The evolution of housing finance in Indonesia: Innovative responses to opportunities

Habitat International

Volumn 20, Issue 4 SPEC. ISS., 1996, Pages 583-594

  Lee, Michael ^a  

^a NONE   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

DEVELOPING COUNTRY; FINANCIAL DEREGULATION; FINANCIAL SYSTEM; HOUSING FINANCE;

INDONESIA;

EID: 0030427278     PISSN: 01973975     EISSN: None     Source Type: Journal    
DOI: 10.1016/0197-3975(96)00030-6     Document Type: Article

References (28)

1. The World Bank found greater reductions in the incidence of poverty in Indonesia than in any other country for which it has statistics, falling from 60% of the population in absolute poverty in 1970, to around 15% in 1990: World Bank, Indonesia: Sustaining Development (World Bank, Washington, DC May 1993).
2. J. Silas, "Marginal Settlements in Surabaya, Indonesia: Problem or Potential?", Environment and Urbanization 1, 2 (1989), pp. 60-70.
3. A. Schwartz, A Nation in Waiting: Indonesia in the 1990s. (Allen & Unwin, St Leonards, NSW, 1994).
4. M. Lee, The Cost of the Second Best: The Price of Land Regulation in Asia. Working Paper No. 62 (Development Planning Unit, University College, London, April 1994).
5. Silas (1989) notes that other informal settlement types include villages on urban fringes, and "pure squatter" areas, illegally occupied and often in dangerous locations.
6. J. Struyk, M.L. Hoffman and H.M. Katsura, The Market for Shelter in Indonesian Cities (The Urban Institute Press, Washington, DC, 1990), p. 57.
7. World Bank, World Development Report, 1994 (Oxford University Press, New York, 1994).
8. The improvement schemes of Surabaya are an exception; new KIP schemes to be funded with World Bank assistance, too, are required to include public consultation and participation.
9. M.J. Hoffman and B.W. Ferguson, Modernizing Land Administration in Indonesia. (The Urban Institute for the Badan Pertahanan Nasional (National Land Agency), and the U.S. Agency for International Development, Jakarta, 1991).
10. Diamond notes that "the extra 10 million rupiahs [$4,500] to 'go formal' is negligible for a 200 million rupiah [$90,000] house but overwhelming for a 10 million rupiah [$4,500] house". Lee reports on "the phenomenon of heavy costs resulting from labyrinthine procedures required for development approvals" finding that the total regulatory cost of formal development in Jakarta is about one third of total project cost. This comprises interest carrying costs over the time it takes to get development approvals; the cost of restricting land supply; and formal and informal fees. D. Diamond, Indonesia: Housing Market Assessment. (Research Triangle Institute for USAID. Jakarta, October 1993). Lee (1994), see note 4.
11. Struyk et al. (1990), see note 6.
12. M. Hoffman and T. Marbun, Unregistered Land Rights: Their Role in Improving Housing Quality (Urban Institute and Hasfarm Dian Konsultan, Jakarta, 1990); and J. Struyk and M.A. Turner, Finance and Housing Quality in Two Developing Countries: Korea and the Philippines (The Urban Institute Press and the University Press of America, Lanham, MD, 1986).
13. M. Hoffman and T. Marbun, Unregistered Land Rights: Their Role in Improving Housing Quality (Urban Institute and Hasfarm Dian Konsultan, Jakarta, 1990); and J. Struyk and M.A. Turner, Finance and Housing Quality in Two Developing Countries: Korea and the Philippines (The Urban Institute Press and the University Press of America, Lanham, MD, 1986).
14. J.W. Christian, "Integrating Housing Finance into the National Finance Systems of Developing Countries", Housing Finance International 4 (1991), pp. 3-18.
15. USAID, Regularizing the Informal Land Development Process (Office of Housing and Urban Programs, U.S. Agency for International Development, Washington DC, 1991).
16. USAID (1991), see note 14.
17. Struyk (1990), see note 6.
18. However, an evaluation did find that KIP gives residents of upgraded areas an additional sense of security, which in turn induces them to invest in home improvements: J.L. Taylor, "Evaluation of the Jakarta Kampung Improvement", in R.J. Skinner et al. (eds), Shelter Upgrading for the Urban Poor: Evaluation of Third World Experience (Island Publishing House, with United Nations Centre for Human Settlements (Habitat) and the Institute for Housing Studies, Manila, 1987).
19. The Indonesian currency, the rupiah (Rp.), has been converted at the mid-1994 exchange rate of Rp. 2,200 to US$1.00.
20. Diamond (1993), see note 10.
21. Struyk (1990), see note 6, p. 169.
22. Diamond (1993), see note 5.
23. The most generous assumptions of a loan of Rp.30 million, an interest rate of 17% and a term of 15 years, imply a minimum monthly income of Rp.1.3 million ($600), if 33% of income is devoted to repayments. This represents around the 90th percentile in the urban income distribution.
24. The studies have been supported by the United States Agency for International Development. See for instance M.J. Lea, "The Applicability of Secondary Mortgage Markets to Developing Countries", Housing Finance International VIII, 3, (1994), pp.3-10.
25. Lee (1992), see note 4.
26. S.K. Mayo, "Housing Finance Development: Experiences in Malaysia and Thailand and Implications for Indonesia". A paper prepared for the Office of the State Minister of Housing, Indonesia. (The World Bank, Washington, DC, 1990). M. Lee, The Role of Private Enterprise in Housing Finance: Lessons from South Asia. (United States Agency for International Development, Regional Housing and Urban Development Office for Asia, Bangkok, 1992).
27. S.K. Mayo, "Housing Finance Development: Experiences in Malaysia and Thailand and Implications for Indonesia". A paper prepared for the Office of the State Minister of Housing, Indonesia. (The World Bank, Washington, DC, 1990). M. Lee, The Role of Private Enterprise in Housing Finance: Lessons from South Asia. (United States Agency for International Development, Regional Housing and Urban Development Office for Asia, Bangkok, 1992).
28. C. Pugh, "The Development of Housing Finance and the Global Strategy for Shelter", Cities (December 1994).