Indonesia Boosts Local Currency Transactions, Value Surpasses US$8.45 Billion
The Indonesian government continues to encourage the use of Local Currency Transactions (LCT) as a strategy to strengthen economic resilience amid global dynamics. This approach is deemed increasingly relevant given Indonesia’s trade structure, which is dominated by non-dollar partners, thereby opening significant opportunities to reduce dependence on major currencies such as the US dollar.
Based on the latest data, Indonesia’s trade performance still shows a positive trend. In February 2026, a surplus of around US$1.27 billion was recorded, primarily supported by non-oil and gas exports such as coal, palm oil, iron, and steel. This condition provides a strong foundation for expanding LCT implementation in cross-border transactions.
The government views the adoption of LCT as experiencing continuous development, although the contribution from State-Owned Enterprises (SOEs) currently ranges from 10% to 19% of total transactions. These figures indicate substantial room for expansion, particularly if driven more aggressively through policies and incentives.
Deputy for Coordination of SOE Management and Development at the Coordinating Ministry for Economic Affairs, Ferry Irawan, emphasised the importance of LCT’s role in maintaining economic stability. He stated that the government, together with Bank Indonesia, continues to strengthen this cooperation framework in international forums.
“Bank Indonesia and the Indonesian Government have jointly advanced the LCT framework to diversify bilateral payments, enhance market efficiency, deepen financial markets, and ultimately reduce exchange rate volatility while strengthening economic resilience,” said Ferry.
Since its introduction in 2018, LCT implementation in Indonesia has expanded across various sectors, from manufacturing to services. Additionally, cooperation has been established with several major partner countries, including Malaysia, Thailand, Japan, China, South Korea, and the United Arab Emirates.
This development is reflected in the surge of transaction values in the first two months of 2026. The government recorded LCT transaction values reaching approximately US$8.45 billion for the January to February period, a sharp increase compared to the same period last year at US$3.21 billion.
Not only in terms of value, the number of users has also seen significant growth. By February 2026, the number of users reached 14,621, with a monthly average of around 16,030 users. This figure far exceeds the 2025 full-year monthly average of 9,720 users.
“LCT transactions have shown a consistent upward trend in value, participation, and market adoption. In January-February 2026, the transaction value reached approximately USD8.45 billion, much higher compared to the same period last year at USD3.21 billion. This growth is also supported by an increase in the number of users to 14,621 in February 2026, with a monthly average of 16,030 users, well above the 2025 monthly average of 9,720 users,” explained Ferry.
In practice, LCT allows business actors to settle cross-border transactions directly using each party’s local currency, without needing conversion to the US dollar. This scheme is considered capable of suppressing transaction costs while reducing exchange rate fluctuation risks.
To accelerate implementation, the government has also formed the National LCT Task Force involving various ministries and agencies. This step is expected to strengthen policy coordination and encourage wider adoption, particularly in export-import activities.
In addition, the government is committed to providing various facilitations for business actors, from simplifying processes to offering incentives. The aim is to make the use of local currencies more competitive and attractive to the business world.
“The development of LCT is a concrete and strategic step towards increasing efficiency, reducing external vulnerabilities, and strengthening multilateral financial cooperation. Through ongoing collaboration between the Government, financial institutions, and business actors, we can build a more resilient, integrated, and sustainable economic ecosystem,” concluded Ferry.