Jakarta – BPJS Ketenagakerjaan, Indonesia's social security agency for workers, plans to invest less than a third of pensions under its management in the housing finance sector, in a move it hopes will help the country close the home-ownership gap.
The agency has so far managed Rp 214 trillion ($16 billion) in pension funds pooled from Indonesian workers, BPJS president director Agus Susanto said on Monday (03/04).
"We will direct about 30 percent, or Rp 64.2 trillion, of the pension funds into home financing. This will become one of our key investment tools," Agus said.
A 2015 government regulation on social security previously set a 30 percent threshold for pension fund investment in home financing.
Agus said the BPJS Ketenagakerjaan house financing program will allow its members to apply for cheaper loans compared to those offered by commercial banks.
Indonesian lenders had an outstanding mortgage balance of Rp 354 trillion by the end of January, according to data from the Financial Services Authority (OJK). The country's banks currently offer a 10.7 percent interest rate for home mortgages, down from 11.3 percent a year ago.
High mortgage rates deter many Indonesian families from purchasing their own homes, with the majority opting to rent instead. The Ministry of Public Works and Housing estimates that more than 12 million Indonesian families are currently unable to purchase a home.
Agus did not elaborate on how the BPJS Ketenagakerjaan home financing program will work. In December last year, the agency struck a deal with Indonesia's largest mortgage lender, Bank Tabungan Negara, and state housing company Perumnas to allow the BPJS to act as a broker for families looking to attain cheaper mortgage rates.
According to its data from the end of February, BPJS Ketenagakerjaan manages Rp 262 trillion in assets, consisting of pension and insurance funds belonging to workers registered with the agency.
The agency has invested 62 percent of its total funds in government and corporate bonds, and 18 percent in shares on the Indonesian Stock Exchange (IDX). Time deposits account for 12 percent, while mutual funds represent 7 percent.
BPJS Ketenagakerjaan invested 1 percent of its funds directly in various enterprises, including construction and infrastructure projects currently underway across the archipelago.
Source: http://jakartaglobe.id/business/social-security-agency-eyes-greater-role-home-financing/