State Bonds Sales to be Focused on Domestic Market
Monday, 08 January, 2007 | 14:15 WIB

TEMPO Interactive, Jakarta: The government will focus on seeking funds from the domestic market through the diversification of State Bonds (SUN).

Foreign loans as a source of financing for the 2007 State Budget will be reduced because the fluctuation risk of exchange rates is high.

According to Finance Minister Sri Mulyani, state bonds diversification to domestic market may cover some state budget's financing posts that were initially paid for by foreign loans or donations.

“We will also carry out market diversification that is still being dominated by foreign banks and investors,” she said last week in Jakarta.

According to her, the focus on the domestic market will ease the prediction over fiscal management because local investors are generally not too sensitive as regards domestic issues.

On the other hand however, foreign investors are difficult to be predicted of and speculative.

“Foreign investors are more sensitive to local issues so that they could respond fast and stimulate the value of state bonds,” he said.

Saebani Hardjono, President Director for Retirement Funds of PT Pertamina, has also asked that the government pay attention to retirement institution as regards issuance of state bonds.

Retirement fund institutions have often faced difficulties in buying state bonds because they lost out to foreign investors.

“We want the government to care more for domestic investors,” he said.

According to Saebani, retirement fund institutions face two problems: low yields and a lack of issued bonds.

Agoeng W, Budiriza