Property developer association implores Indonesian government to provide additional stimulus

Real Estate Indonesia (REI) believes that this is necessary to improve the current situation of the property market 

According to The Jakarta Post, Real Estate Indonesia (REI) has appealed to the government to offer additional stimulus, such as mortgage payment deferrals for both homebuyers and developers since analysts have already predicted the current mortgage subsidy programme to stumble. 

On 25 September, Finance Minister Sri Mulyani Indrawati signed the Ministerial Regulation No. 138/2020 on the procedures for the subsidy disbursement plan of the National Economic Recovery programme, which specifies plans regarding the mortgage loan subsidy.   

The interest subsidy spans from three to 25 percent for the first three months of the loan depending on the loan ceiling of the debtor. This is applicable for 70 square metre maximum property size and is restricted to IDR10 billion (USD673,000) loan ceiling.

“The internet subsidy will only result in substantial effects because it lasts for around three months. Meanwhile, many people now are being furloughed without a severance payment,” said Paulus Totok, the chairman of REI.

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He explained that mortgage deferrals would allow people who are either furloughed or dismissed from their jobs to keep their mortgage even though they lost their source of income, which would prevent huge defaults or cancellations of house orders. 

“The government needs to take a meticulous look at the microeconomic data to understand the current conditions and implement the right policy.” 

“There are 30 million workers that are employed in industries that are directly or indirectly linked to the property sector. Therefore, we have submitted a proposal [to the government] to rescue the property developers’ cash flow,” concluded Paulus.