One of the ambitious targets of the Indonesian government is the realization of the “One Million Houses Program”. Through this program - scheduled to be launched on 30 April 2015 in Central Java by President Joko Widodo - the government aims to provide adequate housing facilities to low income citizens. Over half of these houses will be built using funds from the country’s state budget. State funds will also be used to finance the Housing Loan Liquidity Facility, government-backed mortgages for low-income people.
A total of IDR 10 trillion (USD $782 million) within the 2015 State Budget has been allocated for the realization of the program. Low-income Indonesians who are allowed to purchase these government-backed houses are those that have a maximum monthly salary of IDR 4 million (USD $312). Apart from houses, the program also includes the construction of modest apartment units. Those that are entitled to buy such apartments are Indonesians with a maximum monthly wage of IDR 7 million (USD $546).
These housing facilities can be bought using government-backed mortgages that carry a modest five percentage point interest rate (for a 20-year period). Moreover, down payments are as low as one percent of the property’s price. Indonesians who do not have a payroll wage (that can be used as bank collateral) can use the government-backed smallholder business credit system. In an attempt to combat corruption and ensure clean governance the government will apply an e-procurement mechanism for the program.
A total of 17 Indonesian provinces throughout Indonesia support the government’s “One Million Houses Program”. However, analysts say that the government should make sure it owns the necessary land for the program and prevent sudden hikes in land prices. Due to rapidly increasing land prices, several domestic property developers are reluctant to construct modest housing facilities for Indonesia’s low-income people.
President Joko Widodo stated that he wants to see the construction of 10 million new houses for the country’s low-income people between 2015 and 2019 as the ownership of adequate housing facilities is vital for the dignity of a person. Currently, Indonesia is plagued by a backlog of 13.5 million housing units. Of this total, about 6.5 million houses are regarded top priority as this involves people who have no house, whereas the remainder are for residents who lack permanent houses. It is estimated that Sumatra requires 2,963 houses, Java 7,794 houses, Bali and East Nusa Tenggara 692 houses, Kalimantan 805, Sulawesi 950, Malauku Islands 139, and Papua 183 houses.
The “One Million Houses Program” is part of Widodo’s nine priorities agenda called “Nawa Cita”. State-owned housing developer Perumnas is tasked with the construction of these 10 million additional houses (and will receive an IDR 1 trillion capital injection from the government).