TEMPO.CO, Jakarta - Minister of Public Works and Public Housing (PUPR), Maruarar Sirait, acknowledged ongoing challenges in securing investment to support the government’s ambitious goal of building 3 million houses annually.
According to Awalil Rizky, an economist at the Bright Institute, this difficulty is not only due to global economic uncertainty, but also the weakening domestic economy.
“The key factor influencing investors’ decisions is public purchasing power,” Awalil told Tempo on Monday, May 5, 2025.
Indonesia’s housing backlog, defined as the gap between existing homes and actual housing needs, remains severe. Deputy Minister of PUPR, Fahri Hamzah, recently stated that the backlog has reached 15 million units, a notable increase from earlier public estimates of 9.9 to 12 million.
However, Awalil emphasized that this backlog figure holds little weight for investors. “What matters more is demand, which is tied to purchasing power—not just the need for homes,” he explained. He noted that investors assess market demand, not merely the number of homes needed.
Awalil added that current purchasing power is on the decline, in part due to ongoing layoffs in various industrial sectors.
Additionally, the national economy is showing signs of slowing down. Data from the Central Statistics Agency (BPS) indicates that Indonesia’s economic growth in the first quarter of 2025 was 4.87% year-on-year, down from 5.02% in the final quarter of 2024.
“Even if investors consider entering the market, they’ll calculate whether government policies can support demand, for example through adequate subsidies to make prices more affordable,” Awalil said.
Beyond economic factors, foreign investors are also cautious about policy consistency. “They also consider exchange rate projections, since they’ll be investing foreign currency but selling houses in rupiah,” he added.
Maruarar previously addressed the investment issue during a House Commission V meeting on April 30, 2025. At the time, he admitted that although his ministry had approached several investors, none had committed.
“We’ve tried, but unfortunately, it hasn’t met expectations—nothing concrete yet,” said the Gerindra Party politician, also known as Ara.
He named Ooredoo from Qatar and Standard Chartered from Singapore as examples of potential investors, though no firm agreements have been reached. Still, Maruarar stressed that the success of the 3 million houses program hinges on investor involvement.
To support this effort, the Minister has set internal targets: both the Director General of Urban Housing and the Director General of Rural Housing are expected to attract Rp 5 trillion each in investments.
Additionally, the ministry has tapped into private sector contributions through Corporate Social Responsibility (CSR) programs. According to Maruarar, total CSR support for housing development and renovation has now reached Rp500 billion.
Nandito Putra and Annisa Febiola contributed to the writing of this article.
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