President Joko Widodo announced the threshold for luxury tax at 20% for properties would be raised to 30 billion rupiahs (US$1.4 million) from 20 billion rupiahs.
Also under revision is permits for foreign buyers, currently under a 30+20+30-year scheme Indonesian developers are calling for an 80-year permit for foreign homebuyers.
This new tax essentially makes it easier and cheaper for oversea buyers/investors to acquire a property. One Chinese real estate owner commented,
This is a big change. Foreigners have the right to possess property for up to 80 years and are much less likely to pay 20% sales tax when selling. We expect demand to increase
This beneficial change has been in response to a slow luxury property market since 2017. However, following this announcement, it is predicted that property developers will focus on creating luxury homes that will now be in high demand due to the reasonable prices.
These new revisions are being made in an attempt to make Indonesia more appealing for international investors. Shan Saeed, economist commented,
Policies from the Indonesian government are becoming more investor-friendly, forward-looking and market-driven. The government is now opening up to foreign investors and providing a level-playing field to all stakeholders. That gives a signal for global investors who are looking at the region from a strategic perspective.