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Indonesia State Pension to Lift Housing Investment Fivefold

From Bloomberg
March 19, 2015

Indonesia’s state pension fund plans to increase its investment in affordable housing by fivefold to fulfill demand from low-income workers.

BPJS Ketenagakerjaan will invest 10 percent of its 193 trillion rupiah ($14.7 billion) of assets under management to build homes this year, compared with 2 percent in 2014, President Director Elvyn Masassya said in an interview on Thursday. An estimated 34 percent increase in the pension’s membership this year to 22.3 million people may expand the fund’s assets to 233 trillion rupiah by the end of 2015 and help finance the housing investment, Masassya said.

The move is in line with President Joko Widodo’s pledge to address a “dangerous” level of inequality that threatens the stability of the world’s fourth most-populous nation and to boost growth to 7 percent. The country is grappling with an economy expanding at the slowest pace in five years and a currency at near the weakest level since 1998, which prompted international investors to sell more than $1 billion of local stocks and bonds in March.

“This is a long-term investment because demand for housing is still higher than supply,” Masassya said at his office in Jakarta. “So the upside potential over the next 10 to 15 years will be enormous.”

For detailed story, click here.

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