Bank Indonesia (BI) noted that currently, Local Currency Settlement (LCS) transactions continue to increase significantly. Proving today, more and more industry players and entrepreneurs are abandoning dollars in trading and investing. Bank Indonesia Senior Deputy Governor Destry Damayanti explained that the imposition of LCS transactions had begun in 2018, Then currently, transactions using LCS have increased to four countries. Apart from Thailand and Malaysia, Indonesia has collaborated with Japan and China.
Local Currency Settlement (LCS) is the settlement of bilateral transactions between two countries carried out in the currencies of each country where the transaction settlement is carried out within the jurisdiction of the respective countries.
“In the last two years, the development of LCS has been extraordinary. From 2020 to the end of 2021, LCS transactions have more than tripled, from US$ 797 million in 2020 to US$ 2.53 billion in 2021,” explained Destry Damayanti.
Prior to the imposition of the LCS, for export and import activities, the circulation of the US dollar currency in Indonesia reached 80-90%. This figure is too high because Indonesia’s trade with America is only 10% for exports and 5% for imports. Therefore, with the use of this LCS, entrepreneurs do not need to make transactions using US Dollars, but can use Rupiah or the currency of the destination country.
In order to continue to encourage LCS transactions, Bank Indonesia (BI) together with the government and other authorities such as the Deposit Insurance Corporation (LPS), the Financial Services Authority (OJK), the Indonesian Employers’ Association (Apindo), and the Indonesian Chamber of Commerce and Industry (Kadin) formed a group task or task force.
June 16, 2022, CNBC Indonesia
(https://www.cnbcindonesia.com/market/20220616101602-17-347555/ri-makin-mantap-tinggalkan-dolar-as-ini-buktinya)