Indonesia to subsidise loan interest for small-scale developers, homeowners

[JAKARTA] The Indonesian government plans to subsidise some of the interest on loans held by smaller real estate developers in an effort to encourage them to build or renovate properties, the finance ministry said in a new decree.

It was not clear when the government made the document available to the public, but the decree took effect this week. It is aimed at supporting President Prabowo Subianto’s programme to build 3 million affordable houses a year and address a supply gap that the country’s 280 million people face.

The government said it would subsidise 5 per cent of the interest on loans taken out by small-scale developers for up to five years.

In addition, the government will cover between 5.5 per cent to 10 per cent of the interest on loans taken out by individuals looking to build or renovate their homes – depending on the loan size – for five years. The scheme only applies to loans for as much as 500 million rupiah ($S38,651).

The government placed 200 trillion rupiah worth of funds with state banks this month, telling the institutions to use the money for lending, including for subsidised loans to the property sector. REUTERS