Mon, 15 Aug 1994

Water firms will issue bonds to finance projects

JAKARTA (JP): Two state-owned water companies, one in Bogor, West Java, and the other in Surabaya, East Java, plan to offer bonds to the public next year to raise funds for water purification projects.

"All the requirements for the bond issuance are now under preparation," Progo Nurdjaman, director for regional finance management of the Ministry of Home Affairs, told reporters after a seminar here on Saturday.

The seminar, organized by the ministries of home affairs and finance, in cooperation with the United States Agency for International Development (USAID), discussed the mobilization of funds for the infrastructure projects of local administrations.

Progo said that the bond issuance is aimed at reducing the dependence of local administrations on the state budget in developing infrastructure.

He added that almost 80 percent of the development of the local infrastructure facilities, such as water supply, market places and bus terminals, depend on the state budget.

"We expect that the two water companies in Bogor and Surabaya will pioneer efforts to raise funds from the public to finance infrastructure facilities because they have shown good financial management and performance," he pointed out.

Indonesia currently has more than 200 water companies managed by local administrations.

Chairman of the Capital Market Supervisory Agency Bacelius Ruru said that water companies should improve their management before raising funds from the public because his agency will give no special treatment to any firms entering the capital market.

He said the main problem faced by state companies, including water firms, is how to shift their orientation from purely public service to profit making. (fhp)