National Symposium in Palembang Discusses Regional Bonds as a Local Fiscal Solution

The national symposium brought together stakeholders from government, regulators, academia, and the financial sector to explore the prospects for issuing regional bonds as an alternative financing instrument for development. The forum was held amid ongoing heavy dependence of the regional budget (APBD) on central transfers such as the General Allocation Fund (DAU), Special Allocation Funds (DAK), and Revenue Sharing Funds (DBH). Local governments are urged to become more self-reliant in financing development and improving public services. The Chair of the Golkar Party Fraction in the MPR RI, Melchias Markus Mekeng, said South Sumatra Province is the seventh and final province outside Jakarta in a series of aspirational tours on regional bonds. ‘Because we are all pursuing efficiency, our last stop is in Jakarta. We should keep touring several regions, but because of efficiency we limit it and Sumsel becomes the last province for this sarasehan,’ he said, quoted by Detik Sumbagsel on Tuesday 19 May 2026. He added that the sarasehan forum functions like a Public Hearing (RDPU). Inputs from speakers and practitioners in the region will be compiled into the basis of an academic manuscript. The drafting team aims to complete this document by August 2026 for submission to the government and the DPR RI so that it can immediately enter the National Legislative Programme (Prolegnas). The issue of regional bonds has been discussed since 2000. Mekeng noted that the current momentum is the right moment given tightened regional fiscal conditions due to cuts in central transfers. ‘Now the regions can be said to be dry because their DKD (local revenue allocations) have been cut. But we must not stop here. The country must move forward, and the regions must move forward. One breakthrough is issuing regional bonds,’ he added. He explained that the regional bond instrument is not new. About 20 countries have successfully used this instrument, from the United States such as Las Vegas and San Diego, the United Kingdom, Switzerland, Japan, to developing African nations like Nigeria and Senegal. In Japan, local financing relies on bonds bought by its own people, thereby minimising currency risk. Drawing on domestic successes, Markus is optimistic the regional bonds market will surge after the law is enacted, similar to the positive effect after the passing of the SUN (Surat Utang Negara) Law in 2002. Meanwhile, Deputy Governor of South Sumatra, Cik Ujang, represented by Assistant III for Administration and General Affairs Setda Sumsel, Kemas Umar, praised the national symposium as a strategic space to discuss solutions for local financing amid fiscal challenges. He said the forum is a strategic space to discuss financing solutions for development in the face of fiscal challenges. Moreover, the Director-General of Bina Keuangan Daerah Kemendagri, Agus Fatoni, said the current fiscal condition requires innovative steps. ‘Of 38 provinces in Indonesia, only 20 provinces have strong fiscal conditions, while nine are in the moderate category and nine provinces are still weak. At the regency/city level, the majority of regions are also in weak fiscal positions, numbering in the hundreds,’ he noted. To strengthen fiscal capacity, Fatoni said regions must innovate, take bold steps, and seek alternative financing to fund development, improve public services, and increase people’s welfare. ‘One step the government can take to strengthen the fiscal position is to optimise the Local Original Revenue (PAD),’ he added. He also stressed the importance of controlling regional expenditure to be more efficient and targeted. He said regions should focus spending on needs truly felt by the community, with prudent debt management and improvements in transparency and accountability of regional finances. He also highlighted the role of creative financing as a solution to strengthen regional fiscal capacity. Financing for development does not solely rely on APBD, but can also come from optimising BUMD, BLUD, utilisation of regional assets, and issuing regional bonds as a public investment instrument. With this event, the MPR RI seeks to absorb aspirations from various regions regarding the regulation of regional bonds. The results of the discussions will be compiled into an academic manuscript to push for the formation of the Regional Bond Law.