Two years following the enactment of Law Number 4 of 2016 on Public Housing Savings (“Law 4/2016”) in 2016, on 20 May 2020 Indonesian government at last enacted Government Regulation Number 25 of 2020 (“GR 25/2020”) as the implementing regulation for public housing savings (Tabungan Perumahan Rakyat/ “Tapera”). Tapera is implemented for the purpose of collecting and providing continuous long term low-cost funding for housing financing in order to fulfill affordable and decent housing for its members.
Subsequently, Tapera Management Agency (Badan Pengelola Tapera/ “BP Tapera”) is established solely for the purpose of managing the Tapera. BP Tapera supersedes the Housing Savings Advisory Board for Civil Servants (Badan Pertimbangan Tabungan Perumahan Pegawai Negeri Sipil/ “Bapertarum PNS”) which previously was established on 15 February 1993 for the purpose of managing Civil Servants Housing Savings (Tabungan Perumahan Pegawai Negeri Sipil), a public housing savings program which was implemented exclusively for civil servants. Pursuant to Law 4/2016, any asset under the name of Bapertarum PNS will be liquidated and the result of which shall be returned to (i) the deceased or retired civil servants; or (ii) active civil servants in the form of initial balance under Tapera. The transfer of assets from Bapertarum-PNS to BP Tapera is expected to have been completed by 2021.
Content and Implication
Pursuant to Law 4/2016 and GR 25/2020, employees with monthly salaries equal to or surpassing the minimum wage, including foreign workers living in Indonesia for at least six (6) months, are required to participate in the Tapera program. Employees required to be registered as participant of Tapera encompass:
- Civil servant candidates;
- Civil servants;
- Indonesian National Army/ TNI officers;
- Indonesian National Army/ TNI trainee;
- Indonesian National Police officers;
- State officials;
- Employees of state-owned business entity;
- Employees of village-owned business entity;
- Employees of private-owned business entity; and
- Others who receive salary or wages.
Under Tapera program, the employers will be obligated to register their employees as participant of Tapera and to deposit savings to the Tapera account of each of its employees amounting to three percent (3%) of their respective salary/wage every month, in which 2.5% shall be paid by the employer and 0.5% shall be deducted from the employee’s salary/wages. Individuals with income equal to or surpassing the minimum wage are also required to participate in Tapera whereas those whose income is under the minimum wage may opt not to join the program. Employers are expected to have registered its employees as Tapera participant within maximum of seven (7) years as of the enactment of GR 25/2020.
Failure to comply with obligations imposed by GR 25/2020 will subject employers to administrative sanctions in the form of written warning, administrative fine, publication of violation, suspension of business license, and/or revocation of business license whilst individuals will be subjected to administrative sanction in the form of written warning only.
Other Notable Provisions
Following the completion of Tapera registration process, BP Tapera will issue participation identity number for the registered employee/individuals (“Participant”) which evidenced their participation in BP Tapera. The Participant is given option to determine the investment principle of their Tapera savings of their choice, be it conventional principle or sharia principle. According to GR 25/2020, a Participant will be entitled to receive:
- the utilization of Tapera funds;
- individual participation identification number and account number;
- repayment of savings along with the investment returns;
- information regarding the condition and the performance of Tapera funds from BP Tapera;
- information regarding the allocation of Tapera funds from the investment manager(s) and/or custodian bank; and
- information regarding the monetary value of his/her savings as well as its investment returns from the investment manager(s) and/or custodian bank.
The amount of monthly savings under Tapera program is stipulated to be three percent (3%) of the salary/wages/income in which for employees, the savings is split between the employer and the employee with 2,5% paid by the employer and 0,5% deducted from the employee’s monthly salary/wages. Whilst for individuals, such percentage shall be calculated from the average of the individual’s income per month of the previous financial year within certain threshold.
Employer is obligated to have deposited the savings to the Tapera account of each of its employees at the latest on the 10th day of the subsequent month. Further, in the event that a Participant failed to deposit his/her savings, the participation of such Participant would be deemed inactive until such Participant has continue depositing his/her savings. A minister of finance regulation is expected to be issued in the near future to further stipulate the mechanism regarding the deposit of Tapera savings.
- Management of Tapera Funds
GR 25/2020 determines that savings deposited to Tapera account shall be divided into three (3) categories as follows:
- Investment Fund;
Investment fund is the portion of Tapera savings which will be utilized by way of investment conducted by investment manager(s) and a custodian bank appointed by BP Tapera through collective investment contract mechanism. Investment of Tapera savings shall be made to local investment instrument pursuant to conventional or sharia principle.
- Utilization Fund;
Utilization fund is reserved for providing housing funding for Participant who fulfills certain requirement and criteria with interest or margin stipulated by BP Tapera which is lower than general commercial housing funding. The housing funding scheme will be consisted of the funding scheme for (i) ownership of house; (ii) construction of house; and (iii) renovation of house. GR 25/2020 however does not provide clear particulars regarding the funding scheme. A BP Tapera regulation is expected to be issued in the near future which hopefully will shed more clarity in the rules and regulations with regard to the funding scheme.
In order to qualify for receiving the housing funding, GR 25/2020 determines that Participant shall fulfill the following requirement:
- Minimum participating period of twelve (12) months;
- Qualify as low-income individuals;
- Have yet to own any house;
- The funding is meant to be utilized for the first-time home ownership, first-time home construction, or first-time
The above requirement will also be further stipulated in a BP Tapera regulation.
- Reserved Fund.
Tapera funds which are allocated as reserved fund is utilized for the repayment of savings amount to Participant whose participation in Tapera program has been terminated.
- Termination of Participation
Pursuant to Article 23 of GR 25/2020, participation in Tapera program shall be terminated based on the following reasons:
- having reached 58 years old for individuals;
- unable to satisfy the criteria as a Participant for five (5) consecutive years.
Following the termination of participation, a Participant is entitled to receive investment returns in addition to the amount of deposited savings.
Written by Ahmad Jamal Assegaf and Caroline Ignes Tando. Please click on the download button below to read this publication.