The Government of Indonesia has been placing increasing emphasis on development of the Nonbank Financial Institutions (NBFIs). Well-functioning government and corporate debt markets are critical elements of modern financial systems. A mature domestic bond market offers a wide range of opportunities for funding the government and the private sector, with the government bond market typically creating necessary benchmarks for other issuers. Bond markets play a critical role by assisting governments and firms in mobilizing financing for investment needs
helping governments and firms in obtaining financing directly from the market. In many countries, bond financing is the main source of long-term financing because commercial banks' shorter-term liabilities place constraints on their ability to finance long-term assets. Demand from other sources is also growing. Indonesia is committed to a large infrastructure development program, a substantial portion of which is expected to be financed by private capital mobilized from domestic as well as international capital markets. Particular effort is being made to encourage the financing of private infrastructure projects through domestic bond markets. In the medium term, sub-national governments will also increasingly need access to bond markets. All in all, therefore, domestic debt markets will play an increasing role in Indonesia's financial sector.