Credit for modest homes unavailable

Credit for modest homes unavailable

JAKARTA (JP): The Indonesian Developers Association has
expressed concern over the unavailability of bank credit to build
low-cost houses in several provinces, including West Java, South
Sumatra and East Java.

Association Vice Chairman Herman Soedarsono said last week
that if the situation remained unchanged for long, the country
would barely meet its target of 500,000 low-cost houses in the
Sixth Five Year Development Plan.

He said the association had no idea of the reason behind the
banks' reluctance to provide credit.

"Does it mean that we have to put a brake on the development
of low-cost houses?," Soedarsono was quoted by Antara as saying.

"We hope the government will clear up the situation. The
association's members who had planned to build cheap houses, are
now hesitating to develop their projects, for fear there will be
no housing credit available," he said.

The president director of state-owned property developer
Perumnas, Srijono, said the company also faced difficulties
obtaining credit from Bank Tabungan Negara (BTN), one of the
traditional providers of credit for cheap housing projects.

"BTN's limited capability to provide credit was caused by
limited liquidity loans provided by Bank Indonesia to the bank,"
he said.

Aside from BTN, credit for cheap housing projects was provided
by Bank Papan Sejahtera, Bank Kesejahteraan and Bank Pembangunan.

State minister of Public Housing Akbar Tanjung was vague over
the cause of the unavailability of credit.

He said he thought the banks had stopped the credit only on a
temporary basis.

"I met with the management of BTN late last month. They did
not talk about it."

He speculated that the banks faced technical and
administrative difficulties in providing the credit.

He said the Central Bank might have delayed giving liquidity
credit to the banks which would have forced banks with limited
resources to delay the processing of developers' credit
applications.

Tanjung also said the banks had been inundated with
applications for low-cost housing projects as the government had
targeted the construction of a large number of low-cost houses
this development period. These apparently take a long time to be
processed.

"This is only technical problem. In principle, there is no
problem," he said.

However, Tanjung revealed he had received information from
Bank Papan Sejahtera that the reason the bank had delayed giving
credit was because it had yet to receive liquidity credit from
Bank Indonesia.

"Since the bank has limited funds, it can't provide the
credit," he said.

According to the minister, Bank Indonesia had allocated enough
liquidity credit for 500,000 low-cost houses in the current Sixth
Five Year Development Plan with interest rates ranging from 8.5
to 14 percent.

Perumnas and developers have built about 413,000 low-cost
houses from 1993 to now. Another 110,000 are scheduled to be
built in the 1997/1998 fiscal year.

Tanjung said he was now in the process of discussing with Bank
Indonesia and the Ministry of Fiance the possibility of raising
further liquidity credit for low-cost housing. (jsk)