PPN Incentives DTP And KPR Subsidy 34,000 Units For MBR In 2024 Officially Extended

JAKARTA The government has extended the Government-Borrowed Value Added Tax (PPN DTP) incentive by 100 percent for the housing sector from September to December 2024, as well as an additional 34,000 units of People's Housing Credit (KPR) subsidies for Low-Income Communities (MBR) by the end of 2024.

Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kakalibu said that the construction and housing sector is a strategic choice of the Government considering the large effect of multipliers in the sector, both forward and backward linkage, including in labor absorption.

As for the second quarter of 2024, the contribution of the construction and housing sectors was 9.6 percent and 2.3 percent respectively to the national GDP. Meanwhile, in the same quarter in terms of expenditure, the contribution of building investment in GDP reached 20.8 percent. One of those that contributed to the performance of the construction and housing sectors was property sales activities.

"We provide inclusive housing support to all groups, in addition to the Government-borne Value Added Tax (PPN DTP), the government also provides various support for Low-Income Communities (MBR). Especially for MBR, the government has increased the allocation of 34,000 subsidized mortgages," he said in his statement, Friday, September 20.

Febrio said that various fiscal supports had been provided by the Government in supporting the housing sector. This fiscal support was able to reduce the contraction in property sales at the beginning of the pandemic recovery.

Property sales activities began to expand in the second and third quarters of 2022, respectively at 15.2 percent and 13.6 percent (yoy), shown in the Residential Property Price Survey (SHPR) by Bank Indonesia.

Furthermore, entering 2023, sales contracted again until the third quarter of 2023, so that the Government again issued a fiscal incentive policy which took effect from November 2023 to June 2024.

According to Febrio, this has a positive impact on the expansion of home sales growth in the same period, growing by 3.4 percent, 31.2 percent, and 7.3 percent (yoy) respectively in the fourth quarter of 2023 to the second quarter of 2024.

Febrio emphasized that to encourage property sales, the Government will continue fiscal stimulus to continue to accelerate economic growth through improving the performance of the construction and housing sectors.

"This policy mix certainly means a lot to help low-income people who have limited financial capacity and indirectly encourage national economic growth," he said.

For information, the extension of the DTP VAT incentive for the housing sector, namely landed houses and flats, is contained in the Minister of Finance Regulation (PMK) Number 61 of 2024.

Meanwhile, the DTP VAT for landed houses and flats is given 100 percent of the VAT contained from the basic part of tax imposition up to IDR 2 billion with a maximum selling price of IDR 5 billion.

Febrio conveyed that government support in the housing sector was also given to MBR, including Value Added Tax (VAT), Advance Assistance Subsidy (SBUM), Administration Fee Assistance (BBA), Self-Help Housing Stimulant Assistance (BSPS) and Integrated Simple Houses (RST) assistance.

In addition, through the Housing Financing Liquidity Facility (FLPP) program, the Government also provides subsidized mortgages for the purchase of houses for MBR. The government is committed to increasing the FLPP allocation by 34,000 housing units, so that MBR, which can utilize subsidized mortgages this year, increases from 166,000 families to 200,000 families.

"This policy is expected to be able to provide a significant multiplier effect to accelerate economic growth and strengthen national economic resilience amid worsening global dynamics," he concluded.