Title: Potential financial instruments toward sustainable urban infrastructural development in Indonesia
Authors: Carunia Mulya Firdausy
Addresses: Economic Research Centre, Indonesian Institute of Sciences (P2E-LIPI), Indonesia; Faculty of Economics, University of Tarumanagara, Indonesia
Abstract: The development of urban infrastructures in Indonesia is a must as rapid urbanisation exerts huge pressures on basic services and infrastructures in urban areas. However, the government funds to support urban infrastructures are far from adequate. This paper, by using literatures, studies and primary data, aims at examining potential financial instruments toward sustainable urban infrastructural development in Indonesia. The study confirms that the role of the private business entities is unavoidable to sustain urban infrastructural development. Apart from the available financial instruments that have been implemented to develop urban infrastructures, other financial instruments especially private bonds in the forms of corporate bonds, project bonds and Sharia bonds instruments are potential to be taken into considerations. However, to make these private bonds well-implemented, the government needs to provide regulations, incentives and guarantees to attract the private business entities and community. Thus, much remains to be done by the government.
Keywords: potential urban infrastructural financing; budget deficit; corporate bonds; public-private partnership; PPP; project bonds; Sharia bonds; Sukuk.
International Journal of Critical Infrastructures, 2018 Vol.14 No.4, pp.295 - 310
Received: 23 Nov 2017
Accepted: 29 May 2018
Published online: 03 Oct 2018 *