The financialization of housing in Indonesia: Actors and their roles in the transformation of housing production

Abstract

There has not been a lot of focus on housing financialization literature in Indonesia, except for Lee (1996). This article focuses on the financialization of housing in Indonesia in the past thirty years, including the actors and their roles in transforming housing production. The fall of the New Order regime in 1998 spurred the process of democratization and marked the transformation of Indonesia from an authoritarian rule into a more democratic government. We offer an analytical framework that centers on the transformation of housing production due to the government system changes. We interviewed public and private developers, financial actors, and government officials in Jakarta and Surabaya. The data sources for this article also include federal and local housing regulations, unpublished and published housing reports, and local and national newspapers in Indonesia. This article contributes to the discussion of how housing policy and practice changes result in the transformation of housing production. The Housing and Settlement Law 1/2011 provides new provisions that the government needs to assist low-income residents through tax incentives, insurance permits, the provision of land and public utilities, and land title registrations. We explain how these new provisions shape actors and their roles in housing production, arguing that homeownership is central to the financialization of housing in Indonesia.