Disharmony of Regional Bond Issuance Guarantee

Abstract

Regional bonds are an alternative for local governments to obtain funds to finance regional development. In the process of issuing bonds, collateral is needed in the form of regional assets to ensure the fulfillment of investors' rights. Although the guarantee for the issuance of regional bonds has been regulated in Article 55 of Law no. 33 of 2004 concerning Fiscal Balance between the Central Government and Regional Governments, its implementation will be difficult to do because there is a prohibition on confiscation of state assets as regulated in Article 50 of Law No.1 of 2004 concerning State Treasury. This paper aims to examine the disharmony of the regulation on guarantees in the issuance of regional bonds. Based on the discussion, it can be concluded that the issue of disharmony related to guarantees in regional bonds can be answered by making legal discoveries, namely by identifying and interpreting the relevant regulations. If the regional government acts in its capacity as a public legal entity that carries out civil actions, it must comply with the provisions of civil law. Regional assets that are used as collateral in the issuance of regional bonds are state-owned assets classified as separated state-owned assets so that the regional government assets are no longer attached to state property, and if there is a default on regional bonds, these assets can be confiscated for auction. to fulfill the rights of investors by setting aside the provisions of Article 50 of the State Treasury Law.

Keywords: regional onds, guarantees, regional assets

DOI: 10.7176/JLPG/115-08

Publication date: November 30^th 2021