Technically, regional governments have been allowed to issue bonds for more than a decade now. However, none have come forward because of the complex procedures set up by the central government.

The new procedures, outlined in an OJK regulation issued on Friday, promises to make the procedures simpler, but still ensuring sustainability and the ability of the regional governments to repay its debts.

How the regions manage their budget was important, OJK chairman Wimboh Santoso said at a press conference at the Indonesian Stock Exchange on Friday. 

“Investors’ trust is dependent on how these regions manage their finances, and how they spend the bond money,” Wimboh added.

For now, regional governments’ stream revenue comes mainly from central government contribution, local taxes and licensing fees. They barely cover their operational needs, let alone to finance major projects. 

Wimboh disclosed that West, Central and East Java were already at an advanced stage to issue the bonds. He did not say when this would happen.

On the same day, the OJK also issued two other regulations – on green bond procedures to raise money backed by natural resources and on an e-registration system to boost its service efficiency and transparency to stakeholders. (sha/lnd)

Popular

Great Barrier Reef hit by record bleaching

Govt to undo latest curbs on personal imports

Middle East on edge as Israel and Iran trade threats