Indonesian Minister of Home Affairs, Tjahjo Kumolo, made a statement in support of the Lippo Group's controversial Meikarta integrated township project. At the Indonesia Future City & REI Mega Expo 2017 on Thursday (14/09) Kumolo said Indonesia's regional governments should not unnecessarily obstruct private projects that help to develop the regional economy. He cited Meikarta as an example.
Meikarta is a grand 500-hectare property development project, designed to have 100 hectares of open green space, 250,000 units of prime residential property, and 1,500,000 m2 of prime commercial space located about 34 kilometers to the east of Indonesia's capital city of Jakarta.
However, after obtaining the necessary permits from the local district head, the project was delayed by West Java Deputy Governor Deddy Mizwar. Mizwar said the developers of Meikarta are yet to obtain a recommendation from the regional West Java government, while he also said the developers need to conduct more research into the impact of the property development project on local communities that live in the area.
Meanwhile, a month ago the Lippo Group said land acquisition only stood at 16.8 percent of total land that is required to develop the ambitious Meikarta township project.
Still, despite the limited amount of land under control and criticism from the West Java government, the Lippo Group continued to aggressively promote its Meikarta project in Indonesian media as well as on various strategic locations in Jakarta. In fact, the group claims that pre-sales of apartment units has already reached 130,000 per August 2017, an impressive number.
Therefore National Ombudsman Commissioner Alamsyah Saragih last week urged Indonesian consumers not to buy property at Meikarta because the developers have not yet obtained all permits and have not acquired all land in the Meikarta area. Saragih also advised the Lippo Group to stop its marketing activities related to Meikarta.
However, based on the new statements of Indonesia's Home Affairs Minister Kumolo, the Indonesian government seems to back the Meikarta project and considers it a project that is directly involved in the development of the West Java region. Kumolo says the Meikarta project does not need any permits from the (provincial) West Java government. Instead, it requires permits from the local district (which it already obtained).
The Indonesian government fully supports the participation of private companies in the development of Indonesia. In fact, the government is dependent on private involvement because the government itself has limited financial resources available for infrastructure development and construction projects. Therefore, Kumolo is unhappy seeing a provincial government blocking a big township project that is fully financed by the private sector and does not break existing regulations. Meanwhile, he added that the provincial, district and city governments should all be in sync when it comes to licensing and regulations.
It is not the first time that big development projects encounter trouble in Indonesia. The legal framework in this young democracy (that turned into the road of decentralization in the late 1990s and early 2000s) often seems not ready to facilitate a big project and therefore there can exist a high degree of ambiguity and legal uncertainty as the central government, provincial government, as well as district and city governments all have different views and regulations.
For example, the fate of the Giant Sea Wall project (also known as the Great Garuda) in the bay north of Jakarta remains unknown. This huge project, unveiled in 2014, involves the raising and strengthening of the existing onshore embankment of the Jakarta bay, as well as the construction of a 15-mile outer sea wall and the development of property on artificial islands (land reclamation). Indonesian President Joko Widodo suspended the project in mid-2016 due to alleged violations of and/or hiatuses in Indonesian law. Not unusual for Indonesia, there also emerged a corruption scandal after the Corruption Eradication Commission (KPK) arrested Agung Podomoro Land's President Director Ariesman Widjaja. Widjaja was sentenced to three years in prison after being found guilty of bribing Muhammad Sanusi, a legislator of the Jakarta provincial assembly, for support related to the Pluit City project (one of the artificial islands within the Giant Sea Wall project).