Indonesia property permits continue to slow major development efforts across the country, creating significant hurdles for investors and developers. According to the Indonesian Real Estate Association (REI), 306 property projects have stalled due to licensing barriers, with the halted investments valued at up to Rp34.5 trillion (approximately USD 2.1 billion) from 16 regional chapters alone. As assessments continue across 21 additional chapters, the total potential figure could reach Rp 55 trillion (USD 3.3 billion). These delays pose major risks to economic growth, housing availability, and job creation.
Indonesia Property Permits Create Major Bottlenecks
A range of licensing issues disrupts the progress of large-scale projects nationwide. Developers report obstacles related to the Online Single Submission (OSS) system, environmental impact assessments, spatial planning regulations, and the Protected Rice Field (LSD) policy. These issues cut across multiple ministries, which increases complexity and prolongs approval times.
REI Chairman Joko Suranto said the organization gathered reports from 16 regional chapters showing 306 delayed projects covering 6,178 hectares of land. He noted that the list remains incomplete as 21 other regional chapters continue mapping issues. Joko emphasized ongoing coordination efforts, stating that REI has submitted formal letters to seven ministries and state institutions responsible for the property sector.
Indonesia Property Permits Freeze Trillions in Investment
The stalled projects come with major economic consequences. REI’s data shows that the 306 projects represent Rp34.5 trillion in delayed investment. “If Rp34.5 trillion is divided by 16 (regional chapters), then the potential investment lost from each region reaches around Rp2 trillion,” Joko explained. He added that if data from the remaining 21 chapters is included, the total stalled investment could rise to around Rp55.5 trillion (approximately USD 3.38 billion).
Research from REI and the University of Indonesia’s Management Institute indicates that every Rp112 trillion (approximately USD 6.8 billion) in property investment contributes 0.56% to national economic growth. Consequently, prolonged licensing issues undermine these gains and reduce opportunities for regional development.
Housing Backlog Puts Pressure on National Development
The delays deepen Indonesia’s longstanding housing challenges. The country faces a backlog of 9.9 million housing units, while 26 million homes remain uninhabitable. Moreover, urbanization continues to accelerate, with an estimated 56% of Indonesians projected to live in cities by 2035. These figures show how crucial timely property development is to meeting future housing demands.
Joko also noted the employment impact of stalled projects. He explained that each property development typically employs around 100 workers. With 306 projects currently paused, Indonesia risks losing job opportunities for 30,600 workers. “That is a large potential to drive and contribute to national economic growth. We hope the government can bridge these licensing obstacles, considering property licensing spans multiple ministries,” he said as reported by Bisnis.com.
LSD Land Rules Complicate Pproperty Expansion
Government restrictions on converting protected rice fields add another challenge for developers. The Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN) introduced a moratorium on changing the function of rice fields to protect national food security. While developers support this objective, many argue that the data behind the policy requires updating.
Joko referenced comments by Agriculture Minister Andi Amran Sulaiman regarding self-sufficiency in rice production, noting that improved satellite mapping could clarify which rice fields still operate today. He added that the government plans to reopen LSD permitting in 140 cities. “This LSD issue is essentially in process. We support the government’s efforts to achieve food security and self-sufficiency in line with future national challenges,” he said.
Stimulus Programs Contrast with Stalled Project Approvals
Despite licensing obstacles, the government continues to issue strong stimulus measures for the property sector. Policies include the three million homes program, extended VAT incentives, expanded housing subsidies, and increased FLPP quotas. The government also encourages banks to channel credit more aggressively by using state funds placed in Bank Indonesia.
Around 700 REI developers are currently applying for housing KUR financing, and the number is expected to grow. However, Joko warned that substantial stimulus cannot outweigh licensing barriers that slow investment. He emphasized the need for coordinated action so developers can move approved projects forward.
Urgent Action Needed to Restore Investor Confidence
Stalled licensing processes threaten investment momentum across Indonesia’s property sector. Developers now wait for clearer regulations, faster approvals, and improved coordination between ministries. Resolving these obstacles will help restore investor confidence, support national housing goals, and unlock trillions of rupiah in economic potential.
Source: ekonomi.bisnis.com, detik.com
Image: Getty Images
