The Property Sector and its Impact on the Economy

The economic sector in Jakarta has been hit hard by the Covid-19 pandemic. The good news is that the property industry has contributed to reviving the economy from its current condition.

The role of the property industry can be seen from its large contribution to the economy. That is why it is important for the DKI Jakarta Government to restore the economy through the property industry.

Last year, the construction and real estate industries contributed to

• Jakarta's economy by 17.61 percent
• DKI Jakarta's Domestic Investment amounted to 23.9 percent or equivalent to Rp 14.8 trillion
• Foreign Direct Investment from the two industries is around 28.3 percent or equivalent to IDR 17.5 trillion.
• In 2018, the property sector also absorbed 425 thousand workers in Jakarta.

Steps to restore conducive economic activity after the lifting of the PSBB can start with providing flexibility for developers. This flexibility can be given to developers who are ready to build in at least the next three years. This is because the Covid-19 pandemic has made developers who already have development plans choose to stop their activities.

Solutions for the DKI Jakarta Government to help the property industry

The flexibility is in the form of a policy from the DKI Jakarta Government through the governor's discretion that allows the addition of building intensity. The value of building intensity has been determined in Regional Regulation No. 1/2014 on Detailed Spatial Planning and Zoning Regulations.

For businesses or developers, additional building intensity means additional business space. As for the government, the policy will drive the economy and generate taxes for the region. Another additional point, this policy does not make the DKI Jakarta Government have to spend the budget.

The recovery of the property industry means the recovery of other industries. This is because the property and real estate industry is supported by other industries ranging from manufacturing and services. The guarantee from the DKI Jakarta Government with the policy of providing additional flexibility in building intensity will produce a multiplier effect for other industries.

In terms of taxation, the DKI Jakarta Government this year provides relief in the form of discounts on Land and Building Tax (PBB). However, there is still a need for policy innovations that can make the effect of economic improvement in the longer term. This is because the crisis caused by the pandemic in the economy has not yet reached its lowest point.