JAKARTA — The Republic of Indonesia (RI) is leading ASEAN to be able to reduce the use of the US Dollar currency. This aims to be able to continue to increase the use of local currencies from regional countries.
It is known that Indonesia itself currently chairs the 43rd ASEAN Summit in 2023. Of course, this chairmanship continues to be used to achieve a number of big goals, one of which is reducing the use of the US Dollar.
In fact, this nation itself and a number of other ASEAN countries have started de-dollarization since 2017. At that time, the agreement was signed by RI together with Malaysia and Thailand.
The three countries have indeed agreed to be able to settle trade transactions bilaterally but by using local currency (local currency settlement).
These financial activities and transactions include opening accounts in Thai Bhat and Malaysian Ringgit.
The agreement also explains direct quotations for the Baht and Ringgit currencies against the Rupiah as well as trade financing in Baht and Ringgit currencies.
In the meeting of the Minister of Finance and the Governor of the ASEAN Central Bank (AFMGM), all countries have committed to using their local currencies for cross-border transactions.
“ASEAN leaders have supported and are committed to expanding transactions like this. This is an effort that has been agreed upon by the Minister of Finance and can be done in 3 areas, namely local currency transactions to facilitate trade,” said Bank Indonesia Governor Perry Warjiyo.
“And investing both in local currency transactions and cross-border payments,” he added.
Previously, the Executive Director of the International Department, Rudy Brando Hutabarat, explained that the use of local currency would clearly reduce the use of US Dollars in transactions.
When this is done, it will certainly make transaction costs cheaper between various regional countries.
“It’s becoming more efficient, so transactions are not just transactions now, for example with Malaysia it doesn’t convert to USD first, then Ringgit, but it can immediately convert to rupiah,” said Rudy.
Not only with Malaysia and Thailand, but Indonesia also continues to cooperate in increasing the use of local currency with Japan and China, and most recently with South Korea which is just waiting for implementation.
For information, as of June 2023, transactions using local currency are equivalent to US$3.2 billion, which is a much better value compared to transactions throughout the past year.
“So we estimate it will be far beyond 2022,” said BI Senior Deputy Governor Destry Damayanti.
