Batam Real Estate Industry Protest New Land Lease

JAKARTA. Businessmen protested the decision of Batam Industrial Development Authority (BP Batam) to increase the land lease tariffs by hundreds percent. The businessmen worried that the decision may stunt investment in Batam.

Chairman of Batam branch of Real Estate Indonesia (REI) Djaja Roesli said that the regulation may distract investment in Batam that subsequently may affect to the local economy.

"The regulation will be a burdensome for property sector in Batam", Djaja said.

As an information, BP Batam on 18 October released the Head of BP Batam Regulation No 19/2016 on the new tariff on land lease. The regulation sets the increases in land lease tariffs up to hundreds percent.

For an example, the tariffs of land lease for apartment in Batam Center area increased by 467% from Rp 51.250 per meter square to Rp 290,900 per meter square. Meanwhile the tariffs of land lease for industry increased by 679% from Rp 32.250 to Rp 251,250 per meter square.

According to Djaja, the regulations will drive some investors to move out from Batam, while the new investors may cancel the investments due to the new policy.

Djaja even claimed that some investors have canceled their investments in Batam, such as PT Sat Nusapersada Tbk. The producer of cellular phone and technology instruments had cancelled a worth of US$ 18 million of investment in Batam.

Aside of REI, the policy had led to unease in property enterprises, such as Ciputra, which has a number of property projects in Batam.

Price adjustment

The new policy is a sort of bad news for Ciputra. "We are also unhappy if the land price increases, since demands depend on market condition", said Manging Director of Ciputra Harun Hajadi.

However, the new policy does not distract the business plan of the company, as well as the property projects in the area.

Meanwhile, another developer Meisterstadt Pollux Habibie International Batam stated that the company will comply with the new policy. "We will comply with government regulation," said Operational Manager of Mesiterstadt Pollux Habibie International Batam Yosef Eduardus.

As an information, Meisterstadt Pollux Habibie owns a project of Meisterstadt Batam in the area of 9 hectare (ha).

Yosef added that the company itself has not yet received the details of the regulation.

He said that the company may have a price adjustment, if it is necessary. However, to date the company has not yet planned to adjust the price. (Translator: Muhammad Farid)