State-owned Bank Tabungan Negara (BTN) plans to set aside Rp7.8 trillion ($855 million) to provide housing loans next year to meet rising demands for housing.
"But it (allocation) will still need approval from the shareholders," BTN director, Kodradi was quoted as saying by The Jakarta Post on Wednesday (29/11/06).
The figure represents a 26% increase from the Rp5.7 trillion in housing loans estimated to be extended this year, of which Rp5.2 trillion had been disbursed as of the end of October.
As economic growth continues to improve next year, demand for housing loans will increase, Kodradi predicted. The economy is expected to grow by 6.2% in 2007, from an estimated 5.8% this year.
Bank Indonesia forecasts that housing loans will grow by an average of 20% next year, while the housing market will increase from Rp17.1 trillion in 2005 to Rp21.5 trillion in 2007. "We are optimistic that the money we have allocated will be lent out despite the challenges, mainly in the infrastructure sector, such as electricity supply," he said.
He cited as an example parts of Riau, where no one is purchasing any of the more than 6,000 newly built houses because they lacked access to electricity.