Public Housing Savings Bill Moves Forward Despite Employers' Objections

The new law on public housing savings (Tapera), which forms the legal basis for the establishment of a housing savings program for low-income workers, has the support of Indonesian labor unions despite some flaws that need to be rectified immediately, union leaders said on Friday (26/02). (ID Photo/Emral Firdiansyah)

By : Tabita Diela | on 10:10 PM February 02, 2016
Category : Business, Economy, Featured

Jakarta. The Indonesian government is finalizing a bill that aims to make it easier for low-income employees to buy subsidized houses, but employers are up in arms because they fear they might be expected to make up for mandatory savings that will be deducted from workers' salaries.

The People's Housing Savings (Tapera) bill will be discussed at the House of Representatives this month regardless of employers' objections, lawmakers say.

In the current draft of the Tapera bill, the government makes it mandatory for companies to deduct 3 percent of their employees' salaries, of which 2.5 percent will be borne by employees and 0.5 percent paid by employers, for savings for the housing fund.

The savings will be managed by fund managers appointed by the government, and those who don't use the savings can claim the funds after they retire, with interest.

"[Hearings] on the Tapera bill are almost concluded, around 85 percent of draft has been discussed at the House of Representatives," Misbakhun, a lawmaker from Commission XI, told a business seminar in Jakarta on Tuesday (2/2).

He said the House was targeting to hold final deliberations on the bill this month.

The bill is part of attempts by  President Joko Widodo's administration to help people with low incomes secure low-cost funding to buy subsidized houses.

But as the mandatory scheme is set to apply to all formal workers, or everybody receiving a regular salary, companies see the scheme as a burden.

The bill has been discussed since 2014, but has received massive rejection from the business community ever since the draft went public.

"The bill adds a new burden for the businesses so we think it's unnecessary," Hariyadi Sukamdani, chairman of the Indonesian Employers Association (Apindo) chairman, said separately in Jakarta on Tuesday.

Hariyadi said there are already several mandatory savings schemes for workers, such as the Old-Age Saving (JHT) scheme that is paid to the Social Security Administration Body for Employment (BPJS Ketenagakerjaan). These funds can only be withdrawn when workers are retired.

Under the BPJS Ketenagakerjaan scheme employees are required to set aside 5.7 percent of their monthly salary for their retirement, of which 3.7 percent is paid by the company and 2 percent by workers.

"Both Apindo and Kadin [Indonesian Chamber of Commerce and Industry] officially refuse the [Tapera] bill because we see overlap with the BPJS," Kadin chairman Rosan P. Roeslani said.

The government has heard the complaints and is willing to hold more discussions, said the Public Works and Housing Ministry's director general for housing finance, Maurin Sitorus.

He stressed however that the burden on companies will be a mere 0.5 percent.

Maurin said the government and lawmakers agreed that details of the scheme would be covered by a government regulation.

He said once the House has deliberated the bill, the government is required to establish a legal entity to manage the fund, called BP Tapera, which according to the ministry's estimates will rake in some Rp 50 trillion to Rp 60 trillion ($3.6 billion to $4.4 billion) a year.

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