Regional Development Banks Urged to Drive Economy Through Financing Innovations
Jakarta (ANTARA) - The Association of Regional Development Banks (Asbanda) is encouraging Regional Development Banks (BPDs) to become the primary drivers of regional economic growth through productive and measurable financing innovations.
Asbanda General Chairman Agus H. Widodo stated that changes in the economic landscape and limitations on local government fiscal space demand that BPDs take a more strategic and proactive role, rather than merely serving as managers of local government funds.
“Going forward, BPDs cannot merely act as managers of local government funds. BPDs must transform into orchestrators of regional fund flows capable of actively and sustainably driving the economy,” said Agus in a statement in Jakarta on Friday.
At the National Seminar on Regional Development Banks across Indonesia held in Solo on Friday, Agus emphasised that local fiscal limitations should not hinder development.
In such conditions, financing innovations are key to maintaining the continuity of government spending and regional economic growth.
He also stated that one strategic instrument being promoted is the optimisation of regional loan schemes, not only focused on infrastructure financing but also for strengthening public services, improving the quality of the health and education sectors, as well as developing MSMEs 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 source of financing,” explained Agus.
Asbanda has also submitted proposals to regulators to introduce a more precise policy approach to financing the local public sector.
“This is not a request for relaxation, but an effort to provide a more appropriate framework so that public sector financing can be carried out optimally while remaining prudent,” he stressed.
Furthermore, to elevate BPDs, Agus conveyed that transformation needs to focus on three main pillars: strengthening governance and risk management, developing productive and impactful financing innovations, and deepening their role in the regional economic ecosystem.
“The future of the regional economy is not only determined by the size of the Regional Budget (APBD), but by our ability to manage and direct fund flows to create sustainable growth,” said Agus.
On the same occasion, Central Java Governor Ahmad Luthfi affirmed that regional development requires cross-stakeholder collaboration.
“Building a region cannot be done alone. We are not supermen, but a super team. Everyone must collaborate to drive regional economic growth,” he said.
Luthfi also emphasised the importance of BPDs’ role in supporting regional investments, maintaining economic stability, and strengthening the real sector, particularly MSMEs.
According to him, BPDs must be able to present solutions to various regional economic challenges, from fiscal limitations to improving community welfare.