ADB pro­vides $300 mil­lion to fi­nance hous­ing in In­done­sia

The Pak Banker - - Company& -

JAKARTA: The Asian Devel­op­ment Bank (ADB)'s board of di­rec­tors has ap­proved a US$300 mil­lion ru­pi­ah­de­nom­i­nated pro­gram that will pro­vide fixed-rate loans to pri­vate com­mer­cial banks for mort­gage on-lend­ing.

"There is a large, un­met de­mand for hous­ing fi­nance in In­done­sia, along with limited ac­cess to long-term ru­piah funds, par­tic­u­larly at fixed rates," Philip Erquiaga, the di­rec­tor gen­eral of ADB's Pri­vate Sec­tor Op­er­a­tions Depart­ment (PSOD) said in a state­ment.

"The Hous­ing Fi­nance Pro­gram will help to im­prove ac­cess to fi­nance for a broader seg­ment of con­sumers, in­clud­ing first-time mod­er­ate in­come home buy­ers. Ad­di­tion­ally, de­vel­op­ing the hous­ing fi­nance mar­ket in In­done­sia is im­por­tant, as the fi­nanc­ing of hous­ing plays a ma­jor role in the sta­bil­ity of a coun­try's en­tire fi­nan­cial sys­tem."

In­done­sia cur­rently has an es­ti­mated short­age of about 8 mil­lion homes. With rapid ur­ban­iza­tion, par­tic­u­larly in the cap­i­tal Jakarta, an ad­di­tional 800,000 homes an­nu­ally for the next 20 years are needed. At the same time, mort­gage lend­ing by com­mer­cial banks is limited and largely con­fined to higher in­come groups, with banks find­ing it dif­fi­cult to source long-term funds to sup­port mort­gage fi­nance.

A key el­e­ment of the pro­gram will be tech­ni­cal as­sis­tance to help par­tic­i­pat­ing banks strengthen mort­gage un­der­writ­ing skills. This tech­ni­cal as­sis­tance is be­ing funded from an on­go­ing Hous­ing Fi­nance Ca­pac­ity Devel­op­ment tech­ni­cal as­sis­tance project cov­er­ing South and South­east Asia. "Tech­ni­cal as­sis­tance train­ing tai­lored to the needs of each bank will help boost their skills and this is crit­i­cal for the pru­dent growth of the mort­gage mar­ket in In­done­sia," said Chris­tine Engstrom, the se­nior in­vest­ment spe­cial­ist in ADB's Pri­vate Sec­tor Op­er­a­tions Depart­ment. -PB News

MUS­CAT: US Sec­re­tary of De­fense Robert Gates greets U.S. troops while ar­riv­ing and while be­ing es­corted by Sayyid Badr bin Saud bin Harib al-Bu­saidi (R), De­fense Min­is­ter in Oman, at Mus­cat In­ter­na­tional Air­port De­cem­ber 5, 2010. -Ap

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