The Regional Bond Policy in the Indonesian Regional Autonomy

Abstract

The research aimed to analyze regional bond policy contained in the Indonesian Act Number 23 of 2014 concerning Regional Government and the Act Number 1 of 2022 concerning Financial Relations between the Central and Regional Government as the regional alternative funding resources used for public crucial infrastructure development. Therefore, the regional bond policy shall be supported by the local community because it facilitates the communities' daily needs. However, it has been more than 2 (two) decades since regional autonomy was implemented, there has not a single Regional Government, whether provincial Government or Regency/Municipal Government has successfully issued regional bonds. Therefore, it is significant to further examine the factors that motivate of the local government tendencies for denying the application of regional bond as a  source of development budgeting as well as to study all elements of regional government authority regarding the issuance of regional bond. This study belongs to the normative judicial research applying the deductive - synthesis method. The results are; first, the factors influencing local governments tend not to implement regional bonds in financing development in their regions, in terms of legal system theory, has many weaknesses, both elements of legal substance, institutional structure, and legal culture. Thus, the existing regional bond issuance policy has legal uncertainty. It is unable to represent the goals of regional autonomy, nor to create prosperity for the community. Second, the Regent/Mayor is not authorized to issue regional bonds due to the fact that it is contrary to Article 10 paragraph (2) of Act Number 23/2014 and Constitutional Court Decision Number 36/PUU-X/2012.

Keywords: regional bonds, legal uncertainty, sources of financing,

DOI: 10.7176/JLPG/133-02

Publication date:June 30^th 2023