Last week we went to three banks, BRI, BTN, and Bukopin, to see the possibility of them providing finance for low-income housing. BRI has heavy emphasis on financing small and micro businesses, BTN on housing/property mortgages, and Bukopin on cooperatives.
Here are several issues discussed:
- A bank complained that the government doesn’t have vision on how we should deal comprehensively with the problem of low-income housing needs, while many local governments are only interested in projects from which they can take advantage.
- They also said it may be interested in financing such projects if the government provides two things: legal land titles (new, large quantities of subdivided land), with basic infrastructure (the most important being roads, electricity, and water)
- Another bank raised the issue of insurance/guarantee funds and control over subletting.
- They said they can provide financing for corporation/enterprise’s workers housing, and for ‘solid cooperatives’ (which they need assess first).
- Another bank complained about the lack of legal enforcement for those who default. They said that there have been too many cases where if someone is allowed to stop payment, then others will join.
My conclusion so far is that there is a possibility of mobilizing commercial banks to play a role in upgrading and preventing slums. However, the government will need to play an important role in providing the right incentives (not everything can be privatized, of course!). Also, there needs to be better management: both for the community institutions/cooperatives who apply for housing loans, and for the people who manage and maintain such developments.
technorati tags: slums, settlements, cities