Newsmakers / November 2017

Developers, Bank to Back No Down-Payment Scheme

By GlobeAsia

Property developers and a bank say they are ready to partner with the new Jakarta city administration to provide finance for mid- and low-level housing projects under the no down-payment scheme proposed by new Jakarta Governor Anies Baswedan and his deputy Sandiaga Uno. They stressed that regulations have to be clear and the projects should adhere to green environmental requirements.

Chairman of the Jakarta Chapter of the Real Estate Association Amran Nukman said that a team representing developers is ready to sit down with the city administration and banks to seek ways to realize the no-deposit program.

“It will even be more strategic if the Jakarta Chapter of the Indonesian Chamber of Commerce and Industry (Kadin) is involved to help make the program successful. Developers have prepared several locations and we certainly hope that the program will run,” he said.

Sigit Prastowo, finance director of city-owned Bank DKI, said the lender supports all the governor’s programs, including the no-down-payment housing scheme. “We discussed the program with various parties even before the inauguration of the new governor. Of course, as a bank, we will balance the commercial side and development of the city with 100% support.”

If the central bank, Bank Indonesia (BI), allows the no down-payment scheme to go ahead, the program can be implemented. “We don’t know yet the consumer target for this program as Bank DKI’s obligation is to provide credits and support the city administration,” Prastowo added.

Bank Tabungan Negara (BTN), the state-owned lender which concentrates on housing credits, said so far there has been no communication on the no down-payment scheme with the bank. “But if asked, we are ready to serve in accordance with regulations and government policies,” its president director Maryono said.


“We discussed the program with various parties even before the inauguration of the new governor. Of course, as a bank, we will balance the commercial side and development of the city with 100% support.” -- Sigit Prastowo, finance director of Bank DKI.


The two largest state-owned lenders, Bank Rakyat Indonesia (BRI) and Bank Mandiri, have also said they have not been asked to help or to discuss the program. “But if we are asked to support the program and as long as from the regulatory point of view it is alright, then we will support it. Since we are players in the banking business, we need to know the location, the concept and the technicalities. We need to sit together and discuss the issue,” said Bank Mandiri corporate secretary Rohan Hafas.

BI approval needed

BI communications executive director Agusman said the central bank has no specific regulation that governs the no down-payment scheme as proposed by the governor and his deputy. “There’s no new ruling, if there’s one we’ll let you know,” he replied to a query.

BI Governor Agus Martowardoyo has noted that the central bank has a loan-to-value (LTV) requirement that could work against a no down-payment scheme since it requires a down payment on every mortgage loan.

The regulation empowers banks to provide financing for up to 85% of a property’s value for first-time homebuyers purchasing houses or apartments above 70 sq m. This means prospective home buyers need to come up with at least a 15% down payment.

Anies and Sandiaga have said they will ask Bank DKI to adjust the down payment on a home loan according to “the sum available in the applicant’s savings account.”

“It’s not against the rule if it is included in the regional government’s program. Under our proposed scheme, homebuyers will only need to deposit a certain amount of money for six months in Bank DKI, and that deposit would be regarded as a down payment,” Anies said during the election campaign.

“We’ve always highlighted the fact that credit regulations are easier for people to purchase motorcycles and cars while it is the contrary to purchase a house. That’s why people are forced to stay where they are and cannot move,” he said.

Former energy and mineral resources minister Sudirman Said, who headed the leadership transition team, said implementation of the no down-payment scheme needs the support of other institutions. “The program has been planned but needs regulatory support. We need to talk to the Financial Services Authority (OJK) as well as BI.”

Sudirman said the program will cut the backlog for housing which has reached 350,000 units, adding that the city administration will reform the public housing bureaucracy by establishing a special general services body that manages affordable homes and controls land prices transparently. “We will also invest more to build high-rise flats for lower-income people,” he promised.