Proposal to issue municipal bonds hailed
JAKARTA (JP): City councilors hailed yesterday the city administration's plan to issue municipal bonds as one of the alternatives to help raise locally generated revenue.
Head of Commission C for financial affairs Amarullah Asbah urged the administration to prepare all the requirements needed for the issuance of the bonds as soon as possible.
"I'll give it my full support," he said, urging the administration to think of other possible alternatives and to reduce its heavy dependency on the collection of taxes and levies.
Head of Commission B for economic affairs Djafar Badjeber said the administration had better consult with the institutions concerned, including the Capital Market Supervisory Agency, about this plan so all the requirements can be studied.
The administration's plan to issue the bonds was revealed on Monday by City Secretary Fauzi Bowo.
He said that the administration had been discussing the possibility of issuing bonds with the Ministry of Finance and Ministry of Home Affairs.
"Their (the ministries) responses have been supportive so far. However, we still have to work very hard on it since there is currently no law which regulates the possibility of a regional administration issuing such bonds," he said.
Contributions
Fauzi said the proposal was made in a bid to help reduce the administration's dependency on the collection of taxes and levies as the main source of its locally generated revenue.
He said that the administration could no longer depend on city-owned companies or joint venture firms.
"We all know that the companies' contributions to our locally generated revenues are still too low," he said.
He said that municipal bonds were not a new idea, in some other countries the sales of the bonds were quite popular, he added.
Fauzi, however, did not give details on the bonds issuance plan.
"I don't know when we could realize the plan. But the bonds could be offered by city-owned companies to the public and underwritten by the administration," he said.
Djafar believed that the administration would not find too many obstacles if it could enhance the city-owned companies' performances first.
"If the companies are to issue bonds on behalf of the administration, then they should first improve their performance," he said.
Head of Commission D for development affairs Ali Wongso Sinaga said, "It will be good if the administration could issue bonds to support its major projects, like the subway and reclamation of northern areas of North Jakarta."
He said the management of the projects must be more professional and transparent to compensate the funds invested by the investors. (cst)