Indonesia plans emergency law to let foreigners buy apartments

Property sector needs reform to attract investments, says minister.

Indonesia plans to issue an emergency law - known as a perppu - to break an impasse of more than a decade in efforts to streamline unfriendly laws as the country aims to allow foreigners to purchase apartments in Indonesia.

The government had in the past repeatedly tried to move forward and set regulations to allow foreigners to own apartments in South-east Asia's biggest economy.

But they were never able to get these implemented because the basic stipulation under Indonesia's 1960 Agrarian Law is that foreigners just cannot own homes in the country, Coordinating Minister for Political, Legal and Security Affairs Luhut Pandjaitan said.

"But the era has changed now. The property sector needs a reform so we could attract foreign investment. Foreigners should be allowed to buy apartments - but not landed houses - even if they don't hold Kitas (Indonesia's residence permit)," Luhut told The Straits Times.

"It is similar to that in Singapore," he added.

Indonesia's Constitution gives the President the right to issue a rule in lieu of law (perppu) when he determines that an emergency in the country requires it.

A perppu is immediately effective after the President signs it, and Parliament can either let it remain effective or end it within a year after the perppu is issued.

Luhut said the perppu that covers a new rule allowing foreign investors to buy apartments is one of between four and five perppu that Indonesia plans to issue by August, to resolve other obstacles hindering the government reform programme.

"This is a revolutionary step to address such problems," he said.

A so-called debottlenecking working committee has been set up to identify problematic and protracted clauses in all laws.

"We will comb all legislations that overlap with each other," Purbaya Yudhi Sadewa, who heads the working committee, told The Straits Times.

The perppu will supersede only the problematic clauses in each law and serve to bypass them, Luhut said.

He added that one perppu could address problems in five to more than 10 existing laws, and about 80 per cent to 90 per cent of the existing laws can be harmonised.

Issuing perppu is a normal practice that some foreign governments, such as the United States, also use, Luhut said, adding that the term used in the US is "presidential Act".

In May, President Joko Widodo signed a perppu that allows courts to increase penalties for sex crimes, which include for the first time chemical castration and death sentence, after the media highlighted a growing number of attacks against children.

Previously, the maximum sentence for a child sex offence was 15 years' jail. Indonesians have mostly welcomed the move.

Amending existing laws through the normal process, by proposing Bills to Indonesian Parliament, can drag on for several years, and in some cases, proposed Bills were thrown out.

Numerous government reform programs in Indonesia in the past decades have hit a snag due to conflicting laws that need amendment.