Wearing blue batik, Minister of Public Housing and Regional Settlements Maruarar Sirait talks with President Prabowo Subianto at the Presidential Palace in Jakarta, Wednesday, July 30, 2025. That day, he reported to the President regarding the latest developments in the subsidized housing development program for the community. Also a number of strategic programs in the housing sector, including the plan to launch massive subsidized houses and a new breakthrough in the housing People's Business Credit (KUR).

"First of all, I reported that we are making an event in September, namely the launching of subsidized houses. The plan is massive in September," said Maruarar after the meeting.

The subsidized housing program will be launched simultaneously in various cities with an initial target of at least 25,000 units. The increase in the subsidy quota from 200,000 to 350,000 units this year is considered a significant step in addressing people's housing needs. "Because this is the first time the subsidized housing quota has increased. Usually around 200,000, this year there are 350,000," he said.

Maruarar said support from various parties was the key to the success of this program. Subsidized houses are prioritized for farmers, fishermen, laborers, teachers, drivers, and media workers.

"And the first time it is divided, we have allocations for farmers 20,000 (units), for fishermen 20,000 (units), for laborers 20,000 (units). Then also for media friends 3,000 (units), for drivers while this has been allocated 8,000 (units), then for teachers also 20,000 (units), and various other communities," he explained.

In addition to the subsidy program, the government is also preparing a housing KUR (Kredit Usaha Rakyat) scheme for the first time in Indonesia. The program is aimed at supporting developers and contractors, as well as boosting the tourism sector through homestay construction.

The government is also preparing a housing KUR (Kredit Usaha Rakyat) scheme for the first time in Indonesia.

"This is the first time in Indonesia that there is a people's business credit for housing. This is the first time for President Prabowo, support from Danantara, from BUMN, coordinated by the Coordinating Minister for the Economy, Mr. Airlangga, and Ms. Sri Mulyani. So in terms of supply, there will be support for developers, for contractors, it can be a significant amount," explained Maruarar.

Strategic project 3 million houses

In order to provide livable houses to the community, especially those with low income, the government is targeting the construction of 3 million housing units through the 3 Million Houses Program, a major initiative prioritized by President Prabowo Subianto. This program is also a campaign promise of President Prabowo, which is targeted to be achieved within one government period or five years.

The program aims to build two million houses in rural as well as coastal areas and one million houses in urban areas. Also to overcome the housing backlog and provide decent housing. In addition, it can indirectly reduce the stunting rate, reduce poverty, and alleviate housing and settlement problems in general and stimulate the national economy.

The Palace, through the Presidential Task Force, once said the state budget needed to realize this program reached Rp53.6 trillion. However, until now, the Ministry of Housing and Settlement Areas (PKP) has only been given a budget of Rp5.27 trillion. In fact, this budget amount only applies to 2025, not to 2026, 2027, and so on, which will certainly require more money for development.

Similarly, Minister of PKP Maruarar Sirait had revealed that the ministry's challenge in running the 3 Million Houses Program is financing. According to him, the state can only build and renovate 269,779 residential units.

This figure is based on the value of the state revenue and expenditure budget (APBN) which has been made into a budget implementation list (DIPA). "Our ability is not up to 270,000 (houses). From the APBN and from FLPP," said Maruarar in a meeting with Commission V of the House of Representatives at the Parliament Complex, Senayan, Central Jakarta, May 19, 2025.

Currently, the budget ceiling of the Ministry of PKP after efficiency is IDR 3.446 trillion. In the presentation of the 3 Million Houses Program road map, Maruarar detailed, the construction of 2,682 units of flats, construction of 476 special houses, revitalization of 6,687 units of flats, Self-Help Housing Stumulus Assistance or BSPS 38,504 units, handling of slums 1,430 units, and Housing Financing Liquidity Facility (FLPP) 220,000 units.

Thus, Maruarar said the homework that the Ministry of PKP needs to complete is the target of 3 million houses minus 269,799 houses. For this reason, he is working with various parties, including the Ministry of Finance and private companies to obtain financing support. One of the results is that the FLPP program will have an additional quota from 220,000 to 350,000 units.

Chasing targets with incentives

In order to achieve the construction of up to 3 million housing units during the year, there are several incentives offered by the government. First, the government has extended the incentive in the form of 100% Government Borne VAT (PPN DTP) until the end of 2025.

