OJK to finish revision of rules on municipal bonds this year

The Financial Services Authority (OJK) hopes to finish the revision of a regulation on municipal bonds by the end of the year to increase the attractiveness of debt papers issued by regional administrations.

The bonds are expected to help finance infrastructure projects in the regions.

Some regions, such as Jakarta, West Java and East Kalimantan, had expressed their interest in rolling out such bonds, said the OJK’s deputy director for services company assessment, Muhammad Maulana.

“At present, the OJK is revising the regulation in coordination with the Finance Ministry,” Maulana said on Saturday, adding that lengthy and complicated procedures had hampered efforts by local administrations to issue such bonds.

One of the procedures is that the administrations must gain approval from the Finance Ministry, the Regional Legislative Council (DPRD) as well as the Home Ministry. Consequently, despite the benefits, none of them have launched such debt papers.

In addition to the complex process, unlike with government bonds, the central government does not provide guarantees for municipal bonds in case of default. (lnd)