As Indonesia prepared to host an Association of southeast Asian Nations (Asean) summit in May 2023, president Joko Widodo pledged to make his economy a centre of growth in the region.
If he is to succeed, it will be in part due to the activities of Bank BTN, a project-finance powerhouse in the region’s biggest economy. Driving economic growth between the 10 members of Asean will require a lot of investment in infrastructure across the region. Better ports, roads, bridges, railways and telecommunications are vital to connecting Asean to China, India, Japan and the West.
Bank BTN, led by Nixon LP Napitupulu, is one of several project-finance banks that will be instrumental in funding this process.
In Indonesia, as elsewhere, project finance typically comes from banks, multilateral and bilateral institutions or export-credit entities. But as demand increases for Islamic finance in the nation with the largest Muslim population, there is a big opportunity for Bank BTN.
This will be good news after a difficult few years. The post-Covid 19 era has been challenging for Bank BTN’s Shariah unit and its peers. The government’s enforcement of large-scale restrictions impacted the ability of borrowers to make loan payments. As liquidity dried up, the bank focused its efforts on supporting Islamic finance customers and key sectors.
As the pandemic eased in 2022, Bank BTN took a lead role in helping the government meet its goal to increase the supply of affordable housing. The bank acts as a key enabler in the government’s One Million Houses programme, an initiative to address the nation’s chronic housing backlog. Bank BTN provides 60% of the programme’s financing annually. It estimates that there are currently 12.7 million people living in unsuitable conditions.
Bank BTN has also launched its own initiative to become Asean’s top mortgage bank by 2025. The plan is to tackle the expensive third-party funds that handle capital for buyers and sellers.
Bank BTN wins this year in large part due to the innovative funding and liquidity strategies it has introduced to the sector
It is working to restructure the sector with a particular focus on high-margin financing. It wants to establish a true housing ecosystem, developing a robust Shariah supply chain to strengthen housing-sector finance and building a digital end-to-end Shariah product.
Bank BTN wins the project finance award this year in large part due to the innovative funding and liquidity strategies it has introduced to the sector. Its products focus on savings, current accounts and time deposits. It has reconsidered time deposits that mature at a lower rate and is also acquiring funds that can help cover maturity mismatches when swapping existing financing schemes with new ones.
Millennials remain a key focus for the bank. With its BTN Hits programme, the bank has increased disbursements to younger homeowners by nearly 30% in three years.