This incentive applies to the purchase of landed houses and flats with a maximum price of two billion rupiah. This means that people who buy houses in this category do not need to pay Value Added Tax.

For houses with prices between two billion and five billion rupiah, VAT is only charged on the difference in prices above two billion rupiah. This policy is expected to boost people's purchasing power and stimulate the national property sector.

Finance Minister Sri Mulyani Indrawati has approved the extension of the 100% Government Borne Value Added Tax (PPN DTP) for house purchases until December 2025 and is preparing a revision of the Minister of Finance Regulation (PMK).

"We have approved the 100 percent housing VAT DTP incentive. It is currently in the process of amending the PMK to extend it until December," Sri Mulyani said at a press conference of the Financial System Stability Committee (KSSK), in Jakarta, Monday, July 28, 2025.

The incentive rules were previously contained in the Minister of Finance Regulation (PMK) Number 13 of 2025, where the amount of VAT DTP incentives was determined depending on the time of delivery of residential units.

For the delivery of units on January 1-30 June 2025, the government covers 100% of VAT for a tax base (DPP) of IDR2 billion. Meanwhile, for the delivery of units on July 1-December 31, 2025, the applicable VAT DTP incentive is 50% of the Rp2 billion DPP.

Now, the government has decided to extend the 100 percent incentive until December 2025 to encourage people's purchasing power, especially for home purchases. The policy also aims to maintain the growth rate of the property sector, which has a multiplier effect on the national economy.

The decision was made at a coordination meeting (rakor) on economic growth with relevant technical ministries at the Coordinating Ministry for Economic Affairs Office, Jakarta, Friday, July 25, 2025. "This is all expected to give a signal that we are using all the instruments we have in the fiscal to boost our economy," said Sri Mulyani.

In addition to the subsidized base fee, another incentive intended to increase the quota of subsidized houses is through the FLPP scheme. This year, the quota was increased from 220,000 units to 350,000 units, with funding support of IDR35.2 trillion from the State Budget. This is a concrete step to expand the reach of the subsidized housing program for low-income people.

The Public Housing Savings Management Agency (BP Tapera) reported that the realization of the distribution of subsidized houses through the FLPP scheme had reached IDR 15.73 trillion until July 2025. Commissioner of BP Tapera, Heru Pudyo Nugroho, said that the realization of FLPP distribution by BP Tapera reached Rp. 15.73 trillion for 126,032 housing units until July 2025. Where, West Java occupies the first position with the largest distribution.

Apart from BP Tapera, there is also cooperation between the Association of Settlement and Housing Developers (Himperra) and BPJS employment, by launching a zero percent down payment program for FLPP subsidized houses. In this scheme, the down payment is borne by the developer, so consumers do not need to pay a down payment. This is a solution for people who have had difficulty meeting the down payment requirements in purchasing a house.

The next incentive is that the government provides additional incentives in the form of exemption from the Land and Building Acquisition Duty (BPHTB) for subsidized houses, as well as accelerating the Building Approval (PBG) process throughout Indonesia.

Housing sector business loans

The latest, and will be rolled out in September, is the plan to roll out a special People's Business Credit (KUR) for the housing sector with a value of up to Rp130 trillion. Currently, the government is finalizing the regulations for the KUR program for small and medium-sized businesses engaged in the housing development sector.

The budget for this program will certainly not cut the KUR ceiling for UMKM that are already running, because this program will be backedup directly by Danantara's Investment Management Agency (BPI). Which is committed to pouring Rp130 trillion through KUR financing in the housing sector.

The KUR Housing distribution scheme will run in two channels. The first is from the housing supply side, connected with developers and the housing ecosystem to produce quality and livable homes, with a budget ceiling of Rp177 trillion.

The reverse side is the demand side with a budget of Rp13 trillion that will connect with people who want to develop businesses in the housing sector, such as building shop houses and homestays so as to encourage economic improvement and community welfare.

"The utilization of KUR Housing funds as part of housing finance subsidies must be carried out in an open and accountable manner. In addition, there are a number of indicators that must be achieved, namely right on target, low NPLs and encouraging UMKM to upgrade," said the Secretary General of the Ministry of PKP, Didyk Choirul, quoted from the website of the Ministry of Housing and Regional Settlements.  

The Ministry of PKP, he added, will also continue to open opportunities for partners to provide input by conducting focus group discussions (FGDs) with developer associations, so that KUR Housing receives support from all parties, and is implemented in accordance with good governance and applicable regulations.

