IDX Joins Climate Bonds Initiative Program

Photo: TheInsiderStories

JAKARTA (TheInsiderStories) Indonesia Stock Exchange (IDX) has become the first Exchange in Southeast Asia to join Climate Bonds Initiative Partner Program. IDX is the sixth exchange to partner with Climate Bonds in a diverse grouping that includes London Stock Exchange, Luxembourg Green Exchange, Deutsche Börse, Bolsa Mexicana and Nasdaq Nordics.

IDX now is part of of a leading group of exchanges who are committed to playing a greater role in the development of global and national green finance, with a particular focus on green bonds – which reached a record of US$155.5 billion issuance in 2017, up 78 per cent on 2016 figure of $87.2 billion.

Sean Kidney, CEO Climate Bonds Initiative and Tito Sulisto, President IDX sealed the new partnership in Jakarta on Feb, 5, jointly hosting a round-table discussion for prospective Indonesian green bond issuers, the Climate Bond Initiative said in a statement.

“IDX will be taking an increasing role in green finance as the market develops, both in Indonesia and across the region,” Sulisto said.

“This partnership will be instrumental in helping to increase engagement with key domestic and regional stakeholders and develop joint initiatives to spur market growth,” he added.

Sean Kidney, CEO, Climate Bonds Initiative, said that the IDX can play a vital role in bringing policy makers and market participants together, helping to shift investment and capital towards low-carbon assets and green projects in Indonesia.

“With this partnership we now have a strong foundation to work jointly and promote collaboration, knowledge sharing and the expansion of green finance and green investment,” Kidney said.

The Financial Services Authority (FSA) issues several regulations to support and encourage Government programs, particularly in the area of ​​infrastructure development in the regions through regulations on regional bonds, green bonds, and e-registration.

The issuance of the above provisions is intended to make it easier for local governments to issue local bonds, strengthen the implementation of sustainable finance, and speed up the service process to stakeholders.

Related to the issuance of local bonds, the FSA issued three provisions, namely;

  • The FSA Regulation Number 61/ POJK.04 /2017 regarding Document of Enrollment of Registration in the Framework of Public Offering of Municipal Bond and / or Regional Sukuk ;
  • The FSA Regulation Number 62 / POJK.04 / 2017 concerning the Form and Content of Prospectus and Prospectus Brief In the Offering of Municipal Bond and/or Regional Sukuk.
  • The FSA Regulation Number 63 / POJK.04 / 2017 concerning Report and Issuer Issuance of Issuance of Regional Bond and / or Sukuk.

The FSA policy related to regional bonds or sharia bonds is an effort to support government priority program in increasing infrastructure development which not only become the basis of increasing national competitiveness, but also as a tool for equitable economic growth to all corners of Indonesia. Infrastructure development must be supported by adequate funding sources.

The three FSA regulations on regional bonds and sharia bonds (Sukuk Daerah) are also intended to increase the source of infrastructure development financing, in addition to sourced from the Regional Budget, also from the Capital Market through the issuance of Municipal Bond and Sukuk Daerah.

Through the expansion of regional financing, infrastructure development can be accelerated so that the impact on economic growth and equity of public welfare can be felt immediately.

In the process of issuing Municipal Bond and Sukuk Daerah there is a mechanism, that is, besides being required to submit the Registration Statement to FSA, the Regional Government also requires approval from the Ministry of Finance, Ministry of Home Affairs and the Regional House of Representatives.

Aspects of Regional Budget governance by Local Government also need to be a concern. This is because investor confidence is highly dependent on how the local government manages the APBD and utilizes the proceeds from the issuance of Municipal Bond and Sukuk Daerah.

To that end the FSA hopes that the local government can improve human resources capability and certainly supported by adequate organizational infrastructure, so that it can manage Municipal Bond and Sukuk Daerah.

As for regulations relating to green bonds, OJK issues POJK No.60 /POJK.04/2017 Issuance and Requirements of Green Bond Environmental Securities. This FSA regulation is issued in line with the Long Term Development Plan to achieve a sustainable and sustainable Indonesia through, among other things, the sustainable utilization of natural resources and environment.

The FSA regulation is expected to become one of the most environmentally friendly sustainable financing options in the Capital Market. The issuance of green bonds by Indonesian firms in the capital market will certainly be a significant milestone to affirm Indonesia’s commitment in addressing environmental issues through environmentally friendly financial products.

As for the rules relating to the E-Registration, namely FSA Regulation No. 58/POJK.04/2017 on the Submission of Registration Statements or the Electronic Action Submission of the Corporation. This regulation is published to support the effectiveness and efficiency of FSA services to more efficient and transparent stakeholders by utilizing information technology. For its implementation, FSA has set up an electronic system called Integrated Licensing and Registration System (SPRINT).

In addition to issuing the above rules, the FSA has also initiated several policies for the deepening of the Capital Market in Indonesia. These policies include the policy to reduce market risk, increase market liquidity, and accommodate change of completion cycle in regional practice. FSA together with Indonesia Stock Exchange (BEI), PT KSEI and PT KPEI have accelerated transaction exchange settlement program from “T+3 to T+2”.

The program is conducted with the support of infrastructure that has been in the capital market is now the application of Straight Through Processing (STP), Single Investor Identification (SID), and Customer Fund Account (RDN) allows the process of allocation of funds and Securities in the settlement of transactions in exchange can be done more quickly from the current settlement practice, “T+ 3”.

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