The government of Indonesia passed implementing regulations to the law on Public Housing Savings which creates a government-sponsored housing savings fund with mandatory contributions. The new law aims at helping public and private sector workers finance the purchase, renovation or construction of their first home.

The new regulation is expected to enter into effect on 1 January 2021, when the fund starts operation. However, contributions will be voluntary for private sector employers for the first seven years, until 2028.

Key details

The new legislation, known as the Tapera Law, was signed on 24 March 2016, but regulations implementing the law were not promulgated until recently. The fund will be managed by a new public housing agency called BP Tapera. The Tapera management board will appoint and supervise the investment manager as well as the Tapera custodian bank and financial institutions.


Enrollment is mandatory for all employees who are above age 20 (younger if married) and earn at least the minimum wage. Employers are responsible for their employees’ enrollment, the details of which are still pending. The requirement applies to Indonesian citizens as well as foreigners with a working visa of at least six months.

Contribution rates

The total contribution rate to the Tapera program is 3% of covered pay (the threshold is still yet to be determined), divided as follows:

  • 2.5% by employees
  • 0.5% by employers

The employer must withhold the employee’s contribution and deposit it, along with its portion, to the employee’s account. The employee may choose for the funds to be invested conventionally or in accordance with Sharia laws.

Withdrawal and loan

Employees will have the option to withdraw a maximum of 30% of the Tapera account balance to buy their first home or up to 10% to make renovations. Employees who have contributed for a minimum of 12 consecutive months will be eligible to take out a home loan from the Tapera account at a maximum interest rate of 5%, well below current market rates.


Membership terminates when the employee (i) reaches retirement age (currently age 57), (ii) five years after leaving the workforce earlier than retirement age, or (iii) dies. Upon termination of membership, the employee or designated beneficiaries will be able to withdraw all funds and accrued interest from their Tapera account.

Next steps

A significant number of companies in Indonesia already provide their employees with housing loan benefits. Given the low contribution amount to the new public housing fund, it is unlikely to affect employers’ market practice on current housing loan benefit arrangements.

Employers should monitor the implementation timeline of the new law and ensure compliance with enrollment and contribution requirements.