Understanding developer’s perspective and supply-side constraints of inclusionary housing in Jakarta, Indonesia

A major issue regarding housing is the availability and affordability of housing options for all citizens. Rapid urbanisation has led to a widespread issue of unaffordable housing worldwide, including in Indonesia. The high demand for housing exceeds the supply, resulting in a housing shortage, particularly among low-income groups. Furthermore, housing products offered by development actors, particularly private developers, tend to cater mainly to the high-end market segment. Meanwhile, the government is accountable for ensuring the citizen’s right to adequate housing, as outlined in the Article 28H of the Indonesian Constitution. Therefore, stakeholders involved in housing provision should contribute towards making it affordable per the constitution’s mandates. Policymakers have attempted to tackle the problem by implementing a policy that integrates the notion of inclusionary housing. This concept is translated into the balanced housing policy in Indonesia, first introduced in 1992. Although this policy has existed for approximately three decades, there is limited research on its implementation and the affordable housing supply in Indonesia, particularly Jakarta. The role of private developers in housing development thus becomes crucial in addressing the housing affordability issues in Jakarta. Furthermore, there needs to be more discussion regarding the perspectives of the supply side in the discourse surrounding affordable housing. Therefore, this research aims to explain the influence of the developer’s perspective towards the policy and supply-side constraints of the housing value chain on the affordable housing supply in Jakarta. The results show that the balanced housing policy has not been fully put into practice in Jakarta. This is mainly due to the absence of regulation at the provincial level that binds private developers and local governments to its implementation. However, the existing provincial regulations governing the implementation of housing development by developers have supported the balanced housing policy's requirements and objectives in ensuring affordable housing supply for low-income groups in Jakarta. Developers are willing to contribute to the affordable housing provision if they get enough incentives to offset their costs. However, developers often face challenges when attempting to achieve balanced housing in their projects. The findings show that the housing value chain is weakened by several constraints, such as the high land price, high construction and infrastructure cost, and the house price cap set by the government, which makes them incapable of gaining substantial profit to sustain their business.