Bank Indonesia promotes efficiency of cross-border financial transactions in China

Changsha – Bank Indonesia’s Beijing Representative Office Head Yulian Wihantoro promoted efficiency in cross-border financial transactions through a local currency transaction framework in China.

“When companies undertake international expansion and Chinese companies are known for their initiative to expand globally, there is one important factor that is sometimes overlooked: the efficiency of cross-border financial transactions,” said Yulian Wihantoro, Head of Bank Indonesia’s Beijing Representative Office, at an “Indonesia–China Business Dialogue” event in Changsha, Hunan Province, China, on Tuesday, 10 March local time.

Yulian conveyed this during an event organised by the Indonesian Embassy in Beijing in collaboration with the Indonesia Investment Promotion Center (IIPC) Beijing, attended by approximately 200 Chinese and Indonesian entrepreneurs.

“An efficient financial system helps businesses reduce costs, manage risks, and improve operational efficiency. This is where financial cooperation between Indonesia and China becomes highly relevant and important,” he said.

Yulian stated that Bank Indonesia and China’s central bank signed a Bilateral Cooperation Framework for Local Currency Transactions in May 2025, enabling trade and investment transactions to be settled directly using rupiah and renminbi (RMB).

This reduces dependence on third-party currencies and improves cross-border transaction efficiency.

For businesses, the cooperation can lower transaction costs, as companies no longer need to use multiple currencies – only rupiah or renminbi. The cooperation also helps accelerate transaction settlement processes, particularly given the one-hour time zone difference, and improves foreign exchange risk management capabilities, especially in an uncertain global economic environment.

“This allows companies to focus more on expanding their businesses, operations, and partnerships,” Yulian said.

“Currently, the local currency transaction (LCT) framework continues to develop, with the number of participating companies and transactions increasing significantly. China now accounts for a large share of LCT transactions outside ASEAN countries,” he explained.

Indonesia and China are also strengthening cross-border digital payment connectivity through a QR (Quick Response) code-based payment system to facilitate tourists, consumers, and business people in making payments using domestic payment applications.

The digital payment service is planned to be available on the Alipay application from May 2026.

Chen Hailei, Vice President of CNGR Indonesia, a Chinese electric vehicle battery material manufacturer operating in Morowali, stated that Indonesia has been one of the company’s main foreign expansion destinations since the beginning.

“Indonesia has been one of our primary destinations for overseas expansion from the outset. In 2011, we came to Jakarta, and since then we have begun our entire investment in Indonesia,” said Chen.

Chen noted that CNGR in Indonesia has become a complete business base including product development, planning, and industrial layout.

CNGR has also registered many other companies in Indonesia, provided numerous technologies, created employment opportunities, and transferred some of CNGR’s capacity and traditional products to Indonesia.

“Although the scale of our industrial team in Indonesia is now very large, much of this was actually achieved in just a short period – approximately five years,” said Chen.

“The products we manufacture in Indonesia, such as products within our industrial chain, including battery materials, ternary materials, and various other product forms, are all produced according to global standards,” he added.

Chen stated that Indonesia has different raw material characteristics compared to China. The diversity and complexity of raw materials from Indonesia are higher compared to the character of raw materials from China.

Another challenge is that the company must independently develop new industrial processes, referred to as the second generation, as a solution to balance various technical issues and industrialisation processes.

If Chinese entrepreneurs wish to invest in Indonesia, Chen said, there are at least three things that must be done.

First, complete globalisation work comprehensively. Second, investment must be considered from the perspective of complete industrial chain integration.

Third, companies must genuinely prepare ways to address local issues such as various social concerns, future costs, and joint development with Indonesian companies.

“Based on our own internal calculations at present, initial capital expenditure in Indonesia is roughly 25-30 per cent higher compared to China. That is for capital expenditure (CAPEX), but in terms of operational expenditure (OPEX), it is far lower,” said Chen.

Chen stated that generally, investment costs in Indonesia at present may be slightly higher compared to China, but the trend continues to decline.

“I can provide you with one data point: since 2021, when we began investing, until 2025, the comparison of overall investment costs between China and Indonesia in our project has actually fallen by nearly 30 per cent,” explained Chen.

He also emphasised that Chinese entrepreneurs wishing to do business in Indonesia need to understand Indonesia’s overall political conditions, as there are considerable differences between the legal systems in China and Indonesia.

“The political structure and regulatory mechanisms are also different from China. In China, the government may be more prominent as a supervisory party, whereas in Indonesia, service and supervisory functions operate more in tandem,” said Chen.