BPD Encouraged to Upgrade: From Fund Manager to Regional Economic Growth Orchestrator

Solo, 17 April 2026 – Regional Development Banks (BPD) are encouraged to fundamentally transform their role, from simply managing regional government funds to becoming an orchestrator of regional fund flows as well as the main driver of regional economic growth through productive and measurable financing innovations.

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

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

"In the future, it will not be enough for BPD to only act as manager of regional government funds. BPD must transform into an orchestrator of regional fund flows that is able to move the economy actively and sustainably," said Agus.

He explained that BPD has structural advantages that other banks do not have, starting from closeness to regional governments, understanding of local economic characteristics, to networks that reach down to the regional level.

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

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

Agus emphasized that regional fiscal limitations should not be an obstacle to development. In these conditions, financing innovation is the key to maintaining sustainable government spending and regional economic growth.

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

"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 regional public sector financing.

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

To encourage BPD to move up in class, Agus said that the transformation would be focused on three main pillars:

According to him, the future success of BPD will not only be measured by financial performance, but by its contribution in encouraging real regional economic growth.

"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.

"We cannot develop a region alone. We are not supermen, but a super team. Everyone must collaborate to encourage regional economic growth," he said.

He also emphasized the important role of BPD in:

According to him, BPD must be able to be present as a solution to various regional economic challenges, ranging from fiscal limitations to improving community welfare.

It is hoped that this seminar will be a strategic momentum to accelerate the transformation of BPD into a regional financial institution that is more modern, adaptive and has real impact.

In the future, it is hoped that BPD will not only become a financial intermediation institution, but also become a driving force for inclusive and sustainable regional development