Indonesia is set to relax property rules soon to make it easier for foreigners to own homes in the country, a Cabinet minister said yesterday, in a major change that could spur the slumping economy.

Agrarian and Spatial Planning Minister Sofyan Djalil told property tycoons in a webinar that the new property rules - set to be ratified into law by the end of next month - will allow foreigners to have practically the same rights as Indonesian property buyers.

"On this foreign ownership matter… we will have (the Bill that covers the matter) ratified into law by end-August," Mr Sofyan said in the online seminar attended by the country's top property tycoons.

"That is the commitment from Parliament, and President Joko Widodo had requested that such a timeline to be the deadline."

Among the participants were Mr James Riady of the Lippo Group, Mr Muktar Widjaja of the Sinar Mas Group and Mr Sugianto Kusuma of the Agung Sedayu group.

The government's plan to loosen the property rules comes amid the coronavirus pandemic that has shrunk the economy and caused massive job losses.

The Indonesian property sector supports at least 170 other industries ranging from cement and steel to the creative industries such as interior decor. The sector employs more than 30 million people or about 11 per cent of the country's population.

Foreigners are currently allowed to buy apartments, but not landed homes, in Indonesia and they get only 30-year leasehold titles for these units, making it tough to get bank loans.

The 30-year lease is extendable by another 20 years upon application. Buyers could also later apply for an additional 30-year extension to the lease atop the 50-year lease. But this has posed a big stumbling block for foreign buyers and soured demand, as Indonesian law could change in between their applications.

In contrast, Indonesians who buy property in the country generally get freehold tenure to their homes, or leasehold titles with guaranteed extension to the tenure.

Further, in many foreign countries such as Singapore and Malaysia, leasehold titles have terms of more than 90 years at one go.

Mr Sofyan said President Joko and the government are concerned with the current inflexible clauses of ownership and want them changed.

He said that the administration is keen to upgrade the ownership title status given to foreigners when buying homes.

But Mr Sofyan did not say if the expected amendment to the law would allow non-Indonesians to also buy landed houses.