The Indonesian government has issued Government Regulation (PP) Number 25 of 2020 concerning the Public Housing Savings (‘Tabungan Perumahan Rakyat/Tapera) program as an implementation of Law No 4 of 2016. This mandatory arrangement, which is mainly intended to provide housing financing for low-income participants, is a periodic deposit savings scheme used as the basis for housing financing requests. The financing funds originating from the trust funds belong to all participants as a collection of their deposits and investment yields.
Participants to the Program
All participants are working Indonesian citizens, who work for their employer or are self-employed workers) and also foreign nationals willing to work in Indonesia for at least six months.
Participants from government workers include permanent and candidate employees of the Indonesian Government (ASN), soldiers and students of the Indonesian National Soldiers (TNI), members of the police of the Republic of Indonesia, state officials, workers/laborers of state-owned enterprises, workers/laborers of regional-owned enterprises, and workers of village-owned enterprises.
Below are the main benefits as the participants:
- First home ownership: receiving grants as subsidies to buy and build houses.
- First home construction: receiving funds to help finance the construction cost of a new house.
- First home improvement: receiving funds for house renovations.
Registration Requirements & Memberships
Employers (governments and private companies) must register all of their employees with Badan Pengelola Tapera (BP Tapera), while self-employed workers must register themselves. At the time of registration, participants must be above 20 years old or already married, earn regional minimum wages/incomes and inform the name and single identification numbers.
Self-employed workers may also become participants even if their income is below the regional minimum wages. All Participants may choose either conventional or sharia law that will be applied for their participations.
Upon BP Tapera’s approval, participants will own their membership identity used as proof of memberships, administrative records, deposits and access to Tapera information, and be linked to single investor’s identification numbers.
For government/private company workers, the contribution is 3 % of their monthly salary/wages and must be reported to BP Tapera. The 3% percentage comprise 2.5 %, which is paid by workers, and 0.5% paid by their employers. While for self-employed workers, the contribution is 3 % of the average monthly incomes of the previous one calendar year.
Provisions for Housing Financing
For participants to obtain housing financing, BP Tapera, in collaboration with some appointed banks or finance companies, will assess the eligibility of participants for related requests, namely:
- Having a minimum of 12-month membership period;
- Belonging to low-income community groups
- Participants’ compliance with monthly deposit savings
- Using the Tapera financing for one of the following:
- First home ownership (participants have never had their own house, with the degree of urgency for home ownership considered);
- First home construction; or
- First home improvement.
After all participation aspects have been met, the housing financing is subject to the availability of utilization fund.
Deactivation, Reactivation, and Termination of Participation Status
If participants do not pay deposits, their participation status will be deactivated. However, their membership accounts remain to be maintained by BP Tapera. If they resume payments of deposits after previously failing to do so, the participation status will be reactivated. Detailed provisions will further be regulated by BP Tapera Regulations.
Participation status will end if the participant dies, retires (for workers under employers), have reached the ages of 58 years (for self-employed workers), and if the participant no longer fulfills the criteria as a participant for 5 consecutive years (no longer has salary, wages, or income for 5 consecutive years due to their total disability, as indicated by their repeated failures to deposit monthly saving installments).
In addition, retirees and those who are at the age 58 years or more are also allowed to remain participants if they wish, provided that the related requirements are met.
Rights, Obligations, and Administrative Sanctions
Employers are obligated to register their workers with BP Tapera; to submit any data changes of participants no later than 7 working days after receiving them from the participant; to deduct workers’ salary/wages (2.5%) plus employers’ contributions (0.5%), to deposit funds within the first ten days of the following month, and to keep and update all related reports. If workers change the workplace or are transferred, the previous and new employers must report it to BP Tapera.
An exception is for private companies, they are still allowed to register their workers no later than seven years from the date of the enactment of this government regulation. Employers have the right to obtain information regarding the condition and performance of their employees’ Tapera Fund.
If employers do not deposit funds within the set date, the sanctions imposed are in the forms of warning letters (the first one is for a 10-working-day period, and the second one is for another 10-working-day period), and administrative fines of 0.1 % of monthly total deposits that should have been paid. They might also be publicized as non-compliant entities and undergo business suspension and/or revocations of business licenses.
For workers under employers and self-employed
Participants’ obligations are to notify their memberships with BP Tapera to their new employer if they change the workplace, and to report to their employer if their personal data are changed (self-employed workers must do it directly to BP Tapera).
In accordance with Article 49 of GR Tapera, participants are entitled:
- to benefit from the Tapera utilization;
- to own membership identification numbers and an individual account number;
- to receive returns on deposits and investment yields at the end of the membership period;
- to get information from BP Tapera regarding the condition and performance of Tapera Funds;
- to obtain information on the placement of Tapera Funds from the investment manager and/or custodian banks;
- to obtain information from the investment managers and/or custodian banks regarding the position of assets value on deposit and investment yields of Tapera funds.
Administrative sanctions for workers under employers have been described as mentioned above. Whereas, sanctions for self-employed workers, in accordance with Article 55 of GR Tapera, are to receive the first and/or second warning letters for not depositing funds within the set time, in addition to deactivation of the participation status.
ADCO Law earns the trust to represent clients from multinational companies to emerging entities across a wide range of industries to achieve their business objectives in Indonesia.
By combining commercial sensibilities and legal expertise, ADCO is a Law Firm Jakarta who assists the clients to structure, organize and implement their business ventures and investments, including structuring, financing and securing investments as well as establishing new foreign companies in Indonesia. Should you have more queries regarding this matter, please do not hesitate to contact us.
@2020 ADCO Law. All rights reserved.
This publication has been prepared by Pitman for general informational purposes only to provide clients with information on recent legal developments and is not intended as legal advice or opinion.