Indonesia presidential candidate Joko Widodo announces plan to allow foreigners to buy property
Presidential candidate's new policy to increase tax revenue may boost demand for luxury flats
Indonesian presidential hopeful Joko Widodo plans to allow foreigners to buy apartments to boost tax revenue, a move that could spur demand for property in the country's luxury market.
Foreign investors would be able to purchase apartments worth at least 2.5 billion rupiah (HK$1.6 million) in the capital and other main cities and on Bali island, Setyo Maharso, a member of his campaign team, said.
Foreigners are currently barred from directly buying Indonesian property, leading to illegal transactions via proxies, so allowing them will enable a luxury tax to be imposed on sales, he said in Jakarta.
Widodo, known as Jokowi, is seeking to revitalise his chances with new pledges days before next Wednesday's vote, having seen a commanding lead against Prabowo Subianto evaporate in a race that survey company Roy Morgan says is "too close to call".
The property idea, which is not in Widodo's published policy manifestos, may be a political gamble in a campaign filled with anti-foreign rhetoric, yet would prove popular with investors.
"If the government opens this market to foreigners, it will benefit the government as they can get more revenue from tax and the property market will become attractive," said Anton Sitorus, head of research at the Indonesian unit of Jones Lang LaSalle.
"Foreigners could buy five to eight apartments in Indonesia, while in Singapore, Hong Kong and Australia they could get only one," said Sitorus.
Foreigners would be able to buy property of at least 200 square metres in areas including Batam island near Singapore, and the port cities of Surabaya and Makassar, Maharso said.
"Foreigners buy houses using their Indonesian wives or husbands, so that Indonesia loses revenue from them," he added.
"We will let foreigners buy apartments, not landed houses, in certain places such as in industrial and tourist zones."
Foreign ownership of residential property could double if this plan is implemented, it is claimed.
If elected, Widodo also wants to move tax collection online to boost revenues, while Subianto's campaign is targeting an extra US$300 billion from tax over five years.