ASEAN State Leaders Agree On Payment Connectivity

President Joko Widodo (center) took a photo with a number of ASEAN/POOL/ANTARA PHOTO/Rivan Awal Lingga/hp heads of state.

LABUAN BAJO - This year Indonesia has the mandate to host the 42nd Summit of the Southeast Asian Association (ASEAN).

Indonesia has designated the Labuan Bajo Priority Tourism Area, East Nusa Tenggara (NTT), as the main location for holding the peak of the ASEAN 42nd Summit for 3 days, from May 9 to May 11, 2023.

In its chairmanship, Indonesia has the theme "ASEAN Matters: Epicentrum of Growth" which means ASEAN is relevant and important as a center of world growth, with the aim of strengthening ASEAN's institutional capacity and effectiveness in order to be able to answer challenges in the next 20 years.

In the economic sector, one of these grand events discusses ASEAN as a center of growth. With a large population and economic growth that is almost always above the world's economic growth average, ASEAN is expected to continue to be an inclusive, resilient, and sustainable center of economic growth.

In addition, this event will encourage the wheels of the economy in various cities throughout Indonesia and become a momentum to show progress in development so that it can attract foreign investment to Indonesia.

Declaration Of Leaders

On the first day of the Peak of the 42nd ASEAN Summit on May 10, 2023, which was opened by the President of the Republic of Indonesia, Joko Widodo, the meeting of leaders of ASEAN member countries resulted in various Declarations of ASEAN Leaders, which were set on May 10, 2023.

Reported by ANTARA, Thursday, May 11, in the economic sector, one of the results of the ASEAN Leader Declaration discussed increasing regional payment connectivity and promoting local currency transactions.

The declaration of leaders of various agreements, among others, is given the objectives of regional economic integration as stated in the ASEAN Blue Prints of the 2025 Economic Society, visionful to create a very cohesive deep integration and ASEAN economy, which will support sustainable economic resilience and growth, among others, by ensuring that the financial sector is inclusive and stable.

Then, recognize the faster, cheaper, safer, more transparent, and more inclusive cross-border payment systems and services in providing wider benefits to supporting regional economic growth and the digital economy.

Kemudian, mengakuipotensi manfaat penggunaan mata uang lokal dalam memperkuat ketahanan keuangan, mendaldalami integrasi keuangan regional dengan meningkatkan perdagangan intra-ASEAN dan investasi, serta memperkuat rantai nilai regional.

Then, noted that various ASEAN initiatives have called for increased regional payment connectivity and promoted the use of local currencies for cross-border settlements in the region. Including the Strategic Action Plan (SAP) for Financial Integration (20162025), ASEAN Payment Connectivity Initiative, and Local ASEAN Guidelines for the Currency Settlement Cooperation Cooperation (LCSF).

Furthermore, realizing the ASEAN Comprehensive Recovery Framework (ACRF) and its implementation, by maximizing the potential of the intra-ASEAN market and broader economic integration. Also calls for promoting the use of local currencies, and broad strategies, accelerating the inclusive digital transformation, calling for promoting financial inclusion including through digital financial connectivity services and regional payments.

Also emphasized the importance of providing a possible environment to strengthen regional links and payment systems to support faster, cheaper, safer, more transparent and more inclusive cross-border payments to promote the development of local currency markets in the region as well as reduce the risk of foreign exchange and fanfare.

Furthermore, welcoming the progress of regional payment connectivity cooperation and the promotion of local currency use in the regions, including a memorandum of understanding of cooperation in regional payment connectivity between Indonesia, Malaysia, the Philippines, Singapore, and Thailand, the implementation of bilateral LCSF between several ASEAN member countries and the interests of other ASEAN member countries to join the initiative.

Also highlighting the 2023 Indonesian Chairship Theme ASEAN Matters: Epicentrum of Growth, which underscores ASEAN's commitment to ensuring that it remains resilient, effective, and responsive to regional and global future challenges, as well as positioning ASEAN as the center of global economic growth.

Regional payment connectivity

In the ASEAN Leaders Declaration, leaders are committed to advancing regional payment connectivity, taking advantage of the overflow of opportunities brought by innovation to facilitate smooth and secure cross-border payments, taking state of state into account.

Then, encourage the use of local currencies for cross-border transactions in the region and support the establishment of task forces to explore the construction of the ASEAN local currency transaction framework.

Then, support further cooperation in advancing regional payment connectivity and facilitating interoperability of cross-border payment systems, improving infrastructure, accelerating digital payment adoption, deepening financial inclusion, developing human resources, strengthening cybersecurity, and others.

Furthermore, it supports further cooperation in promoting local currency transactions and the role of financial sector authorities to reduce the vulnerability of the region to external ones; promote the creation of efficient price discovery. Also consider these provisions as flexibility of foreign exchange administration, increase infrastructure financial markets, and lower cross-border transaction costs.

Then, bring in an initiative to explore the connection between local ASEAN currency transactions within the framework with cross-border payment initiatives, including regional payment connectivity.

Further involved and collaborating with ASEAN external partners, international organizations, and the private sector to build cooperation and partnerships in advancing regional payment connectivity and promoting local currency transactions.

The task of ASEAN finance ministers and central bank governors is to oversee the implementation and advance regional payment connection activities and explore the development of the ASEAN local currency transaction framework, with the help and close coordination between sectoral entities of each country.