Bank Indonesia (BI) pointed to positive and significant development in the transaction value using the Local Currency Settlement (LCS) with Malaysia and Japan.

“(The percentage of LCS) in 2020 exceeded four percent of our total trade with Malaysia and clocked a three-fold rise from our starting position in 2018 at around 1.4 percent,” BI International Department’s Chief Executive Director Doddy Zulverdi stated during an online media briefing observed here on Friday.

In detail, the LCS percentage in the Indonesia-Malaysia trade reached 1.4 percent in 2018, thereafter increasing to 3.6 percent in 2019, 4.1 percent in 2020, and 2.8 percent during January-March 2021.

Zulverdi also highlighted promising developments in the rupiah-yen LCS transactions despite only being implemented since the start of September 2020.

He noted that during the September-December 2020 period, the LCS percentage in the Indonesia-Japan trade was recorded at 0.1 percent, though rising significantly to 3.4 percent during the January-May 2021 period.

The chief executive director is upbeat about the use of LCS being accelerated with the strengthening of LCS collaboration with Malaysia and Japan implemented at the start of August this year.

“We admit that the figure is still small as compared to the trade total, but it is a positive trend, and various strengthening strategies have been implemented. Our optimism will continue to rise,” he remarked.

BI has applied several strategies to strengthen the LCS framework, including by raising entrepreneurs’ awareness and interest through the comprehensive LCS campaign, joint dissemination with authority partners, and reinforcing dissemination, consultation, and education functions.

BI has also strengthened the LCS Appointed Cross Currency Dealers (AACD) framework and pushed for the development of non-US Dollars foreign exchange market as well as reinforced synergy with the ministry, related institutions, and authority partners to incentivize entrepreneurs to utilize LCS.

Source: Antara News