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)