Indonesia’s Central Bank to Boost Liquidity for Property Sector

JAKARTA (Reuters) – Indonesia’s central bank plans to increase the amount of liquidity freed up to 80 trillion rupiah ($4.9 billion) by reducing reserve requirements for banks that lend to the property sector, aiming to support the government’s housing goals.

Bank Indonesia (BI) has implemented similar liquidity measures since 2023 to stimulate credit growth by lowering the reserves that banks must maintain when lending to key economic growth sectors.

Currently valued at 23.2 trillion rupiah, the liquidity measure for property loans will gradually rise to 80 trillion, according to Governor Perry Warjiyo, who announced the decision late on Tuesday.

“This is a form of Bank Indonesia’s commitment to fully support the president’s programs,” Warjiyo stated at a press conference after discussions with government and parliament representatives. He emphasized that the housing sector is crucial for driving high economic growth and job creation, with additional support measures to be revealed later.

President Prabowo Subianto aims to construct 3 million affordable houses annually. Recently, the government established a partnership with a Qatari investor for the construction of a million homes.

Warjiyo’s remarks followed a meeting with Housing Minister Maruarar Sirait, State-Owned Enterprises Minister Erick Thohir, lawmaker Mukhamad Misbakhun, and Pandu Sjahrir, representing the new state investment agency Danantara.

As of early January, BI data indicated that various reductions in reserve requirements across multiple sectors, including agriculture, trade, manufacturing, tourism, and construction, had released 295 trillion rupiah of liquidity.

($1 = 16,370 rupiah)