Jakarta, February 19, 2025 - One of the main takeaway from the business roundtable titled ‘A Roof for All: Social Affordable Housing, a Key Driver of Indonesia’s Economic & Social Development’ taken place in the second day of the Indonesia Economic Summit 2025 is that the Indonesian Government’s plan to deliver 3 million affordable houses every year will help to achieve President Prabowo Subianto’s objective of 8% economic growth in 2029.

Nicholas Morris, Economist and Adjunct Professor at La Trobe University, Melbourne said that there is various academic evidence that housing investment has a very significant multiplier effect to the overall economy. In the US, an $1 investment in residential housing will increase the GDP by $3.08, while in Australia every $1 spent on residential housing generates $2.9 in economic output, according to Nicholas Morris.

“Investment in housing is a very effective way of economic growth to a high level. Developing housing is a very good way of having a very big multiplier,” said Nicholas Morris. Investment in housing can lead to strong economic growth, helps poverty eradication and leads economic equality and upward mobility, according to Nicholas Morris.

Indonesia is experiencing an acute housing backlog as new supply cannot keep up with the rising demand coming from the aspiring middle class. The Real Estate Indonesia, an industry group, estimated that around 12.7 million Indonesian households did not own a house due to the backlog.

The Indonesian Government aimed to build 3 million houses per year targeting the low-income population, and offered a low cost financing scheme through the Public Housing Loan Program (FLPP), which already reached around 1.5 million beneficiaries. In 2025, the Government had set aside Rp 28,2 trillion for FLPP with a goal to provide a cheap financing scheme for over 220,000 units of houses.

Sri Haryati, Director General for Urban Housing at the Ministry for Public Housing and Settlements, explained that the Indonesian Government had so far delivered 104,000 affordable houses under the three million housing programme. The Indonesian Government is currently deliberating a Public Private Partnership scheme in which affordable houses are being built over government-owned land through investment from the private sector.

The Indonesia Government also provides various schemes to stimulate the housing sector, including the subsidy on value-added tax for house purchases and shortening the process for construction permits, according to Sri Haryati.

Chin Beng Yap, Former Deputy CEO (Estate and Corporate) of Housing and Development Board in Singapore (2009 - 2017), said the Singapore Government had been successful in providing affordable housing to its population mainly due to two reasons: A very strong commitment from the government, and a single agency that drives the entire initiative and coordinate with different functions under the government.

About the Indonesia Economic Summit (IES): The Indonesia Economic Summit (IES) is an annual initiative of the Indonesia Business Council (IBC). Initiated as a high-level forum for collaboration and innovation, IES seeks to promote competitiveness, inclusive growth, and sustainable prosperity for Indonesia. This forum reflects IBC’s commitment to advancing Indonesia’s role in the global economic arena.

About the Indonesian Business Council (IBC): The Indonesian Business Council (IBC) is an association of CEOs and business/industry leaders of leading companies in Indonesia, established in February 2023. IBC seeks to promote and strengthen Indonesia’s competitiveness, encourage collaboration, and enhance the contribution of the Indonesian private sector to economic growth and prosperity, through advocacy. For media inquiries, please contact:
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