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View all search resultsBTN to cash in on foreign apartment ownership rule
State-owned Bank Tabungan Negara (BTN) expects that the governmentâs plan to allow foreigners to own luxury apartments will help boost mortgages in the upscale segment, an executive has said
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tate-owned Bank Tabungan Negara (BTN) expects that the government's plan to allow foreigners to own luxury apartments will help boost mortgages in the upscale segment, an executive has said.
The planned policy, which is part of the government's policy package to revive the country's sluggish economy, will open foreign ownership for apartments worth at least Rp 10 billion (US$697,329).
BTN mortgage and consumer lending director Mansyur Nasution said the bank, whose core business is mortgages, welcomed the government's plan as it would increase financing for the higher segment.
'The planned policy can help us keep up our loan growth across all segments, from low to high-end as we want to cater to all demand,' Mansyur said on Thursday.
Despite being known for providing mortgages for low- to mid-income borrowers, Mansyur said BTN was also eager to grow its high-end segment as part of its long-term efforts to increase its market share to 30 percent by 2019.
As of last year, BTN led the market with a 27.53 percent share of the country's total mortgage market.
Mansyur said that as of now, 80 percent of BTN's house and apartment loans were to middle- to lower-income customers, while the remaining 20 percent were to premium borrowers in an effort to diversify its business.
Of the premium mortgages, Mansyur said financing for residences worth above Rp 10 billion accounted for less than 1 percent.
'We can expect to increase the portion of mortgages for residences worth above Rp 10 billion to over 3 percent, because we are approaching year's end. It may be bigger next year,' Mansyur said.
BTN booked loans worth Rp 126.12 trillion in the first half, with 85 percent of this going to the property sector, including mortgages and financing to developers of residential and commercial buildings.
Foreigners have been limited by the current regulation to purchase only strata title-type properties, which include 'right to use' buildings only ' excluding land ' through a building ownership certificate (SKBG) for a 25-year period with the opportunity to extend.
Finance Minister Bambang Brodjonegoro previously considered a threshold of Rp 5 billion, but the planned revision of government regulation No. 41/1996 on housing ownership by foreigners will stipulate Rp 10 billion instead.
Regarding construction loans for luxury residences, Mansyur said BTN prioritized its lending for projects set up by developers in Indonesia's top 20 and 50 lists, which were capable of finding premium locations that offered high investment gains from the properties.
'People who want to invest funds of over Rp 5 billion are usually quite convinced that they will make good gains on their investments. This is the segment that we also want to pursue,' Mansyur said.
Despite the current weak economic growth, Mansyur said BTN was still convinced that it could achieve its loan growth target of between 15 percent and 17 percent this year as its lending as of August had grown by at least 18 percent.
