West Java Governor Ahmad Heryawan said the province actually wanted to issue its first municipal bonds for Kertajati Airport. However, it later chose to finance it with a RDPT as the securitization process was faster.

He said the province began the administratve process for both municipal bonds and the RDPT at almost the same time, but the process of issuing the bonds was more complicated. Meanwhile, it also faced a time limit as Kertajati Airport was expected to begin operating midyear.

“When we are still struggling with the bond, RDPT securitization has been done quicker and we also got a Rp 906 billion [US$63.42 million] syndicated loan from seven regional sharia banks,” he said after the trade opening ceremony at the Indonesia Stock Exchange (IDX) building in Jakarta.

Kertajati Airport development company PT Bandarudara Internasional Jawa Barat (BIJB) got the syndication loan from seven regional sharia banks: Central Java, North Sumatra, West Kalimantan, South Kalimantan, West Sulawesi, Jambi and West Java itself. The loan is divided into several stages and on Feb. 8, BIJB had signed the third stage of Rp 256 billion.

Meanwhile, the RDPT is securitized by state-owned Danareksa Investment Management and expected to raise Rp 400 billion. The RDPT, which has entered the offering period, will get around 18 percent of shares in BIJB.

Other than the loan and the RDPT, BIJB will get a direct equity placement from state-owned airport management company PT Angkasa Pura (AP) II, which agreed to buy 20 percent of BIJB shares on Feb. 20.

BIJB president director Virda Dimas Ekaputra said the company was currently finishing the phase 1A construction, which consisted of a three story passenger terminal and supporting facilities.

“We expect to finish the construction in March, and we will hold a soft launch in May, a grand launch in June, and the airport will host haj flights in July,” he said.

Despite the Kertajati Airport having progressed without municipal bonds, Heryawan said the provincial administration might issue bonds in the future but for other projects.

“We will leave bond issuance for a while but hopefully we can propose it again for other infrastructure projects,” he said.

He mentioned some potential infrastructure projects such as the UNESCO cultural geopark at Ciletuh, Pelabuhan Ratu, which could be a candidate for the issuance of municipal bonds.

Heryawan admitted municipal bond securitization was complicated because the provincial administration had to face assessments from a lot of institutions.

“We have to be assessed by the Regional House of Representatives [DPRD], Supreme Audit Agency [BPK], Home Ministry, Finance Ministry and Development Finance Controller [BPKP]. With such a long procedure, it is difficult for regional administrations to issue their municipal bonds,” he said.

The Financial Service Authority’s (OJK) commissioner for capital market supervision Hoesen said the process of securing municipal bonds was different compared to the process for corporate bonds. The issuer had to get approval from other governmental institutions, which could take a longer time for the discussions.

“We simplify our internal process in OJK for the issuance of municipal bonds. However, regarding whether or not regional administrations have to talk with DPRD and other institutions, it is beyond our reach,” he said.

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