T

he government has scrapped its plan to inject additional capital into Bank Tabungan Negara (BTN), leaving the lender looking for other funding sources to help finance its business, including the '€œone million housing'€ program.

Gatot Trihargo, the State-Owned Enterprises Ministry'€™s deputy for business services, confirmed recently that BTN, which specializes in mortgages, had been taken off the list of capital injection (PMN) recipients for 2016.

'€œThe total PMN amount has been lowered. We had to remove some SOEs because of budget constraints and BTN is one of them,'€ he said.

The amount of PMN initially added up to around Rp 40 trillion (US$3 billion), but discussions over state capital disbursement are not yet final. They are still ongoing at the House of Representatives and are part of the larger 2016 state budget talks.

BTN was at first allocated between Rp 4.6 trillion and Rp 6 trillion in funds through a rights issue scheme because of its status as a publicly listed firm. The lender would have used the funds for home loans to realize the government'€™s '€œone million housing'€ program.

However, the allocation was slashed to Rp 1 trillion last month before subsequently being completely scrapped.

Gatot said that the decision to remove BTN from the PMN recipient list was partly determined by the fact that BTN also stood a chance to receive funding for the program from other sources, including from the state-owned Workers Social Security Agency (BPJS Ketenagakerjaan) and the Public Service Agency on Home Financing (BLU PPP).

BPJS Ketenagakerjaan will provide around Rp 48.6 trillion, while BLU PPP will provide about Rp 5.1 trillion. BTN treasury director Iman Nugroho Soeko brushed off concerns over its capital situation after the PMN was canceled.

He said that it was currently discussing other possibilities with the government to boost its capital without having to reduce the government'€™s 60.1 percent stake in the bank.

'€œThe state capital would have helped raise our tier-1 capital, but we can also look for other funding sources to boost our tier-2 capital. That will also help our lending disbursement capacity,'€ Iman said.

At the same time, Iman added that BTN was exploring other funding options offered by foreign institutions as well, including institutions that own an Indonesian representative office or branch.

'€œWe are still holding talks with the Asian Development Bank [ADB] about obtaining around $160 million worth of loans. Everything is on track,'€ he said.

When the talks are completed, BTN will begin to receive the funds starting next year.

BTN president director Maryono has again reiterated the bank'€™s optimism that the housing program will propel its business.

BTN was listed as the ninth-largest lender in terms of assets at the end of May, official banking statistics show. '€œBut we are upbeat that we will reach the seventh position by 2017 as demand for homes continues to grow,'€ he said. (prm)