Bye Dollar! RI-China Strengthen The Use Of Local Currency In Cooperation

Governor of Bank Indonesia Perry Warjiyo. (Photo: Doc. ANTARA)

JAKARTA Bank Indonesia (BI) stated that the supply of economic partnerships between Indonesia and China through transactions using local currency (LCT) has continued to be strengthened since it was implemented on September 6, 2021.

BI Governor Perry Warjiyo said the LCT mechanism is believed to encourage investment and trade cooperation between the two countries.

He conveyed this during a working visit in China this week.

"As the largest trading partner, the second highest direct foreign investment contributor, and Indonesia's top three tourist sources, China needs to continue to strengthen bilateral relations with Indonesia," he said, quoted Friday, September 29.

According to Perry, Indonesia's macroeconomic performance which records low inflation and is projected to continue to decline, stable rupiah exchange rates, fiscal deficits that continue to shrink and increase banking financing.

Indonesia is macroeconomically stable, monetary and financial stability. This is important because there is no investment and business prospects if a country is unstable," he said.

To note, LCT cooperation has also been implemented between Indonesia and a number of countries in the region, namely Malaysia, Thailand, and Japan.

Meanwhile, with Singapore and South Korea, a joint agreement has been reached to build a framework for implementing LCT cooperation with Indonesia.

Adapu, LCT sebagai mekanisme transaksi bilateral antara pelaku dengan mitra menggunakan mata uang setempat dalam transaksi, dalam hal ini Yuan (CNY) maupun Rupiah (Rp). Dengan kata lain transaksi LCT dapat menurunkan pendependsi terhadap mata uang asing lain (utamanya dolar).

Currently, China's LCT Indonesia, which has been initiated since 2017, has involved 16 banks in Indonesia and 8 banks in China. The performance of the LCT Indonesia-China for the last 2 years shows positive development both in terms of volume and number of users.

"To optimize it, in LCT campaign activities in China, BI encourages the commitment of bank leaders and business actors to increase LCT utilization in the future," said Perry.

On the same occasion, there is an Indonesian clean and clear (CC) project curation offered for Chinese investors. There are 4 sector focuses that Chinese investors are interested in, namely renewable energy, projects in the IKN area, transportation infrastructure and the electric vehicle industry.

It was stated that based on the results of the curation of a number of parties including Bank Indonesia, there were 16 selected projects from all over Indonesia, including geothermal energy projects, waste treatment, rubber factories, cocoa commodity development, toll road projects, monorails, smelters to the electric engine industry for electric vehicles.

"Hopefully, this investment promotion activity will concretely realize a mutually beneficial partnership between the two countries," concluded Perry.