Riau plans massive bond issue

The Jakarta Post, Jakarta

Oil-rich Riau province plans to issue bonds this year to boost its financial capability as it is seeking to speed up economic development to bring its people out of poverty.

"This is because our original financial capacity is not yet sufficient. The amount (of the bond) is still being calculated, but most likely it will be in the trillions (rupiah)," governor Mohammad Rusli Zainal told reporters on Friday.

Part of the proceeds would go for the province's infrastructure development, but most would be allocated for education, the governor said.

"At the moment, some 67 percent of our budget is used for education and our poverty alleviation program, which shows how important we regard education for the province's future."

He noted that education was crucial for the province, which despite its abundant oil resources is considered among the country's poorest. About 5.5 million workers in the province are either elementary school drop-outs or have never gone to school.

It remains unclear whether the central government has given the go-ahead to such a plan. According to existing regulations, local government has to secure the central government's consent before seeking alternative funding sources -- aside from its local revenue.

Rusli added the province was also considering seeking soft loans and was building cooperation with some countries to help finance a number of development projects in the province.