Bank Indonesia: RI-Japan LCS Transaction Reaches 109.4 Million US Dollars, Up 10 Times In Two Years

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) reported that international trade transactions using local currency (local currency settlement/LCS) between Indonesia and Japan in September 2021 increased 10 times to US$109.4 million per month. This amount grew significantly from the initial implementation in 2020 which was recorded at only US$ 9.8 million.

BI Senior Deputy Governor Destry Damayanti said this book could not be separated from Japan's position as Indonesia's second largest trading partner in terms of exports and third in terms of import countries.

According to him, with the LCS cooperation, it will also increase the volume and value of trade and investment between the two countries.

"Japan's trade and investment relations continue to improve. We can optimize this through the LCS between Indonesia and Japan," he said as reported by the official website, Thursday, November 11.

Destry explained that currently local currency settlement cooperation has been established with four friendly countries, namely Thailand, Malaysia, Japan, and China.

"The four countries were chosen because of the high value of trade transactions and direct investment," he said.

Furthermore, Destri explained that the average export transaction settlement from 2015 to 2020 was 94 percent for exports and 83 percent for imports using United States (US) dollars.

"We try not to depend on one particular currency. We try to diversify so that the risk becomes manageable," he added.

On the same occasion, Deputy Minister of Trade Jerry Sambuaga appreciated BI's role in pushing the international trade balance surplus.

"This is a positive thing to improve the trade balance because the trade sector is closely related to the financial sector," he said.

To note, LCS transactions such as Indonesia and Japan are facilitated by Bank Appointed Cross Currency Dealer (ACCD) partners appointed by the central banks of the two countries.

This designated bank assists in the process of completing trade transactions to investments in local currency. Thus, transactions can directly use rupiah and yuan without the need to convert to dollars.