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The World Bank’s Footprint on Indonesia’s Decent Homes

In addition to increasingly limited land, relatively expensive prices, the crucial problem of the housing sector in the country, is the access to financing.

To overcome the latter problem, the Government is collaborating with the World Bank. Through the National Affordable Housing Program (NAHP), the Ministry of Public Works and Public Housing (PUPR) and the World Bank have collaborated, helping as many as 263,520 housing units throughout Indonesia.

The main objective of the NAHP Program is to increase access to affordable housing for low-income people. This program has been running for a dozen years.

“The NAHP project has successfully achieved and met most of the project indicators in distributing 30,422 BP2BT mortgage subsidies for first homeowners and serving 233,098 households below the poverty line through grants and BSPS technical support to increase access to livable homes,” said Secretary of the Directorate General of Housing, M. Hidayat, when giving a speech at the NAHP Closing Workshop representing the Director General of Housing of the Ministry of PUPR in Jakarta, Tuesday (23/5/2023).

Hidayat also explained that the provision of livable and affordable housing, especially for low-income people, has become a priority for the Indonesian Government. However, as Indonesia’s population increases, solving the housing backlog and meeting the target of the One Million Houses Program (PSR) with limited fiscal space is an increasingly difficult challenge.

“I express my sincere gratitude for the tremendous support, teamwork, and partnership from the World Bank and all parties involved in the successful implementation of the NAHP. The NAHP program is part of a sustainable solution and a significant breakthrough so that people will continue to encounter difficulties in obtaining the right to adequate housing,” he explained.

The achievement of the distribution of NAHP funds, he added, also faced obstacles in the field and physical limitations caused by the COVID-19 pandemic that hit Indonesia some time ago. Nevertheless, NAHP succeeded in channeling BP2BT and BSPS assistance to low-income and informal segments of society, as well as developing a Quality Assurance and Quality Control (QAQC) system that enforces technical and application standards for facilitators, communities, and developers and ensures the construction of quality and decent homes.

On that occasion, Hidayat also explained that NAHP also contributed to the development of the Housing and Real Estate Information System (HREIS), a study on the supply side of affordable housing, a strategy for PT SMF (a secondary housing finance company) to encourage the growth of the mortgage market, the development of a case study for Public Private Partnership (PPP) for affordable housing, and an in-depth and multidimensional Housing Policy Grand Design.

The NAHP is also credited with laying the foundation for the future development of Indonesia’s housing sector to achieve the necessary scale and capacity to create universal access to decent and affordable housing. The success and achievements of the NAHP would not have been possible without solid collaboration, strong innovation, and strong commitment from various stakeholders that resulted in significant and long-lasting impacts.

“In addition to providing assistance for access to livable houses for MBR through BSPS, NAHP also adopted the use of ferrocement technology in the BSPS program to build houses that meet standards and reduce the risk of earthquakes for households. NAHP also provides much-needed technical support to support housing sector policy reforms while increasing the capacity of the sector,” he said.

Meanwhile, World Bank Regional Operations Manager for Indonesia and Timor-Leste, World Bank, Bolormaa Amgaabazar said that rapid urbanization has led to a large demand for housing throughout Indonesia. However, the country faces major challenges in meeting the housing needs of its citizens, both in terms of the quantity of housing units and the quality of housing. Ensuring access to affordable housing in Indonesia has been a long-term policy of the Government of Indonesia.

“In 2017 the World Bank has provided $450 million for the National Affordable Housing Program (NAHP) to support the affordable housing sector in Indonesia in collaboration with the Ministry of PUPR. NAHP aims to increase access to affordable housing for Low-Income Communities (MBR) while supporting the government in meeting the Sustainable Development Goals (SDG) 11.1 target of making cities and settlements inclusive, safe, resilient, and sustainable and supporting the achievement of the One Million Houses Program (PSR) target,” he said.

The success of the NAHP, he added, demonstrates the close partnership between the Government of Indonesia and the World Bank in addressing entrenched challenges and constraints in Indonesia’s housing market. NAHP helps support the Government’s longstanding housing program in improving access to housing finance for first-time homebuyers with its market-friendly KPR BP2BT subsidy product and also addresses the needs of previously underserved informal workers.

The program also caters to Bottom-of-Pyramid (BOP) segment households by providing technical assistance and grants to improve sub-standard houses through the BSPS component. Multi-faceted efforts that bring structural change to Indonesia’s complex housing value chain require progressive and innovative approaches catalyzed by transformative tools and technologies and accepted by the wider community.

“I am proud that NAHP has contributed to the Government of Indonesia’s vision to build an Indonesia Green and Affordable Housing Platform to realize low-carbon housing by 2050, and aims to significantly increase private sector investment while reducing the Government of Indonesia’s fiscal burden. We hope that NAHP can also improve efforts to provide safe, decent and affordable housing for all people in Indonesia,” he said.(InfoPublik.id)

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