Declining TKD Pushes Regional Development Banks to Elevate Their Role as Drivers of Local Economies

JAKARTA, KOMPAS.com - Regional Development Banks (BPD) must play a role in supporting local economies. This comes as fiscal pressures mount and transfers to regions (TKD) decline. Asbanda General Chairman Agus H. Widodo stated that BPDs must transform to become the primary drivers of regional economies. According to him, limited fiscal conditions demand a change in the role of BPDs, which have previously tended to be administrative. “BPDs can no longer just be parking spots for regional government funds. BPDs must level up,” he said in an official statement on Friday (17/4/2026). He added that BPDs must act as managers of fund flows, guardians of liquidity, and drivers of regional economies. He assessed that BPDs have advantages due to their closeness to regional governments and understanding of local economic characteristics. For this reason, financing innovations, including regional loan schemes, need to be optimised while still upholding prudent principles. “We are not asking for relaxations, but a more precise risk-based approach in financing public sectors at the regional level,” he explained. “The future of regional economies is not only determined by the Regional Budget (APBD), but by how strongly BPDs can orchestrate fund flows and drive the economy in their regions,” he said. On the other hand, Bank Jateng President Director Bambang Widiyatmoko sees the decline in TKD as a momentum for BPDs to strengthen their contributions to regional development. He noted that the trend of declining TKD has occurred since 2020 and continues until 2026, both in terms of percentage and nominal value.