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Back to topIn recent weeks, Indonesia’s National Housing Fund (Tabungan Perumahan Rakyat, or Tapera) has taken centre stage in national news and social media discussions. In this bulletin we endeavour to unpack the key points relating to Tapera, rather than the mechanics of Tapera contributions for employees and employers (which have been covered extensively in local news).
BACKGROUND
In March 2016, Indonesia’s parliament passed a law on Indonesia’s National Housing Fund (Law 4 of 2016)1. The law implements the national government’s constitutional duty to provide appropriate housing facilities for the Indonesian people.2 As the law states, these funds are needed to finance national housing programs not covered by Indonesia’s social security program.3
Indonesia’s National Housing Fund (known by the acronym Tapera) is intended to be separate and distinct from Indonesia’s social security program.
KEY FEATURES
Tapera fund status. The law expressly states that the legal and beneficial owners of the fund are the participants, not the Indonesian government. Each participant will receive an individual fund account.4 The law is also clear that:
- the Tapera fund includes a principal contribution made by the participants and any proceeds from the management thereof (hasil pemupukan dana). Emphasis is placed on the word “and” because it indicates a clear distinction between the principal contribution and any interest; and
- the Tapera fund will be returned to the participant when their participation is terminated (please see Participants below).
BP Tapera. The law establishes BP Tapera, which is mandated to manage and run Tapera. BP Tapera is a public organisation, not a business entity. It is funded by the government and supervised by Indonesia’s Financial Services Authority (OJK).5
Participants. Participation in the Tapera program is mandatory6 and there are currently no provisions expressly allowing a participant to voluntarily opt out of the program.
In May 2020, Government Regulation No. 25 of 2020 (GR 25/2020) was issued as a key implementing regulation of Law 4 of 2016. GR 25/2020 confirmed that employees (including expatriates) of private business entities are required to participate in the Tapera program. In May 2024 (when this topic took centre stage in national discussions), Government Regulation No. 21 of 2024 (GR 21/2024) was issued to amend GR 25/2020. However, the 2020 position is unchanged, with employees of private business entities still being required to participate in the program.
Under Law 4 of 2016, participants can voluntarily let their participation “terminate” by ceasing to pay their contributions,7 upon which their principal contribution and any interest will be returned to them. However, under both GR 25/2020 and GR 21/2024, private business entities are obliged to withhold and pay employee contributions to BP Tapera. Any company failing to comply with this requirement may face administrative sanctions, which may include revocation of their business license should they fail to enroll their employees in the Tapera program.
Participation timeline. Participation by employees of private business entities becomes mandatory on 20 May 2027 (a timeline that has been in place since May 2020).
Corporate liability. Law 4 of 2016 is clear that corporate liability is limited to the administrative aspects of employee contributions to BP Tapera. This includes maintaining employees’ data with respect to their participation in the program and ensuring that the employer’s contribution is paid to BP Tapera. While these administrative obligations constitute an additional business process for corporations, Law 4 of 2016 is clear that corporations/employers will not be liable in respect of program returns or any aspect of the management of the Tapera fund.
Investment managers. While mandated to manage Tapera, BP Tapera cannot manage Tapera directly. Instead, it must appoint investment managers and custodian banks. As of 2023, seven investment managers had been appointed.8
Investment structure. Law 4 of 2016 requires that Tapera be managed solely through a collective investment contract (kontrak investasi kolektif), with each participant being the holder of an investment unit in the collective investment contract.
Key customer-facing benefits. In addition to being a fund that will be returned to participants when their participation ends, Tapera backstops the government’s subsidised low-income housing financing liquidity facility (FLPP). FLPP is a housing mortgage product issued by Indonesian banks with a relatively low mortgage interest rate and certain benefits.9 To be eligible, mortgage applicants must earn no more than 8 million rupiah per month (around US$500 per month).
FLPPs are currently issued for the most part by state-owned or regional government-owned banks.
KEY TAKEAWAYS
For now, private business entities should start planning to enroll their employees in the program by the May 2027 deadline. This includes socialising the terms and conditions of the program to employees to avoid any confusion or concerns. Implementing regulations are expected from the government or BP Tapera once the registration deadline is approaching.
We will continue to monitor developments and share any updates on the Tapera fund.
Endnotes
1 We note for context that some parts of Law 4 of 2016 have just been challenged at the Indonesian Constitutional Court for being "unconstitutional." The motion to challenge was submitted by two Indonesian individuals on 18 June 2024, as reported in local media.
2 Opening remarks of Law 4 of 2016
3 Opening remarks of Law 4 of 2016
4 Article 11 of Law 4 of 2016
5 OJK Regulation No. 20 of 2022
6 Article 7.1 of Law 4 of 2016
7 Articles 13 and 14(1)(d) of Law 4 of 2016
