On May 18, Japan International Cooperation Agency (JICA) signed a loan agreement of 7 billion yen to PT Bank Tabungan Negara Persero Tbk (BTN) of the Republic of Indonesia to finance housing loans to low- and middle-income groups in Indonesia through an overseas investment loan. The loan is in line with the “Initiative for Overseas Investment and Loan to ASEAN Countries” (*1) announced by the Japanese government in 2019, and will be provided under the “Financial Inclusion Promotion Facility for Asian Countries” (*2), which was established as a pillar of the initiative, through co-financing with Citi and PT Bank Central Asia Tbk. The loan will be co-financed by Citi and PT Bank Central Asia Tbk.
In Indonesia, there is an annual demand for more than 1 million housing units, mainly in urban areas, due to population and household growth and migration to cities. On the other hand, the outstanding balance of loans in Indonesia’s mortgage market is only 4% of GDP, lower than neighboring countries such as Thailand (22%) and Singapore (50%), making access to mortgage financing a challenge in home acquisition. It is estimated that the percentage of “self-built houses” constructed by low- and middle-income residents themselves accounts for about 70% of all houses in the country, but there are safety issues such as high risk of exposure to natural disasters, and the need for sanitary housing is increasing from the perspective of countermeasures against infectious diseases such as COVID-19.
This project aims to increase the supply of safe and sanitary housing for low- and middle-income people in Indonesia by improving access to finance through the provision of housing loans for low- and middle-income people, thereby contributing to SDGs Goals 1 (End Poverty), 3 (Health and Welfare for All), 10 (Reduce Inequality among People and Countries) and 17 (Achieve the Goals through Partnership).
BTN is one of the four state-owned banks in Indonesia, and has the largest share of approximately 40% in the housing loan sector in the country, with a particular strength in housing loans, including an approximately 86% share of housing loans for low- and middle-income groups through the support program of the Indonesian government’s “One Million Housing Units Plan The company is a financial institution with particular strength in housing loans.
© Source JICA