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Indonesia’s public housing savings rule sparks criticism as it seeks to cover more workers, including foreigners

Private-sector and self-employed workers in Indonesia, including foreigners, will now have to contribute 3 per cent of their salaries to the country’s Public Housing Savings Fund. 

Indonesia’s public housing savings rule sparks criticism as it seeks to cover more workers, including foreigners
Subsidised public housing in Indonesia. (Photo: iStock/ Habib Farindra)
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JAKARTA: Private-sector and self-employed workers in Indonesia, including foreigners, will now have to contribute 3 per cent of their salaries to the country’s Public Housing Savings Fund in a sudden move by the government that has sparked widespread criticism.

They join civil servants, who have been contributing to the fund – also known as BP Tapera – since 2016.

President Joko Widodo signed the latest Government Regulation on the Implementation of Tapera into law on May 20, reverting to an earlier version of the policy that encompassed both public and private employees.

The policy requires workers aged 20 years and older, or those who are married, and earning at least the minimum wage to participate in Tapera. They include civil servants, military and police personnel, state-owned enterprise employees, private sector employees, and foreign nationals working in Indonesia for a minimum of six months.

Indonesia’s minimum wage varies across regions; in Jakarta, it is IDR5,067,381 (US$315).

Under the policy, employees will contribute 2.5 per cent of their salaries while their employers foot the remaining 0.5 per cent. Self-employed workers or freelancers will contribute the entire 3 per cent. 

Contributions made by the foreign workers will be returned to them once they conclude their employment and leave Indonesia, said Tapera’s deputy commissioner for fund mobilisation Eko Arianto.

#TAPERA TRENDS AS WORKERS VENT ON SOCIAL MEDIA

The new policy has drawn opposition from the Indonesian Employers’ Association and stoked widespread unhappiness.

Many Indonesians see it as another forced cut to their monthly salaries on top of taxes they already have to pay. The hashtag #Tapera trended on the platform X, formerly known as Twitter, in the wake of news reports this week.

Employees in Indonesia will contribute 2.5 per cent while their employers foot the remaining 0.5 per cent. (Photo: iStock)

Mr Muhammad Gilang Toni, a freelance translator, expressed frustration and confusion over the regulation and was unhappy that lower-income freelance workers like him had to contribute. 

"As a freelancer, I am already burdened with contributions for social health insurance (BPJS), social security (BPJS TK), and my own savings for housing," the 33-year-old told CNA. 

Mr Muhammad Gilang, who lives in a rented house in Jakarta, wants the government to disclose more information about Tapera including its financing schemes and housing options.

Content marketing manager Anne Saraswati, 34, felt compulsory contributions to Tapera are unfair as she is already servicing a mortgage for her current home in South Tangerang, just outside of Jakarta.

The Indonesian Employers’ Association opposed Tapera’s inclusion of private-sector workers. The move is “burdensome” for both businesses and workers, it said in a statement on Tuesday (May 28).

While the association supports increasing access to housing for workers, it suggested drawing from the government’s social security and old-age security funds that workers already contribute to.

EMPLOYERS MUST REGISTER WORKERS BY 2027

Minister of Public Works and Public Housing Basuki Hadimuljono said Tapera is a savings programme and not a salary cut, news outlet Kompas reported on Tuesday (May 28). 

Previously, only civil servants like police officers contributed to Indonesia's Public Housing Savings Fund. (Photo: AFP/ Bay Ismoyo)

BP Tapera commissioner Heru Pudyo Nugroho said the changes are part of the government's effort to “enhance the effectiveness and accountability of Public Housing Savings management".

He said participants contribute to the fund over a specified period and receive their savings with interest at the end of their participation, reported news outlet Kumparan.

Workers may stop participating in BP Tapera when they retire or die, according to its website. Independent workers and freelancers may pull out at the age of 58. Workers may also stop contributing if they do not meet the participation criteria for five consecutive years.

BP Tapera helps improve lower-income groups’ access to housing through various financing schemes – loans with below-market interest rates for home ownership, home building and renovation, for example.

Those with monthly incomes below IDR8 million are eligible for Tapera help; in Papua province, the income threshold is IDR10 million. 

Through the House Financing Liquidity Facility, BP Tapera also funds the building of homes by the Ministry of Public Works and Housing. As of May 8, the facility has funded the development of nearly 73,000 housing units across over 8,000 housing estates in the archipelago, according to BP Tapera’s website.

Prices of the homes vary based on location and developer. In Java (except Jakarta, Bogor, Depok, Tangerang and Bekasi) and Sumatra (except Riau Islands, Bangka Belitung and Mentawai Islands), for instance, costs start from IDR166 million, according to the Decree of the Minister of Public Works and Housing issued in 2023.

This year, about IDR 9.083 trillion (US$562 million) will be used to subsidise housing for low-income citizens, stated the website.

Mr Eko said BP Tapera aims to register 13 million workers as participants by this year.

Under the new regulation, all employers must register their workers with BP Tapera by 2027, seven years after the regulation was enacted in 2020. 

As of December 18, 2023, total assets managed by the Tapera conventional fund, derived from 3.07 million participants, was IDR7.23 trillion.

BP Tapera's fund management is supervised by the Tapera Committee, the Financial Services Authority, and the Supreme Audit Agency.

Source: CNA/ps(ih/cc)
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