Sunday, 20 June 2021 | 23:46 WIB

BI Issues Regulation to Use Local Currency in Bilateral Transactions

Bank Indonesia

JAKARTA, NETRALNEWS.COM - Bank Indonesia (BI) issued provisions on the completion of bilateral trade transactions with two countries, namely Thailand and Malaysia.

This Regulation of Members of the Board of Governors (PADG) is a regulation of the implementation of Bank Indonesia Regulation No.19/11/PBI/2017 on Local Currency Settlement through Bank.

The provisions govern the LCS implementation mechanism between Indonesia and Thailand using Rupiah and Baht, and the implementation of LCS between Indonesia and Malaysia using Rupiah and Ringgit.

"This is part of the effort to encourage bilateral trade between Indonesia and Thailand and Malaysia, and reduce dependence on certain currencies, thus supporting the stability of the exchange rate," said Agusman, Executive Director of BI Communication Department in a press release on Monday (11/27/2017).

He explained, in the implementation, LCS will be done through commercial banks. To this end, this provision contains the rules of conduct of activities and financial transactions that can be done by Bank Appointed Cross Currency Dealer (ACCD Bank).

The AACD Bank appointed by Bank Indonesia and the partner country's central bank will obtain exemptions on certain provisions and flexibility in conducting certain financial transactions and activities in the forex market.

Financial activities and transactions, among others, include the opening of the Thai Baht and Malaysian Ringgit currency accounts, direct quotes for Baht and Rupiah currency against Rupiah and trade financing in Baht and Ringgit currencies. The terms will come into force on January 2, 2018.

"The provisions on LCS with Malaysia are listed in the Governor's Regulation No 19/12/PADG/2017 on the Settlement of Bilateral Trade Transactions Between Indonesia and Malaysia Using Rupiah and Ringgit Through Banks," he concluded.