Got Along! Bank Indonesia And Central Bank Of Malaysia Increase Cooperation In Using Local Currency

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) and Bank Negara Malaysia (BNM) have agreed to strengthen the framework for settlement of transactions using Rupiah-Ringgit (Local Currency Settlement/LCS) between the two countries which has been implemented since January 2, 2018.

Head of the BI Communications Department Erwin Haryono said the strengthening of the LCS cooperation framework, which initially only covered trade transactions, has now been expanded to include underlying LCS transactions by adding direct investment and income transfers (including remittances).

"In addition, the strengthening of LCS cooperation between BI and BNM also includes easing foreign exchange transaction rules, among others related to the expansion of hedging instruments and increasing the threshold value for transactions without underlying documents up to 200,000 US dollars per transaction," he said in an official statement, Monday, 2 August.

According to Erwin, strengthening the framework is in line with the Memorandum of Understanding signed by BI and BNM on December 23, 2016.

"The strategy of strengthening the LCS cooperation framework is a shared ongoing commitment by the two central banks in encouraging the wider use of local currency for businesses and individuals to facilitate and increase trade and direct investment," he said.

BI and BNM themselves have appointed several additional banks in each country as Appointed Cross Currency Dealers (ACCD) to support the implementation of strengthening the LCS framework using Rupiah and Ringgit.

The following are the designated banks.

Indonesia

Additional ACCD Bank:

1. PT Bank HSBC Indonesia

2. MUFG Bank Ltd, Jakarta branch

Current ACCD Banks:

3. PT Bank Rakyat Indonesia (Persero) Tbk

4. PT Bank Mandiri (Persero) Tbk

5. PT Bank Central Asia Tbk

6. PT Bank Negara Indonesia (Persero) Tbk

7. PT Bank CIMB Niaga Tbk

8. PT Bank Maybank Indonesia TbkMalaysia

Additional ACCD Bank:

1. HSBC Bank Malaysia Berhad

2. MUFG Bank Malaysia Berhad

Current ACCD Banks:

1. CIMB Bank Berhad

2. Hong Leong Bank Berhad

3. Malayan Banking Berhad

4. Public Bank Berhad

5. RHB Bank Berhad

"The appointed bank has a sufficient level of resilience and health, experience in facilitating trade or the capacity to provide various financial services, and has good cooperative relationships with banks in partner countries," concluded Erwin.