Shelter for All: Sine Qua Non, not a Chimera

By Muamar Vebry

Last week I went to one of the biggest housing and land development project in Serpong, trying to identify a potential house to buy. The result was depressing; it was way above my purchasing power — by far. Sadly, despite the splendid infrastructure and its impressive greenery, my dream house was out of reach.

This week, I went to check out several RUSUNAMI (high-rise and low cost apartment) in Eastern Jakarta. Surprisingly it was still beyond my reach. One question struck me, how on earth can low income and middle income earners in Jakarta afford a decent house if the price of the properties are way above their heads. Whilst Government interventions in affordable public housing through mass production of RUSUNAMI, which supposedly targeted the low-mid income groups with income less than 4.5 million per month, apparently is not affordable enough. The price of one RUSUNAMI unit is capped at IDR144 million maxima, which by whatever means would hardly be purchased by people in the low-income group.

Besides the price, another consecutive question struck me, one that relates to the compatibility of high-rise forms of low cost housing targeted for the low income. This question came from my earliest observation of 3 (three) Rumah Susun in Jakarta, one in Bendungan Hilir, one in Kebon Kacang and the other one in Tebet, regardless of the fact that Rumah Susun — which is also a low-cost housing introduced in 1990 — and RUSUNAMI is not an apples to apples comparison. Perhaps I am being very subjective here and made an over simplistic conclusion, but my lay mans observation is that the higher the Rumah Susun raises, the lower the maintenance.  That does tell me something:  the low-cost high-rise housing model in Indonesia is not working.

It should be noted that our beloved country has never had glimmering success stories in the provision of adequate shelter and secure tenure for the low income group. Despite the rosy programming, many low cost housing projects or Government’ funded programmes have failed to yield tangible results. The situation has worsened since developers became disinterested in low cost housing, simply because they could not milk a good profit out of it.

It’s been reported that many developers have terminated the development of RUSUNAMI and are no longer offering a subsidized low-cost apartment. Consequently, the price of RUSUNAMI has increased from the previously capped IDR 144 million maxima to a new ceiling capped at IDR 200 million — more that 25% increased in ballpark estimation — which now targets the mid-income group. The Deputy of Formal Housing for the Ministry of Housing confirms that many developers have terminated their commitment to develop subsidized apartments due to an increase of production cost (materials etc…). The Deputy pontificates that this could not be avoided as there is no legal binding clause between Government and Developers that says developers must develop subsidized housing. The Deputy also points out that it should be looked on from the bright side, in return; many apartments for mid-income earners are being developed and soon will supply the housing market (KOMPAS daily newspaper, February 27, 2010). Once again it shows a policy failure — low-income groups are left out in the cold.

In a nutshell, lack of political will to serve the low-income housing sector is one of the many causes, not to mention that a systematic, properly designed and well-targeted social housing program has never been considered as a top Government priority. What has happened is scattered and sporadic initiatives, poorly planned and managed interventions, and spread thinly on a piece meal approach.

In Indonesia, the market forces it-self plays quite a substantial role to limit the supply of low cost housing and manages to keep the housing price beyond low income’s earners purchasing power. Please don’t get me wrong, I am not against the free market I believe free market society is good. However, it somehow fails to address the needs of adequate shelter for the low income group.

To address this, a political will should be properly nurtured and intelligent Government interventions should be adopted. By learning from the past failures in dealing with low-cost housing provisions, by taking into account few facts: first, the landed property is overpriced; one could get an affordable landed property but it can be 2-3 hours driving to/from Jakarta; second, the current high-rise model for example RUSUNAMI (or probably the upcoming RUSUNAMI Version 2.0) is not affordable,  high-rises are not socio-culturally suitable for low income group and the maintenance cost is expensive and will increase incrementally over time; and third, a developer driven model has not been able to address the pressing needs of low-cost housing demand as most developers are bogged down supplying  houses to the niche market of middle income and high income groups.

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To date, the Government is revising the regulation on subsidized housing. But I can’t see how any breakthrough will be made as it is still likely to play within the “old” context of the proven-failured-high-rise-apartment (RUSUNAMI). As highlighted in Kompas Daily in February 27, it seems the Government is merely aiming to enlarge the size of the of the unit, revising the amount of government’s subsidy and the funniest thing revising the income criteria for the targeted consumer from those earning IDR 4.5 million per month to IDR 6 million per month. This is completely misleading.

Hence, this might be a good time to challenge the Government to think outside the box and focus more on informal housing.

Construction costs are relatively small for low cost housing (landed house), whilst the land and infrastructure cost are relatively high. The Government, in this context Ministry of Housing, should play a more intelligent role in supporting other than developer driven modality such as self help modality to delivering a decent and affordable landed house or a duplex perhaps, and become a competitor in housing market — which so far has been monopolized by a developer driven approach for quite sometime.

There are various approaches which could be adopted, a possible solution could be attained through state interventions to provide matured land — either by giving a temporal right to use, providing land for free or selling it for an affordable price with reasonable repayment scheme –, and adequately equipped with basic infrastructure needs such as installed pipe-water, electricity connections and other vital basic services.

The housing delivery mechanism itself is not rocket science. It is simply utilizing a community development approach towards targeted groups by organizing and facilitating targeted low income groups to construct their own landed houses through self help modality — based on their individual needs and their financial capacity (core house or extended house). The planning and construction process could be assisted by professional/social architects, engineers and facilitators to ensure proper planning and design of the environment and that it meets the expected standard. The source of finance could vary, one possible way is to seek financing from community cooperative institutions or micro finance institutions which provides micro loans either for productive or consumptive purposes — so that the low income could avoid neck-chocking interest rates that are applied by mainstream Banks.

Thailand has successfully addressed the massive growth of slum areas in Bangkok by providing access to land to low income groups to build their own low-cost housing through participatory approach. The basic element of Thailand success story lies in the congruent approach, mutually agreed solution, high commitment coupled with strong synergy between stakeholders involved (i.e. Civil Society, Academic Institutions and the Government ultimately).

Another remarkable success was made by Enrique Peñalosa, a politician who served as mayor of Bogotá — Colombia’s capital city of 7 million — for three years (1998-2001). During his term, he bought undeveloped land on the outskirts of the city to prevent real estate speculation and ensured that it will be developed as affordable housing with electrical, sewage, and telephone service as well as space reserved for parks, schools, and greenways.

The question is now whether the Government of Indonesia is willing to give access to land for the poor and invest state funds to mature land by building the necessary infrastructure?

The Government has given access to state owned land to many developers to build RUSUNAMI, so why can’t they grant access to “well-organized low income groups”?

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