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Indonesian Housing Minister Suharso Monoarfa on Wednesday outlined a new Rp 14 trillion ($1.5 billion) program to provide subsidized housing loans to low-income earners.

People with monthly income of Rp 4.5 million or less will be offered subsidized loans to purchase apartments costing as much Rp 144 million, referred to as rusunami . Those earning Rp 1.5 million or less will be eligible for loans for small homes known as rumah sederhana sehat , or s imple healthy home , which cost as much as Rp 55 million.

Suharso said the program, referred to as a liquidity facility, will begin in the first half of this year. The government will provide Rp 5 trillion of direct funding, with the remainder pooled from state institutions, including social security provider PT Jamsostek, civil service insurance firm PT Asabri, pension fund PT Taspen and health-insurance firm PT Askes.

Many Indonesian families still did not own a home, Suharso said. “It is hoped the liquidity-facility scheme will be able to decrease this by providing lower-cost housing for Indonesians,” he said.

The program will run alongside the government-assisted home-ownership credit program, known as KPR. Suharso said the new scheme would offer lower interest rates and longer-running subsidies than the KPR. Banks will disburse and manage the credit, as in the KPR program.

“With the new scheme, mortgagees will pay a fixed monthly rate of Rp 320,000 until they have paid off the mortgage, which will take 20 years for a basic house,” Suharso said.

People buying a rusunami apartment through the program will pay a fixed Rp 1,055,000 per month until the purchase is completed after 20 years.

Under the KPR, the government only subsidized mortgage payments for the first four years. Home buyers had to pay Rp 1.2 million per month for the first four years, and Rp 1.5 million thereafter until the loan is paid off, usually over a 20-year term.

A special vehicle will be formed to coordinate the funding and assess who qualifies to receive the subsidized loans.

Aviliani, an economist at the Institute for Development of Economics and Finance, urged the Housing Ministry to ensure that the new program was not abused, as the KPR has been.

“In the past, so many of the rich have been known to buy houses meant for low-income people, so the Housing Ministry has to make sure that this does not happen again,” she said.

Aviliani also said Suharso should work to provide more rental homes.

“I know he is trying to see that more Indonesians own houses, but he shouldn’t force it if many people are, in fact, unable to actually purchase a house,” she said.