Sriwijaya University Professor Highlights Key Challenges in Issuing Regional Bonds in Indonesia

Academically speaking, the main hurdle is usually the feasibility study. The feasibility study typically takes three months, said Prof. Didik during the session of the National Seminar on Regional Bonds at the Aston Palembang Hotel & Conference Centre, Tuesday (19 May 2026).

He explained that besides the review process, the approval stage by the DPRD (Dewan Perwakilan Rakyat Daerah) also becomes an obstacle that often delays plans to issue regional bonds. He cited several regions that had previously proposed regional bonds also facing constraints in the political process in the DPRD.

“Compared with deposits, and then mutual funds and the like, bonds are actually more promising. The expected return could be around 7 to 8 percent,” he said.

Moreover, Didik revealed that regional bonds could be used to finance various strategic projects such as the construction of ports, roads, and even airports in South Sumatra.

In addition, regional bonds could support the development of public facilities, tourist areas, and the SME and retail sectors if managed well. “Event spaces, festivals, paid parking, and other public facilities could also use regional bonds once they are running,” he added.

In the same event, Heru Helbianto, Director of Finance and Treasury at Bank NTT, said regional bonds carry risks that are relatively competitive with bank loans or corporate bonds. He estimated that the yields on regional bonds would not be far from government bonds, currently in the range of 6.5 to 6.8 percent. “If regional governments issue bonds, the risk will not be far from government bonds. So it will not be as high as bank loans or corporate bonds,” he said.

For information, the National Seminar is being held amid the still-high dependence of the APBD (Anggaran Pendapatan dan Belanja Daerah) on central government transfer funds such as the DAU (Dana Alokasi Umum), DAK (Dana Alokasi Khusus), and DBH (Dana Bagi Hasil).

On the other hand, regional governments are urged to be more autonomous in financing development and improving public service delivery. Therefore, regional bonds are regarded as a strategic solution to strengthen local fiscal capacity while also opening space for public participation in public investment.

Watch also the video “Ministry of Home Affairs Reveals the Benefits of Regional Bonds to Drive Regional Economic Growth”.