Benchmarking The Housing Ecosystem with a Rent-To-Own (RTO) Scheme in Indonesia and Malaysia

Abstract

Background: Population growth, urbanization rates, high housing prices, and low purchasing power of the population for homeownership contribute to Indonesia's ongoing housing backlog. Housing backlog refers to the gap between the number of homes built and offered and the number of homes needed by the population. To reduce the backlog, PT BTN, one of the stated-owned entrepreneurs leading housing schemes in Indonesia, introduced an innovative Rent-to-Own (RTO) financing scheme in 2022, targeting low-income households and informal workers as its primary beneficiaries. However, the implementation of the RTO scheme has yet to demonstrate satisfactory performance. Therefore, benchmarking to other countries is an option to evaluate the performance of housing ecosystems using the RTO scheme in Indonesia.
Purpose: This study aimed to evaluate the RTO ecosystem in Indonesia and Malaysia (benchmark countries).
Design/methodology/approach: The method used in this study is a combination of descriptive and benchmarking analyses, utilizing primary data obtained through in-depth interviews and secondary data gathered through a literature review.
Finding/Result: This study evaluates Indonesia's Rent-to-Own (RTO) housing scheme, comparing it with Malaysia's more established RTO ecosystem. The findings highlight that Indonesia's RTO implementation, launched in 2022, faces challenges such as low public awareness, weak regulatory support, and minimal stakeholder engagement, leading to limited uptake. In contrast, Malaysia benefits from a robust regulatory framework, better stakeholder coordination, and broader public education, enabling greater success. The study concludes that Indonesia needs clearer regulations, improved public outreach, and stronger collaboration among stakeholders to enhance the RTO scheme's effectiveness. A feasibility study is also recommended before further implementation to address existing market and organizational challenges.
Conclusion: The findings reveal that Indonesia's RTO ecosystem remains underdeveloped and requires improvements across various aspects, including regulations and policies, RTO scheme structure, stakeholder involvement, and market readiness. To evaluate the viability of implementing the RTO scheme as a housing finance scheme, conducting a feasibility analysis is also a crucial step that must be undertaken by the relevant stakeholders.
Originality/value (State of the art): This study is the first to benchmarking the RTO scheme between Indonesia and Malaysia.

Keywords: benchmarking analysis, ecosystem development strategies, housing backlog, housing finance scheme, rent-to-own