Jakarta. The Public Works and Public Housing Ministry (PUPR) said that the mandatory Housing Savings Fund (Tapera) program is designed to tackle the backlog of 36 million houses in Indonesia.

"This figure encompasses 9.9 million new residences for individuals lacking permanent housing and 26 million houses failing to meet minimum habitation standards," said Herry Trisaputra Zuna, Director General of Infrastructure Financing at the Ministry, on Sunday.

The implementation of the law has sparked opposition from both employees and employers due to its requirement for a salary deduction. President Joko "Jokowi" Widodo recently signed Government Regulation (PP) Number 21 of 2024 concerning the national housing program, mandating a 3 percent deduction from the salaries of both public and private sector employees as well as freelancers. Employers are obligated to cover 0.5 percent, while employees bear 2.5 percent.

Tapera participants will benefit from long-term housing loans, including mortgage loans (KPR), house construction loans (KBR), and house renovation loans (KRR), with repayment terms of up to 30 years and fixed interest rates below market rates.

"Participants in the home savings program are also eligible for a Rp 4 million subsidy for down payments on home purchases," added Herry.

The fund will be administered by a dedicated entity named BP Tapera, tasked with addressing the national housing backlog and providing accessible home loans.

While the ministry constructed 229,000 new residences for low-income families last year using state funds, this figure is projected to decrease to 167,000 this year due to financial constraints.

Indonesia requires up to 800,000 new residences annually, yet the current capacity stands at only 500,000, according to estimates.

“Once the public home savings program collects a substantial amount of funds, it will be able to tackle the huge backlog in public housing with support from the state budget,” Herry said.

President Joko "Jokowi" Widodo acknowledged public concerns regarding the 3 percent salary deduction for Tapera contributions.

"It's normal for people to have concerns about a new policy, calculating whether they can afford it or if it’s burdensome," President Jokowi said in Jakarta, last Monday.

The President likened the Tapera policy to the initial public reaction towards the implementation of the national health insurance scheme BPJS Kesehatan, which generated intense discussion upon its introduction in 2011 and implementation in 2014.

According to Indah Anggoro Putri, Director General of Industrial Relations and Social Security Development at the Ministry of Manpower, the salary cut policy is still under intensive review until 2027 and emphasized that it will not affect workers earning below the minimum wage.