Jakarta. The World Bank has approved $450 million in financing last week to help low-income families in Indonesia acquire affordable homes.
The loan would support the government's housing assistance programs, such as the community-based housing development program (P2BPK) and the government housing assistance program (BSPS). The World Bank would also provide the government assistance to reform housing policies.
"Indonesia is taking a major step forward through this program towards ensuring that low-income households have access to an adequate, safe and affordable homes," Rodrigo Chaves, World Bank country director for Indonesia, said in a statement on Monday (20/03).
"Providing Indonesian families with access to affordable housing is essential to increasing shared prosperity and reducing poverty in the country," he said.
So far, Indonesia has developed a number of policies and institutions to support affordable housing, including a subsidized mortgage liquidity facility — known as the FLPP scheme — which subsidizes middle-income households, allowing mortgagors to repay their loan at a lower than interest rate than the prevailing market interest rate.
The Indonesian government has also allotted a portion of its budget to state-controlled home builder (Perum Perumnas) and mortgage insurance provider Asuransi Kredit Indonesia (Askrindo) for affordable housing development projects.
According to the 2017 state budget, the government is set to spend Rp 29.7 trillion ($2.2 billion) for affordable housing and public facilities this year, or about 2.3 percent of the total central government's budget.
Taimur Samad, World Bank program leader, said in the statement that it is critical for the World Bank to support inclusive and well-planned urbanization in Indonesia.
Indonesia's housing backlog reached about 13.5 million houses while housing development only reached up to 400,000 units a year, according to a Ministry of Finance report in 2015.
World Bank reports that Indonesians need one million new housing units a year. Around 20 percent of the 64.2 million housing units are deemed in poor condition and about 29 million out of Indonesia's 250 million population live in slums.