Semester I Cross-Border Transactions with Local Currency Reached IDR 72 Trillion
Bank Indonesia (BI) and nine government ministries/agencies (K/L) that are part of the National Task Force for Local Currency Transactions (LCT) have agreed to strengthen their commitment to increasing the use of local currencies in trade transactions with other countries.
This agreement is outlined in a Cooperation Agreement (PKS) and the coordination of the duties and functions of the National Task Force for Local Currency Transactions, which aims to promote the implementation of local currency transactions (LCT) in bilateral transactions.
The agreement was signed by BI and senior officials from the Coordinating Ministry for Economic Affairs, Coordinating Ministry for Maritime Affairs and Investment, Ministry of Finance, Ministry of Foreign Affairs, Ministry of Industry, Ministry of Trade, Ministry of State-Owned Enterprises, Financial Services Authority, and the Deposit Insurance Corporation.
This PKS is a follow-up to the Memorandum of Understanding (MoU) signed on September 5, 2023. The PKS signing ceremony took place in Jakarta on Thursday, August 29, 2024, after the meeting of the Deputy-Level Working Committee of the National LCT Task Force.
Bank Indonesia Senior Deputy Governor, Destry Damayanti, stated that this PKS is a concrete step to implement the commitment, cooperation, and policy synergy in accelerating the implementation of LCT.
Furthermore, it also serves as a guide in the implementation of cooperation and coordination of the National LCT Task Force and all relevant parties, to encourage the increase in LCT realization through synergy of work programs among the members of the National LCT Task Force.
This step is expected to support the efforts to diversify currencies in bilateral transactions, as a form of risk mitigation amid high global uncertainty, as well as to deepen the financial market and maintain the stability of the rupiah exchange rate, said Destry in a written statement by BI's Assistant Governor, Erwin Haryono.
The Deputy for Macroeconomic and Financial Coordination of the Coordinating Ministry for Economic Affairs, Ferry Irawan, welcomed the LCT initiative in economic and financial transactions between countries.
This initiative has shown very encouraging results, as seen from the significant increase in transactions in terms of value and the number of users since the launch of LCT in 2018. "Ministries/Agencies must support the acceleration of LCT implementation through their respective strategic programs," he added.
Currently, the effective LCT includes Malaysia, Thailand, Japan, and China. In the first half of 2024, the transaction value reached USD4.7 billion or around Rp72 trillion.
"This year, the LCT transaction value is expected to increase 1.5 times compared to 2023, which reached USD6.29 billion (almost Rp100 trillion)," Ferry revealed.
Going forward, he hopes the implementation of LCT will continue to increase, after the agreements with four other countries (Singapore, South Korea, India, and the United Arab Emirates) become effectively implemented.
Collaboration and policy synergy among the members of the National LCT Task Force need to be further strengthened to encourage the increase in LCT realization.
