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Government Bonds are securities that have been issued by the government to build the country which certainly requires large costs. The function of SUN itself is as a request from the state to its people to be able to invest a fund as capital for the development of the country. For more details about SUN itself, you can start understanding it in our discussion this time. Before reading the GICTrade article, it doesn't hurt to download the GIC Mobile application, both on the Google Play Store and Apps Store.
What are Government Bonds
Government Bonds (SUN) are securities in the form of debt acknowledgments in the form of Rupiah or foreign currency that will be guaranteed an interest and principal payment by the State of the Republic of Indonesia, in accordance with the existing validity period. This letter was issued by the Government in accordance with Law No. 24 of 2002, which consists of 2 letters, namely, State Treasury Bonds (SPN) and also State Bonds (including Retail State Bonds/ORI). This SUN is used by governments to be able to finance the needs of a government budget to be able to cover the deficit of the State Revenue and Expenditure Budget (APBN). So, indirectly, if you invest with SUN, you will participate in a development whose benefits can also be felt by yourself.Functions and Objectives of Government Bonds
These Government Bonds are not suddenly issued just like that, but of course this SUN has certain objectives for its issuance, which include to provide funding for the state budget deficit, as well as to cover the shortfall in cash in a short period of time, and also to manage the state-owned portfolio. The central government will have full authority to be able to issue the SUN after obtaining an approval from the House of Representatives that has been ratified within the framework of the ratification of the State Budget and also after consultation by Bank Indonesia. For a summary, there are functions of SUN itself in its manufacture, namely:- Financing the deficit from the state budget.
- Closing shortfalls in short-term cash.
- Manage portfolios that are state debts. The central government will be authorized to issue the SUN after obtaining approval from the House of Representatives which is then ratified within the framework of the ratification of the State Budget and after consultation with Bank Indonesia. For this issuance, the Government will be obliged to pay interest and principal when it is due. Funds for the payment of interest and principal of SUN will be provided in the State Budget.
Types of Government Bonds
After knowing what Government Bonds are, this time we will learn what are the types of SUN itself. This SUN has been recorded in law number 24 of 2002, where there are two types of SUN, namely State Treasury Securities or SPN and also State Bonds or commonly referred to as ON.Surat Perbendaharaan Negara (SPN)
Surat Perbendaharaan Negara or SPN is a SUN that has a maximum period of 12 months using a discounted interest payment system. Some other countries will be better acquainted with this SPN as T-bills which is short for Treasury Bills. In general, this SUN will be more aimed at large investors.Obligasi Negara (ON)
ON are a type of SUN that has a term of more than 12 months using coupons or with an interest payment system that will be carried out at a discount. Obligasi Negara that have used coupons will have a payment schedule that is made periodically, such as one, three, or even once every six months. Meanwhile, for ON without coupons, the ON will not have a payment schedule in the form of coupons which will be further divided into 3 types of bonds, which are:ORI (Obligasi Ritel Indonesia)
ORI is the oldest retail bond that has been issued by the Indonesian state. The first time the ORI was issued was in July in 2006 using the ORI001 series. In general, every year the Indonesian state will issue 1-2 ORI.SBR (Saving Bond Ritel)
SBR is a bond by the state that will be sold to individuals or individuals of Indonesian citizens through distribution partners in the domestic primary market and will not be traded in a secondary market. The characteristic of the Retail Saving Bond itself is the existence of a floating drinking rate and also an early redemption feature.Sukuk Ritel (SR)
Sukuk Ritel or commonly abbreviated as SR is a government bond that will be sold to individuals and individuals from Indonesian citizens with distribution partner companies located in the sharia-based domestic primary market. In addition, this type of ritel Sukuk bond has also been guaranteed by the Indonesian Ulema Council institution regarding its sharia value. If you look at the characteristics, this Retail Sukuk has almost the same characteristics as ORI, namely that there is a fixed rate every year in the secondary market.Benefits of Government Bonds
There are benefits from the issuance of Government Bonds itself which will affect the country's economy. So these benefits are:Fiscal Instruments
Fiscal policy instruments are sectors used by the government to maintain the stability of a state-owned macroeconomy. As a fiscal instrument, that is, debt securities will be able to explore a potential source of state budget financing which is greater than capital market investment.Investment Instruments
These government bonds are included as investment instruments that have no risk or are relatively risk-free regarding default and also have the potential to earn profits in a secondary market.Financial Market Instruments
In addition to the above benefits, government bonds can also increase the strength of financial system stability and can also be used as a benchmark to be able to determine the value of other instruments.Can Government Bonds Be Traded?
Investments using government bonds will usually be traded in two types of markets, namely the primary market and the secondary market. The primary market is a place used to sell debt securities at the first stage between a company and also investors or the general public. The price of the letter sold will generally be fixed and also the number will be limited. Meanwhile, the secondary market is a place to trade debt securities after experiencing the first purchase process. Buying and selling will be carried out by investors, which makes the price of the letter will vary and also fluctuate. Profits from buying and selling can also be obtained from the investors themselves. The company will not benefit at all. For example, investors will buy debt securities on the primary market in a company. Because they certainly want a more profit, these investors will sell it again on the secondary market at a price that is more expensive than the purchase price or the previous price of other investors.How to Buy Government Bonds
For those of you who want to buy government bonds, but don't know how to do it, then you can follow the methods below so that you can buy them properly and correctly. The ways to buy SUN are:Registration
Before you make a purchase, on each platform you will certainly be required to do a registration. The registration that will be done is quite easy, because the government has provided a registration system that can be done online on the provider page of the debt securities to be selected. What you need to do is prepare your identity, which is in the form of an Identity Card, Fund Account Number, Securities Account Number and also a Single Investor Identification Number. If you don't have an account of securities, fund accounts, and also a Single Investor Identification number, then you don't need to worry, because you can create one. Later when you are going to create the data, the creation process will be guided by the Distribution Partner who has been appointed directly by the Ministry of Finance of the Republic of Indonesia.Most recent booking
If you have done the registration process, then the next step you have to do is to place an order. The steps in placing an order are:- You can choose and open the distribution partner you want.
- Next, understand the provisions that have been written in the Information Memorandum.
- Then prepare a securities account, fund account, and also a Single Investor Identification number.
- The next step you have to do is to enter the amount of the nominal amount of the debt securities which you want to buy.
- Once done, you will receive a message in the form of a billing code and also a notification that will inform you that your order has been verified.
Payment
The next way to buy Government Bonds is to make a payment. The amount of the payment nominal that you will pay must be in accordance with the nominal that you have written at the time of the ordering process.Payment Confirmation
If the payment process has been completed, then the next step you must take is to confirm the payment to the Distribution Partner you have chosen. Make sure you have received a code in the form of the State Revenue Transaction Number. You will also later get a confirmation of the ownership of the debt securities after the government has issued them. The process of confirmation will take place on a date that has been determined by the government. So, you just need to wait for the process.Examples of Government Bonds
For the example of this Government Bond itself, it is the same as the type that has been explained earlier, namely there are State Treasury Bonds or SPN and also Government Bonds (ON). For SPN itself, when SPN is classified according to its ownership, then SPN can be further divided into:- SPN owned by Government Bank
- SPN owned by National Private Bank
- SPN belongs to Mixed
- SPN owned by Foreign Banks
- SPN owned by the Regional Development Bank (BPD)
- SPN owned by Bank Indonesia
- SPN belonging to the Customer.
