resources have only been enjoyed by few people. While the majority of the people are poor.

In this regards, Bloomberg reported (below) that the number of rich people in Indonesia has almost doubles in just 1 year.

I hope that in the future there will be another report which shows that the number of middle class people, i.e. those whose economic conditions are somewhere between the poor and the rich, also increased significantly.

Number of Indonesian billionaires nearly doubles

JAKARTA, Indonesia
 
The number of billionaires in Indonesia has nearly doubled from a dozen last year to a record 21 today -- thanks largely to booms in coal, palm oil and other commodities.

Forbes Asia also said in its December issue that the collective net of the country's 40 richest people jumped from $42 billion to an all-time high of $71 billion.

Indonesia, home to 237 million people, has one of the fastest growing economies in the region. That's thanks to a strong stock market -- boosted by the wealth of many on the list -- abundant natural resources, and consumers who are eager to spend.

The richest Indonesians were once again brothers Budi and Michael Hartono. Money generated by the Bank Central Asia, clove cigarette giant Djarum and palm oil interests gave them a combined net worth of $11 billion.

That's up from $7 billion last year.

Photo: Courtesy of Fotokita/M.Iqbal

Electricity for the Poor and for the Rich

Last Saturday, President Director of the State Electricity Company (PLN) i.e. Dahlan Iskan, proposed the government and the House of Representative (DPR) to free poor people from paying electicity, and increase electric tariff for rich people.

Considering that PLN has been unable to supply suficient electric power to its 40 million consumers in recent years, this proposal has received mixed reactions from members of DPR.

Please find below an article about this that I quoted from The Jakarta Globe.

A proposal to provide free electricity for the poor and hike rates for the rich has received mixed reactions from the House of Representatives.

‘Free Electricity for Poor’ Plan Gets Mixed Reviews 

A proposal by a state enterprise executive to make electricity free for tens of millions of poorer Indonesians and hike power rates for the rich has received mixed reactions from lawmakers.

Dahlan Iskan, president director of state-owned power company PT Perusahaan Listrik Negara, on Saturday urged the government and the House of Representatives to free users with an hourly average of less than 450 watts from having to pay the basic electricity tariff, or TDL.

Dahlan said the bulk of this group were the country’s poorest people, and made up half of PLN’s 40 million subscribers. As subscriptions usually mean a household, the move would potentially help 20 million families.

Dahlan said it should come before the TDL is raised by a planned average of 10 percent in July. If the government is really out to help the poor, he said, “the best thing to do would be not to charge the poor for their electricity usage.”

Only Golkar aired support for the proposal, with its faction secretary, Ade Komarudin, saying subsidies should not be given to those undeserving.

“But there must be a rigid scheme, that this is only for the poor,” he said, using the occasion to defend Golkar’s widely criticized proposal to give each lawmaker Rp 15 billion ($1.6 million) to develop his or her constituency as another pro-people move.

Sutan Batugana, a lawmaker of the ruling Democratic Party sitting on Commission VII that deals with energy affairs, aired opposition to the scheme.

“Some think everything that is free is good, but I don’t agree,” he said. “I asked Dahlan Iskan already, why would you say all this when PLN still owes Rp 25 trillion to state oil and gas firm Pertamina? Don’t teach people to be lazy.”

Commission VII deputy chairman Effendi Simbolon, from the Indonesian Democratic Party of Struggle (PDI-P), said the company should carefully study the financial consequences of the policy in detail before officially proposing it to the legislative.

“It was an unofficial statement, but if he [Dahlan Iskan] is serious, he needs to do his homework and submit a proposal to the commission,” Effendi said.

He said the scheme would be unfair to the country’s working class as they would end up having to pay more for electricity. “We shouldn’t teach the nation to hate people with money.”

Prosperous Justice Party (PKS) secretary general Anis Matta said it had yet to decide its stance, but was leaning toward disagreeing with the idea. “Rich people are also paying a higher burden of taxes. I think this needs to be studied a lot more before we decide anything.”

M Romahurmuziy from the United Development Party (PPP) said PLN should have discussed how a plan like this might work with the Energy Ministry before making it public, and throwing ideas around that don’t make good economic and social sense would only disappoint people.

Dahlan said that if large consumers of electricity, or those using above 1,000 watts per hour, were to pay prices based on actual production costs for a year, it would add an extra Rp 28 trillion to PLN’s annual revenues.

Dahlan also vowed to make PLN a more transparent state-owned enterprise and to figure out ways to make the entire agency less bureaucratic.

“I have proposed the Corruption Eradication Commission [KPK] to have direct access to our procurement procedures, and the State Audit Agency [BPK] direct access to our finances.”