Indonesia Promotes Use of Local Currencies in Multilateral Cooperation
Bank Indonesia and the Indonesian Government have jointly promoted the LCT framework to diversify bilateral payments and increase market efficiency.
Jakarta (ANTARA) - The government is promoting the optimisation of local currency transactions (LCT), as most of Indonesia’s major trading partners are non-dollar economies.
“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,” stated Deputy for Coordinating the Management and Development of State-Owned Enterprises at the Coordinating Ministry for Economic Affairs, Ferry Irawan, in an official statement received in Jakarta on Saturday.
Currently, the participation of State-Owned Enterprises (SOEs) accounts for around 10-19% of total Local Currency Transaction (LCT) volumes. This indicates increasing utilisation and significant room for further expansion.
Indonesia’s LCT framework has continued to evolve since its launch in 2018. Its application has expanded across various major sectors, including manufacturing, electricity and gas, transportation, trade, and services.
This utilisation demonstrates the role of LCT as a tangible instrument to strengthen the rupiah and support real sector activities.
By 2025, the LCT framework has been implemented with six major partners, namely Malaysia, Thailand, Japan, China, South Korea, and the United Arab Emirates.
Cooperation has also been strengthened through the expansion and enhancement of bilateral arrangements, reflecting significant progress in deepening regional financial cooperation and promoting broader use of local currencies.
Ferry conveyed that LCT transactions have shown a consistent upward trend in value, participation, and market adoption.
In January-February 2026, the transaction value reached approximately $8.45 billion, significantly higher compared to the same period last year at $3.21 billion.
“This growth is also supported by an increase in the number of users to 14,621 in February 2026, with an average of 16,030 users per month, far above the 2025 monthly average of 9,720 users,” said Ferry.
LCT enables cross-border transactions to be settled directly in local currencies without relying on major currencies such as the US dollar.
The implementation of LCT is supported by three main components: flexibility in Foreign Exchange Administration (FEA), Monitoring and Supervision Mechanisms, and Appointed Cross Currency Dealers (ACCD).
To further optimise LCT utilisation, the Indonesian government has established the National LCT Task Force, comprising 10 ministries and agencies.
This task force strengthens coordination, supports policy development, and accelerates the adoption of local currency transactions, particularly in export-import activities.
Through LCT, the government is committed to providing facilities, incentives, and simplified processes for business actors to enhance efficiency, reduce transaction costs, and expand the use of local currencies in international trade.
“The development of LCT is a concrete and strategic step towards increasing efficiency, reducing external vulnerabilities, and strengthening multilateral financial cooperation,” stated Ferry.