State-owned secondary mortgage provider Sarana Multigriya Finansial (SMF) signed on Wednesday a loan agreement with publicly listed state-owned Bank Tabungan Negara (BTN) for housing loans worth Rp 1.5 trillion (US$113.5 million) to support the government's programme of providing 1 million homes per year.
SMF president director Raharjo Adisusanto said on Wednesday that the money would be used to provide more housing loans under the housing loan liquidity facility (FLPP), a government subsidized mortgage programme for low-income people who have never owned a house.
"The loan disbursement marks the beginning of a financing facility disbursement to support the government's one-million-homes-per-year programme," Raharjo said at a press conference.
"Total loans disbursed to BTN from 2006 to 2014 amounted to Rp 6.4 trillion, and with the current signing the total loan amount reaches Rp 7.9 trillion," Raharjo said.
The signing was also attended by Public Works and Public Housing Minister Basuki Hadimuljono and Deputy Finance Minister Mardiasmo.
On the same occasion, BTN president director Maryono added that the current demand for houses did not show any sign of letting up. This condition illustrates the gap between the availability of housing and demand, he continued.
"This financing facility hopefully can be one of the solutions to help the government's housing programme," he added.
Of the 1 million homes to be built for low-income people this year, the government will be responsible for building 603,516, while private developers will construct the remaining 396,484.
In the initial stage, the ministry will construct 331,693 homes in the provinces of Aceh, North Sumatra, West Sumatra, Riau, Riau Islands, Lampung, South Sumatra, Jambi, Bengkulu, Bangka Belitung, Banten, Yogyakarta, Jakarta, West Java, Central Java and East Java.
On April 29, President Joko "Jokowi" Widodo officially launched the programme with a groundbreaking ceremony for the construction of 103,135 homes in Semarang, Central Java.
The ministry allocated Rp 13 trillion from the state budget for housing. The allocated funding will be used not only to construct housing but also to fund the FLPP with a total budget of Rp 5.1 trillion.
The ministry's director general for housing finance, Maurin Sitorus, acknowledged that the state budget allocation for FLPP was limited and said the government would seek other financing to provide more loans for low-income people.
The ministry introduced the FLPP, government-backed mortgages, in 2010 to help low-income people buy homes.