Danamon Financial Friday Episode 7: Supporting Home and Vehicle Ownership Amidst Optimism for the New Economy

Press Release / 19 November 2024

Share

Jakarta, 19 November 2024 - PT Bank Danamon Indonesia Tbk (Danamon) has launched the 7^th episode of Danamon Financial Friday (DFF). This latest episode highlights strategies aimed at empowering Indonesians, particularly the younger generation, to achieve their aspirations of owning a home and vehicle amidst an ever-evolving economic environment. Additionally, Danamon provides practical guidance and tailored financial solutions to help people navigate current economic challenges and seize opportunities presented by the new Indonesian government's economic policies.

In today's economic climate, numerous challenges are impacting people's purchasing power, with a particularly significant decline evident among the middle class. Data from Statistics Indonesia indicates that the country’s middle class has become increasingly vulnerable financially, with its percentage dropping from 21.45% in 2019 to just 17.13% in 2024. Concurrently, a downward trend in the average savings balance has been observed in recent years, falling from Rp3 million before the pandemic in 2019 to only Rp1.8 million as of April 2024. Additionally, a survey conducted by Bank Indonesia (BI) in both 2019 and 2024 reveals notable changes in financial behavior: the proportion of expenditure to income has risen from 68% to 74%, while the proportion of savings to income has decreased from 20% to 17%. Furthermore, the share of installment payments to income has also declined, dropping from 12% to 9%.

This phenomenon is commonly referred to as "depleting savings," which describes a situation in which individuals increasingly rely on their savings to cover daily expenses. Driven by recent economic deflation, this trend serves as clear evidence of the financial pressures affecting various segments of society. As a result, there may be a noticeable decline in public interest in significant purchases, such as homes and vehicles.

In response to this situation, the government has implemented several measures aimed at boosting credit growth and facilitating easier access to financing, particularly in the property and automotive sectors, which are crucial for driving economic recovery. Additionally, Bank Indonesia (BI) has taken proactive steps to maintain economic stability by implementing a 25-basis point interest rate cut in September 2024. Furthermore, BI has extended its Loan-to-Value (LTV) and Financing-to-Value (FTV) easing policies through the end of 2025, providing additional support to stimulate consumer spending and investment in these vital areas.

Hosianna Evalita Situmorang, Economist at PT Bank Danamon Indonesia Tbk, considers BI's interest rate reduction policy as a positive move to boost people's purchasing power. "This interest rate cut is expected to stimulate credit growth, which in turn will drive both consumption and investment," she said.

These policies align with the ambitious economic growth target of up to 8% by 2029, emphasizing initiatives that promote investment, generate employment, and implement measures to facilitate home and vehicle ownership for the public. This reduction in interest rates by Bank Indonesia presents a timely opportunity, particularly for productive consumption, such as purchasing a vehicle or financing a home through installments. The incentives provided by the government are highly relevant, not only in supporting people's purchasing power but also in boosting labor-intensive sectors. These sectors are expected to create more job opportunities, which, in turn, will further enhance overall purchasing power.

DANAMON SHARES TIPS & TRICKS FOR OWNING A NEW HOME AND VEHICLE IN DFF EPISODE 7

These developments have successfully sparked new hope among the public, resulting in a generally positive shift in overall market sentiment. "Danamon wholeheartedly welcomes and fully supports the government's initiatives aimed at enabling more Indonesians to access decent housing at affordable prices. We are optimistic about helping people seize the opportunity to own their dream home through Danamon's comprehensive financial solutions, which can be customized to meet the needs of each customer," said Enriko Sutarto, Consumer Lending Business Head of PT Bank Danamon Indonesia Tbk.

To support this initiative, Danamon is once again offering various financial programs, including the KPR Take Over program, which enables customers to transfer their home ownership loans from other banks to Danamon at competitive interest rates, at a fixed rate of up to five years. Enriko also underscored the importance of this flexibility for customers. "With the KPR Take Over program, customers can enjoy greater convenience in managing their cash flow through options such as longer tenors, lighter installments, or top-up facilities for additional needs," he explained.

Danamon also offers KPM Prima, a vehicle financing solution supported by Adira Finance. This product enables customers to purchase new or used vehicles with flat interest rates and insurance protection provided by insurance company Zurich Asuransi Indonesia. With KPM Prima, a financing product tailored for new and used passenger cars, commercial vehicles, premium motorcycles (motorcycles with an OTR price above Rp100 million or engine capacity of over 500cc), non-premium motorcycles (those outside the premium criteria), and Vespas, Danamon customers can achieve their dream of owning a new vehicle. Managed by Adira Finance, a subsidiary of Danamon, this product allows customers to pursue vehicle ownership even while managing ongoing mortgage installments. In addition to applying for vehicle financing, customers can also apply for a Multi-Purpose Loan through D-Bank PRO. This option provides additional funds for personal needs, such as business development, children's education, home renovations, or other urgent expenses.

Ivan Jaya, Consumer Funding and Wealth Business Head of PT Bank Danamon Indonesia Tbk, stated, “KPM Prima enables people to own vehicles with affordable installments, allowing them to meet their transportation needs with more manageable and structured costs. Through this collaboration, Danamon ensures that individuals can access financial support tailored to their specific needs. Danamon also leverages digital technology through the D-Bank PRO application, providing customers with easier access to a wide range of banking services. With this app, customers can simulate installments, autofill their data, and apply for financing quickly. This makes Danamon more relevant to individuals who value practicality and efficiency in accessing banking services in today’s digital era," he explained.

Danamon also supports the government’s initiative to construct three million houses annually to address the housing backlog, which currently stands at 12.7 million units. This initiative seeks to expand access to affordable housing for a broader segment of the population, with Danamon playing a key role by offering financing solutions that empower communities to fulfill their need for decent housing. Through strong collaboration between the banking sector and the government, it is hoped that purchasing power in the property sector will increase, contributing to economic stability by meeting the basic needs of the population.

As a part of MUFG, Danamon strengthens its financial ecosystem through strategic collaboration with Adira Finance and Zurich Asuransi Indonesia. This strategic collaboration broadens the scope of Danamon's financial services, enabling it to cater to the diverse needs of various segments of society. "With MUFG's global network, we are able to offer comprehensive and integrated financial solutions, positioning Danamon as a trusted financial partner for the Indonesian people," explained Ivan Jaya.

With support from Danamon, it is expected that communities can achieve financial well-being, secure decent housing, and own their dream private vehicles by leveraging the opportunities provided by the current government’s incentive policies. To attract active customers and sustain growth in vehicle and property financing, Danamon and its group of companies adopt a holistic ecosystem approach.

In addition to offering financial product solutions, Danamon actively promotes financial education through Danamon Financial Friday, which has become a significant platform for enhancing public financial literacy. This program offers financial education and practical insights into personal financial management, including tips on saving, managing household budgets, and understanding banking products. With improved financial literacy, the people are expected to make smarter and wiser financial decisions, such as utilizing KPR Danamon own a home while effectively managing their finances for vehicle financing.

A wealth of valuable information, along with tips and tricks on vehicle and home ownership solutions with Danamon, is now available in the newly released seventh episode of the DFF. You can watch the latest episode of the DFF at bdi.co.id/dff174.

###

For media inquiry, please contact: