In a significant step toward solving Indonesia’s long-standing housing crisis, the World Bank has pledged funding support to help renovate thousands of uninhabitable homes across the country. This initiative is part of the broader partnership between Indonesia's Ministry of Public Works and Housing and the World Bank, focused on creating a resilient, inclusive, and sustainable housing ecosystem. The support will primarily target low-income households, aiming to improve living conditions while promoting social equity and economic stability.

The Urgent Need for Housing Reform in Indonesia

Indonesia, the world’s fourth most populous country, has struggled for decades to provide adequate housing for its citizens, especially in urban and rural low-income communities. According to the Ministry of Public Works and Housing, over 12 million housing units are currently categorized as “uninhabitable.” These homes often lack access to clean water, proper sanitation, and basic structural safety.

The situation is particularly dire in rural and disaster-prone areas, where poor construction standards and limited public funding have left communities vulnerable. Many families are forced to live in makeshift dwellings, exposed to extreme weather and health risks. These living conditions are not just a matter of infrastructure—they reflect a deeper issue of social inequality and missed opportunities for development.

In response, the Indonesian government has launched various housing programs, including Bantuan Stimulan Perumahan Swadaya (BSPS)—a community-driven home renovation program. However, budget constraints and logistical limitations have slowed down progress. The recent involvement of the World Bank brings much-needed financial and technical support to accelerate these efforts.

World Bank’s Role in Housing Renovation

The World Bank’s support is part of its broader commitment to reducing poverty and building resilient communities in developing nations. Through its new funding plan, the organization will assist in renovating uninhabitable homes to meet minimum health and safety standards. The funds will support infrastructure upgrades, such as clean water access, better ventilation, waste management, and structural reinforcement.

Deputy Minister of Housing, John Wempi Wetipo, recently confirmed that the World Bank has agreed to provide funding to assist in the renovation of at least 25,000 uninhabitable homes across Indonesia in the coming year. This effort is seen as a strategic collaboration to support President Joko Widodo's vision of zero slum housing by 2045, Indonesia’s centennial year.

The renovation initiative also aligns with the National Affordable Housing Program (NAHP), which was previously supported by the World Bank. This program laid the groundwork for delivering access to decent housing through a mix of public subsidies, microfinancing, and technical assistance for self-help housing builders.

Additionally, the World Bank has partnered with Indonesia on projects like the Indonesia Green Affordable Housing Program (IGAHP), which emphasizes sustainability in housing design. The latest renovations will incorporate energy-efficient features and materials to promote climate resilience, reduce long-term maintenance costs, and contribute to national emissions reduction targets.

Economic, Social, and Environmental Impact

Boosting Local Economies and Job Creation

One of the most immediate benefits of the housing renovation initiative is job creation. By employing local laborers, carpenters, and suppliers, the program will stimulate regional economies. Construction work is labor-intensive, and the renovation of tens of thousands of homes is expected to generate thousands of jobs, particularly in underdeveloped regions.

Micro, small, and medium enterprises (MSMEs) involved in construction materials and services are likely to see a surge in demand, helping them scale operations and contribute further to local economic development.

Improving Health and Well-being

Safe housing is a key social determinant of health. Inhabitants of structurally sound, well-ventilated, and sanitary homes experience lower rates of respiratory diseases, waterborne illnesses, and injury. Children in particular benefit from better housing conditions—they are more likely to attend school consistently and perform better academically when they have a stable and healthy home environment.

With proper water access and waste disposal systems integrated into the renovations, communities will also experience an improvement in hygiene and public health standards.

Advancing Climate Resilience

Indonesia is one of the countries most vulnerable to the impacts of climate change. Floods, earthquakes, and volcanic eruptions frequently destroy poorly built housing. The World Bank-funded renovation will ensure that homes are built using climate-resilient materials and designs, such as elevated flooring in flood-prone areas or reinforced structures in earthquake zones.

The emphasis on green housing also means promoting solar energy solutions, rainwater harvesting, and sustainable construction practices—lowering environmental footprints and utility costs in the long term.

Challenges and the Way Forward

Despite the promise of the World Bank’s involvement, challenges remain. Ensuring that funds are disbursed transparently and reach the communities most in need requires efficient oversight and monitoring mechanisms. Additionally, community engagement is critical to success. Local governments and village leaders must be included in planning and execution to adapt the program to regional needs and customs.

There is also a need to standardize renovation guidelines and offer technical training to local builders to maintain quality. Without proper training, the risk of poorly executed renovations could undermine the program’s objectives.

Collaborative Governance and Future Goals

The Ministry of Public Works and Housing has expressed confidence in scaling up the renovation efforts with support from global partners. The Indonesian government hopes to renovate at least 1 million uninhabitable homes by 2030, with the World Bank and other international agencies playing a crucial role.

In the long run, officials aim to combine this renovation initiative with housing finance reforms, urban planning improvements, and land tenure legalization programs—creating a more integrated housing policy framework.

This multi-faceted approach would not only address the current backlog of unfit housing but also prevent future shortages and slum development, ensuring that all Indonesians have access to safe, affordable, and dignified living spaces.

Conclusion

The World Bank housing renovation program in Indonesia is more than a construction initiative—it is a transformative investment in human dignity, health, and social stability. By partnering with the Indonesian government to upgrade uninhabitable homes, the World Bank is helping build a more equitable and resilient future for millions.

While challenges remain, the path forward is clear: through sustainable funding, community involvement, and transparent governance, Indonesia can overcome its housing crisis and become a regional model for inclusive urban development.