City firms to issue bonds
The Jakarta Post, akarta
The Jakarta administration is considering bond issues by city- owned firms to raise additional revenue to help finance development projects in the capital.
Nugraha K. Yasin, head of personnel and administrative affairs with the Jakarta Planning Board (Bapeda), said on Monday that the administration depended too much on revenue from local taxes.
"We cannot continue in this way as revenue from local taxes will reach its maximum level some time in the near future, forcing the administration to look for other sources of revenue. That's why we are looking into the possibility of letting city- owned companies raise fresh cash through bond issues," he told reporters.
He added that since revenue from taxes was limited, the administration often found it difficult to implement its programs.
"But, the plan to issue bonds will require city-owned companies to improve their performance in the first place to make the bonds attractive to investors," he said.
He acknowledged that most city-owned firms performed poorly, only managing to contribute Rp 103.4 billion (US$10.5 million) last year, a meager amount compared to the 2004 figure of Rp 11.49 trillion.
The 2005 city budget is around Rp 14.01 trillion.
Aside from tax collection, the administration also receives revenue from local charges, contributions from city-owned companies and "miscellaneous" sources.
Nyoman Suhartono, head of the budget unit in the Jakarta Finance Bureau, said that vehicle registration and ownership taxes were the biggest income earners for the city.
"The motor vehicle registration tax contributed Rp 1.9 trillion last year, while vehicle ownership taxes brought in Rp 2.4 trillion," he said.
In addition to encouraging city-owned firms to issue bonds, Nugraha said that the administration was also considering promoting development projects through public-private partnerships.
He pointed to the agreement with the PT Jakarta Monorail consortium to develop an ambitious monorail project worth $497 million as an example.
"But, we need to be careful in picking our partners so as to ensure that any deals won't lead to losses," he asserted.