For KUR Housing distributors, it still involves state-owned banks or Himbara which have been engaged as KUR distributors, such as Bank BRI and housing finance, namely BTN. "We are also discussing involving Nobu Bank, BCA, and Artha Graha as KUR Housing distributors and conducting FGDs to seek input and suggestions from development actors and housing developer associations," Didyk explained.

The vital role of banks in financing

A number of banks are also involved in accelerating the distribution of Home Ownership Loans (KPR) for subsidized houses with FLPP for low-income people.

One of the channeling banks, PT Bank Rakyat Indonesia (Persero) Tbk or BRI recorded a positive achievement in the distribution of subsidized mortgage loans. BRI was recorded to have reached 97,878 beneficiaries throughout Indonesia as of June 2025, up 18% from the previous year. The existing outstanding value also reached IDR 13.35 trillion, growing 19.51% on an annual basis (YoY).

This achievement was also offset by credit quality that was maintained, reflected in the non-performing loan (NPL) ratio which was at a low level of 1.1%.

FLPP mortgages are also the scheme with the largest contribution. Namely, reaching 97% of BRI's total subsidized KPR distribution until mid-2025.

Meanwhile, PT Bank Tabungan Negara (BTN) has also channeled financing for FLPP Prosperous KPR as many as 79,104 units until the end of May 2025. This year BTN targets to support the government in the People's House Program by distributing FLPP Prosperous KPR as many as 220,000 units.

PT Bank Negara Indonesia (BNI) noted that as of July 23, 2025, BNI had distributed 6,025 FLPP KPR units with a value of IDR 759.57 billion. This year, BNI received a quota to distribute FLPP mortgages of 25,000 units. 

This number has more than doubled compared to BNI's initial quota this year of only 10,750 units. This distribution is part of BNI's commitment to support the 3 Million Houses Program launched by the government to reduce the national housing backlog.

Supervision of housing distribution

Despite the involvement of various institutions, this program will still face many obstacles in the future. The amount of land or vacant land to build housing is getting smaller due to the centralized control of land by several parties. This results in higher land costs for the 3 Million Houses program. In fact, house construction should be made as affordable as possible for low-income people.

Within the scope of government, housing issues are managed by six ministries or agencies. This causes slow administrative processes and coordination between parties related to the management of the housing sector. If the bureaucracy is not simplified, the 3 Million Houses program will be difficult to implement.

Finally, the distribution of the three million houses that have been built needs to be monitored so that they reach the right targets, namely low-income people. If not accompanied by strict supervision, this program has the potential to be misused so that it targets people outside the target audience.

If not accompanied by strict supervision, this program has the potential to be misused so that it targets people outside the target audience.

If this happens, then the program cannot be said to be successful because the needs of low-income people for housing have not been met.

Property observer who also serves as Head of Research Coldwell Banker Richard Ellis (CBRE) Indonesia, Anton Sitorus, said, one of the things that needs to be the focus of the current government so that the 3 Million Houses Program runs well is to ensure that all incentive policy packages have moved and have an impact, not running in place.

If one of these incentive packages fails, then the 3 million housing unit program will be difficult to achieve and will become a mere discourse. Therefore, he thinks it is better for the government to focus on implementing existing incentives, not adding new incentive policies.  

"If I am asked about the 3 million housing unit program, there is no problem, the goal is very noble, I just want the incentive package to really work and there are no obstacles," he said when contacted by SUAR on August 1, 2025.

Anton said that he learned from last year's mistakes. At that time the government targeted the construction of 1 million housing units, but in reality the construction only reached 300,000 units or 30% of the target.

Similarly, the 3 million housing units program is a very good idea: helping people to get decent housing. However, in reality it may take some hard work to achieve. The key lies in implementing the incentive package as planned.

Anton highlighted the FLPP scheme, which is included in the incentive package, to be prioritized. This is because the FLPP scheme also has an impact on Indonesia's economic growth, because it encourages the growth of the construction sector. "The government focuses on developing the FLPP program, because there are indeed many people who need subsidized houses, especially those with low income," he said.

On the other hand, the benchmark for subsidized houses must be based on the World Health Organization (WHO) which is a minimum of 7.2 square meters per person and the Indonesian National Standard with an area of 9 square meters per person. The government must also pay attention to the comfort of residents because comfort will affect a person's happiness index in living their lives. S

Mukhlison, Harits Arrazie, and Ridho Syukra