BPD is encouraged to upgrade: From Fund Manager to Regional Economic Growth Orchestrator

JAKARTA - Regional Development Banks (BPD) are encouraged to fundamentally transform their roles, from merely managing local government funds to becoming regional fund flow orchestrators as well as the main drivers of regional economic growth through productive and measurable financing innovations.

This was conveyed by the Chairman of ASBANDA, Agus H. Widodo, in the National Seminar on Regional Development Banks throughout Indonesia which was held in Solo and was attended by the Governor of Central Java, Ahmad Luthfi.

In his remarks, Agus emphasized that changes in the economic landscape and the limited fiscal space of local governments require the BPD to take a more strategic and proactive role.

"In the future, the BPD is not enough to only play the role of managing local government funds. The BPD must transform into an orchestrator of regional funds that can actively and sustainably drive the economy," said Agus, in his statement, Friday, April 17.

He explained that BPD has structural advantages that no other bank has, ranging from proximity to local governments, understanding of local economic characteristics, to networks that reach down to the regional level.

With this advantage, BPD has a unique position to play a greater role in directly driving the regional economy.

"The BPD must be able to ensure that every rupiah that circulates in the region can provide economic added value, encourage productivity, and strengthen the real sector," he said.

Agus emphasized that regional fiscal constraints should not be an obstacle to development. In this situation, financing innovation is the key to maintaining the continuity of government spending and regional economic growth.

One of the strategic instruments that is being driven is the optimization of regional loan schemes which are not only focused on infrastructure financing, but also for:

• Strengthening public services • Improving the quality of the health and education sectors • Developing MSMEs and the local economy

"Regional loans must be seen as a strategic instrument to create a multiplier effect for the regional economy, not just a source of short-term financing," explained Agus.

In this context, ASBANDA has also submitted a proposal to the regulator to present a more precise policy approach to financing the regional public sector.

"This is not a request for relaxation, but an effort to present a more appropriate framework so that public sector financing can be carried out optimally, but still prudent," he said.

To encourage BPD to rise in class, Agus said that the transformation would focus on three main pillars:

1. Strengthening governance and risk management 2. Development of productive and impactful financing innovations 3. Deepening the role in the regional economic ecosystem

According to him, the success of the BPD in the future is not only measured by financial performance, but by its contribution in encouraging regional economic growth in a tangible manner.

"The future of the regional economy is not only determined by the size of the APBD, but by our ability to manage and direct the flow of funds to create sustainable growth," he concluded.

Meanwhile, the Governor of Central Java, Ahmad Luthfi, in his keynote speech emphasized that regional development requires collaboration across stakeholders.

"Building an area cannot be done alone. We are not supermen, but a super team. Everyone must collaborate to encourage regional economic growth," he said.

He also emphasized the importance of the role of the BPD in:

• Supporting regional investment • Maintaining economic stability • Strengthening the real sector, especially MSMEs

According to him, the BPD must be able to present solutions to various regional economic challenges, ranging from fiscal constraints to improving people's welfare.

This seminar is expected to be a strategic momentum to accelerate the transformation of BPD into a more modern, adaptive, and impactful regional financial institution.

In the future, the BPD is expected not only to be a financial intermediation institution, but also to be a driving force for inclusive and sustainable regional development.