Opinion – published in Jakarta Investment Center
From 360 days to 57 days. Peraturan Gubernur 118/2020 to accelerate construction permit process for high-rise buildings is a much-needed breakthrough during the Covid-19 pandemic. Governor Anies Baswedan for his urgency in leading this change is much appreciated.
The regulation was a fruit of intense dialogue between DKI staff, practitioners and property developers. It was years of examining granular details, collectively solving problems out-of-the-box. All sides presented vastly different perspectives, sharing issues that the other sides would never have been aware. But what united us was our spirit of collaboration and common interest in building a better Jakarta.
The Governor’s team dedication is commendable. They pushed boundaries and acknowledged the far-reaching impact of efficient process to the well-being of Jakarta—that it does not only affect developers’ project timelines but more importantly, investment, employment and housing.
Permit process is a factor in competitiveness. And competitiveness matters. High competitiveness correlates with a thriving economy and higher income. In this regard, Jakarta must look internationally. It lags behind Singapore, Kuala Lumpur, Bangkok and Ho Chi Minh City in World Bank Ease of Doing Business index.
The construction process of high-rise buildings is continually changing. Within the industry there are always new building techniques, disruptive technology, novel sustainability practices. Externally, the city’s needs are constantly shifting. Ongoing dialogue between stakeholders is therefore critical to agilely respond to change and to proactively update outdated regulations.
Streamlining the permit process for high-rise buildings benefits the industry. Onerous process has a price. The hidden costs arising from bureaucratic delays are passed on to property buyers, tenants and consumers. More certainty helps more property players participating, not just the big ones with cash dominating the scene. A robust ecosystem ensues.
The role of the property industry warrants special attention. The impact of its multiplier effect extends to a host of sectors including construction, banking, design and engineering consulting, retail and many more. According to the national statistics agency BPS, in 2019, the construction and property industries contributed 17.6% to Jakarta’s GDP. In 2018, they employed 425,000 people. Furthermore, property-related taxes are an enormous source of DKI Jakarta’s revenue.
The Covid-19 pandemic forced a handful of high-rise development projects to be put on hold. A great number of construction labourers, retail staff, suppliers, engineers and architects are out of work. Truncating the construction permit process for high-rise buildings from 360 days to 57 days means these people can return to work sooner, more jobs created and the economy can recover speedily from the Covid-19 downturn.
Peraturan Gubernur 118 is of monumental significance. It’s a first step to a long journey of continuous improvement. This achievement is a testament of how through dialogue we can resolve complex problems together and remind ourselves of our shared interest: to build a better Jakarta, together!