JAKARTA (TheInsiderStories) – The South Kalimantan Province government shows interest in issuing municipal bond, told the governor in a business meeting with Indonesia Stock Exchange (IDX) and Financial Services Authority (FSA), on Friday (02/15).
If its being executed, then South Kalimantan will be the first province that issues municipal bond. The instrument issuance is expected to be used for infrastructure projects funding, from highway to port constructions.
“There’s no regional government that has issued the municipal bond. The regulation has just being released and we haven’t being socialized yet,” said South Kalimantan Deputy Governor Rudy Resnawan.
He continued, the municipal bond can be an alternative funding, as the regional budget is limited while the funding needs is big enough. “Its very huge. If we calculated, we still need around Rp20 trillion (US$1.43 billion),” he said.
Resnawan targeted that the municipal bond can be issued at least next year. But prior to the execution, provincial government must discuss further with South Kalimantan Regional House of Representatives.
Previously, FSA has encouraged regional government to be independent in getting funding sources for infrastructure projects. Last year, the authority released regulation about municipal bond.
IDX’ President Director Inarno Djajadi mentioned that regional governments have responded well to the municipal bond regulation. According to him, several provinces have stated their interests, such as South Kalimantan, West Java, and East Java.
After the Deputy Governor of South Kalimantan, he added, that West Java Governor Ridwan Kamil will also visit Indonesia Stock Exchange. “A lot of them consider this as an alternative funding besides regional budget,” said Djajadi.
But he didn’t mention when those municipal bonds are planned to be released. He highlighted that the issuance process is not that simple. Although the process is relatively easier compared to submitting loan, but provincial government must get Regional House of Representatives’ blessing. The projects must also be feasible to get such debt funding.
The bourse then encourages South Kalimantan companies to get funding from stocks market. Djajadi sees that the region has a big potency of resources from mining, agriculture, fisheries, and so on.
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