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The Indonesian government has implemented a new policy to subsidize loan interest for small-scale property developers and individual homeowners. This initiative aims to support the construction of affordable housing, addressing the country's significant housing shortage. Developers will receive a 5% interest subsidy on loans for up to five years, while homeowners borrowing up to 500 million rupiah (approximately USD 30,000) will benefit from an interest subsidy ranging from 5.5% to 10%, depending on the loan size. The government has allocated 200 trillion rupiah to state banks to facilitate this program.
Indonesia has introduced interest subsidies for small developers and individual homeowners. This initiative aims to support the construction of affordable housing, addressing the country's significant housing shortage. Advertisement
Under the new policy, small-scale developers will receive a 5% interest subsidy on loans for up to five years. Individual homeowners borrowing up to 500 million rupiah (approximately USD 30,000) for building or renovating their homes will benefit from an interest subsidy ranging from 5.5% to 10%, depending on the loan size. The government has allocated 200 trillion rupiah to state banks to facilitate this program, directing them to use these funds for lending purposes, including subsidized loans to the property sector.
This move is part of President Prabowo Subianto's broader plan to construct 3 million affordable homes annually, aiming to address the housing supply gap for the country's 280 million residents. The government's intervention is expected to stimulate the housing sector, making homeownership more accessible to a larger segment of the population.
In addition to the interest subsidy, the government has implemented measures to streamline the housing development process. These include tax and retribution waivers for land acquisition and building permits, as well as an accelerated building permit issuance process, requiring completion within ten working days once all application documents are duly submitted. Enhanced coordination between the Ministry of Housing and Settlement, the Ministry of Public Works, and the Ministry of Home Affairs has also been emphasized to streamline the development process.
These efforts are in line with Indonesia's broader strategy to promote affordable housing and support economic growth through the real estate sector. By reducing financial barriers and simplifying administrative procedures, the government aims to encourage more developers and homeowners to participate in the housing market, thereby contributing to the country's development goals.
Source Reuters
5th Jun, 2025
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