Bank KB Bukopin, Pionir Of Social Bonds For Private Sector Banks In Indonesia

Photo: Doc. Bank KB Bukopin

JAKARTA - Carrying the theme "The First Social Bond For Private Sector Bank in Indonesia" PT Bank KB Bukopin Tbk held an Event Agreement Signing Ceremony at The Langham Room Jakarta with the International Finance Corporation (IFC) World Bank.

The event became one of a series of symbolic events for a cooperation agreement between Bank KB Bukopin and IFC in foreign loan transactions worth US$300 million or Rp4.41 trillion from the IFC. Loans include the issuance of the first social bonds by private banks in Indonesia.

The Social Bonds will be fully dedicated to funding social initiatives focused on handling socio-economic impacts as a result of COVID-19 and financing in social segments such as MSMEs, affordable housing, health care, education, and infrastructure.

Present at the event were representatives from the government, namely Septian Hario Seto as Deputy for Investment and Mining Coordination from the Coordinating Ministry for Maritime Affairs and Investment, Puji Gunawan as Assistant Deputy for Regional Economy and Chancellor Riil from the Coordinating Ministry for Economic Affairs, Deni Ridwan as Director of State Debt Letter of the Directorate General of Financing and Risk Management (DJPPR) from the Ministry of Finance, Riyatno as Deputy for Investment Cooperation of the Ministry of Investment/BKPM, and Kusdarmawan Agustianto as Director of Banking Supervisory II OJK.

Other invited guests who were also present were the South Korean Embassy for Indonesia, government institutions, a number of leading government and private-owned enterprises.

Also present virtually and giving a speech, Coordinating Minister for Economic Affairs Airlangga Hartarto.

"The government supports the cooperation carried out by Bank KB Bukopin with the IFC World Bank for the issuance of these social bonds, to open investment potential in Indonesia. This collaboration is expected to contribute positively to economic growth in Indonesia," said Airlangga, in a statement, Tuesday, September 20.

Bank KB Bukopin will take several steps after receiving a loan facility from IFC, namely KB Bukopin, which is committed to always disbursing credit for three main sectors in order to realize business sustainability for business actors after COVID-19. The three sectors are as follows:

1. Retail Sector: Outreach House Financing.2. SME Sector: Micro, Small and Medium Enterprises includes women's businesses.3. Commercial Sector: Health, Education (outside K-12 education), water-related infrastructure, underwater and terrestrial fiber optic cable production, as well as telecommunications network providers (only for sub-projects or activities located in urban areas).

In order to maintain this social bond to the parties or related sectors, KB Bukopin revealed that he had formed a special team that oversees the distribution of funds so that it is accepted into the predetermined sector.

Deni Ridwan as Director of State Debt Letter of the Directorate General of Financing and Risk Management (DJPPR) from the Ministry of Finance stated that his party noted that the issuance of social bonds by KB Bukopin was the first for private banks in Indonesia. The government certainly greatly appreciates the scheme carried out by KB Bukopin with IFC which dedicates social incentive funding that focuses on resilience and social economy due to the COVID-19 pandemic.

"Learning from the issuance of SDGs Bond and Global Green Sukuk, there is an important role here is to find the right partner. We see this program, as a stepping stone for KB Bukopin to develop bond instruments," said Deni.

Referring to a survey conducted by Bank Indonesia, it was stated that as many as 87.5 percent of MSMEs were affected by the COVID-19 pandemic. Of this number, around 93.2 percent of them were negatively affected on the sales side. In addition, these funds will be used to increase credit disbursement to women's entrepreneurs and women's SMEs (women-nowned small and medium enterprises/WSMEs).

On the same occasion, representing the Coordinating Minister for Maritime Affairs and Investment, Director for Coordination and Mining, Septian Hario Seto said, the issuance of social bonds is a good step for private sector banks in Indonesia.

"I think this is an important step in Indonesia's economic recovery. So I think this momentum must be maintained in the future. Loans from social bonds are in line with programs that are being socialized by the government regarding sustainable finance, which is one of the topics of the issue of six priorities in the financial sector raised at the G20 Indonesia Presidency," said Septian.

Meanwhile, Deputy for Investment Cooperation at the Ministry of Investment/BKPM, Riyatno said, with social bonds, funding for social initiatives that focus on socio-economic impacts and financing of the social segment could be more massive.

"The initiatives in question include affordable house MSMEs, medical equipment, and so on. This effort will have a collective impact on increasing economic growth. Congratulations and success for Bukopin and IFC on collective efforts. The hope is that it can have a real impact on the wider community and the country," said Riyanto.