Jakarta. Indonesia will ease restrictions on property and auto loans and allow foreigners to buy apartments as it looks to boost economic activity, officials said on Wednesday.

Bank Indonesia Governor Agus Martowardojo said the central bank may cut the loan-to-value ratio for property and auto loans as soon as this month, allowing banks to finance buyers with lower down payments.

In 2013, the central bank set a minimum down payment for housing loans at 30 percent for first home purchases, rising to 40 percent for second house, and 50 percent for third house.

Martowardojo declined to give more details on the move, but previously has said the central bank will seek to maintain healthy growth in consumer loans while preventing price bubbles.

At a separate event, Finance Minister Bambang Brodjonegoro said the government is going to allow foreigners to own luxurious apartments in Southeast Asia’s largest economy.

“This plan is very good to support the property sector,” Brodjonegoro told a news conference.

Currently, foreigners aren’t allowed to purchase property in Indonesia, though many have done so using the names of local residents.

Brodjonegoro also explained that his earlier ministerial decree on lowering the price threshold for luxury property to 5 billion rupiah (about $380,000) should not make home buyers less attracted to purchase property because the government has not imposed more luxury tax.

Buyers have only been asked to pay a 5 percent withholding tax, deductible from their yearly income tax.

An industry association welcomed the changes.

“We hope that the changes will come soon so that these could create passionate economic growth,” said Eddy Hussy, chairman of Real Estate Indonesia.

President Joko Widodo’s administration has promised to speed up government spending, while the central bank prepares a mix of monetary policy changes to jump-start the worst economic slowdown since 2009.

Indonesia’s economic growth in the first quarter slumped more than expected to 4.71 percent, hit by a collapse in commodity prices and weak government spending.

Reuters

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