Bank Indonesia is playing a role as a strategic advisor to regional\ngovernments. This was emphasised at the Coordination Meeting for\nAccelerating Investment and Regional Economic Growth in the Java Region\n2026, held in Surabaya on Tuesday (11\/8\/2026). The forum is part of the\nRoad to Java Regional Economic Forum (JREF) 2026 series.<\/p>\n
Bank Indonesia is taking concrete steps through regional economic and\nfinancial assessments, mapping potential investment projects,\nstrengthening the Regional Investor Relations Unit (RIRU), and\nfacilitating meetings between regional governments and investors, banks,\nfinancial authorities, and development financing institutions.<\/p>\n
\u201cRegional governments in Java are encouraged to expand sources of\ndevelopment and investment financing, not only relying on the Regional\nRevenue and Expenditure Budget (APBD),\u201d said Ibrahim, Head of the Bank\nIndonesia Representative Office for East Java.<\/p>\n
Director General of Regional Financial Development at the Ministry of\nHome Affairs, Agus Fatoni, said that alternative financing needs to be\naccompanied by strengthening fiscal capacity and regional government\ngovernance. \u201cIt is necessary to consider regional financial capacity,\nregulatory readiness, and institutional readiness,\u201d said Agus.<\/p>\n
A number of schemes that regional governments can utilise include\nregional loans, Public-Private Partnerships (KPBU), issuance of regional\nbonds and sukuk, optimisation of regional assets, and blended\nfinance.<\/p>\n
The need for alternative financing is considered important because\ninvestment is one of the main pillars of Java\u2019s economy. In the second\nquarter of 2026, Java\u2019s economy grew by 5.65 percent year on year (yoy),\nan increase compared to 2025 growth of 5.30 percent. Investment was\nrecorded as contributing 29.68 percent to Java\u2019s Gross Regional Domestic\nProduct (PDRB).<\/p>\n
Assistant Deputy at the Coordinating Ministry for Economic Affairs,\nYuli Sri Wilanti, said that expanding infrastructure financing sources\nis necessary to accelerate connectivity development and increase\nbusiness entity involvement in developing regional leading sectors. \u201cThe\nutilisation of creative financing is expected to accelerate\ninfrastructure provision, improve connectivity, and open greater space\nfor business entity involvement,\u201d she said.<\/p>\n
However, the availability of financing schemes does not automatically\nguarantee their implementation. Regional governments still face\nchallenges in terms of project readiness, regulatory certainty,\ninstitutional capacity, and human resources.<\/p>\n
Bappenas noted that various creative financing instruments are\navailable and permitted by regulation. Nevertheless, their\nimplementation is still constrained by regional government\nreadiness.<\/p>\n
The coordination meeting established three focus areas: strengthening\nunderstanding and governance of creative financing, preparing feasible\nand bankable investment projects, and strengthening the financing\necosystem through regulation, institutions, human resources, and central\nand regional government coordination.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bank-indonesia-urges-java-regions-to-expand-development-financing-beyond-apbd-1786812636", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }