Asbanda highlights structural advantages of regional development banks to boost local economies
Jakarta (ANTARA) - Chairman of the Regional Development Banks Association (Asbanda) Agus H. Widodo stated that Regional Development Banks (BPD) possess several structural advantages that can be optimised to drive regional economic growth.
He explained that these advantages include proximity to local governments, understanding of local economic characteristics, and networks reaching down to the district level, enabling BPDs to play a larger role in directly mobilising the regional economy.
“BPDs must ensure that every rupiah circulating in the region adds economic value, boosts productivity, and strengthens the real sector,” said Agus H. Widodo in an official statement received in Jakarta on Friday.
He noted that fiscal limitations at the regional level should not hinder development, necessitating innovative financing to balance government spending and regional economic growth.
He highlighted that one financing instrument that can be utilised is the regional loan scheme. This instrument is not only focused on infrastructure financing but also on strengthening public services, improving the quality of health and education sectors, as well as developing SMEs and the local economy.
“Regional loans must be viewed as a strategic instrument to create a multiplier effect for the regional economy, not just a short-term funding source,” said Agus.
He also urged the strengthening of governance and risk management, the development of productive and impactful financing innovations, deepening the role in the regional economic ecosystem, and establishing a more appropriate framework so that public sector financing can be carried out optimally and prudently.
He emphasised that BPDs are not sufficient to merely act as managers of regional government funds but must transform into regulators of regional financial flows capable of actively and sustainably driving the economy.
“The future of the regional economy is not only determined by the size of the regional budget but by our ability to manage and direct financial flows to create sustainable growth,” said Agus H. Widodo.