Housing sector needs better finance: BTN

Housing sector needs better finance: BTN

JAKARTA (JP): State-owned Bank Tabungan Negara's (BTN)
president, Tito Soetalaksana, called yesterday for the
establishment of more long-term financial sources to finance the
country's growing property industry.

He said that the traditional long-term financial sources such
as bond instruments are no longer sufficient to support the rapid
development in the property sector.

"It is, therefore, essential to study the possibility of
establishing other long-term financial alternatives," he said.
"If needed, it will be wise enough to adopt the financing schemes
from neighboring countries such as Singapore and Malaysia."

In Singapore and Malaysia, he said, provident and pension
funds owned by both the government and private companies have
been widely used to finance housing projects.

"For banks, such long-term financial alternatives are quite
important to finance housing projects, especially those built for
people of the low-income segment," he said in a seminar on the
financing of the property industry.

BTN provides its lendings mostly to the property sector,
especially housing projects for low-income people.

He said that BTN, as a state-owned bank, receives a special
fund from Bank Indonesia (the central bank), equity from the
government and special assistance from the World Bank, to finance
housing projects.

However, such financial alternatives are not enough while
issuing bonds on the local market is not so helpful, given their
short maturity period, he said.

Tito acknowledged that the government's decision to establish
Civil Servants Housing Savings (Taperum) in 1993 was very
positive in creating financial schemes for the construction of
small houses.

"The funds provided through such savings have significantly
increased BTN's capability to finance small houses over the last
two years," he said.

He hoped the government's plan to establish Private Employees
Housing Savings could be soon realized in order to give more
long-term financial alternatives for the development of small
houses in the country.

Tito also called on the government to speed up the
establishment of the planned secondary mortgage market and its
mortgage instruments in order to give more long-term financial
sources to the property sector.

The secondary mortgage instruments can be more effective than
the traditional saving instruments in drawing public funds as
they not only give higher yields but are also more secure.(hen)