Opportunities for Expanding Local Currency Transactions Increasingly Open
Deputy for Coordination of State-Owned Enterprise Management and Development in the Coordinating Ministry for Economic Affairs, Ferry Irawan, assesses that Indonesia’s trade structure has opened opportunities for expanding local currency transactions. This is because the majority of its main trading partners are countries with non-dollar economies.
He mentioned that the trade surplus of around US$1.27 billion in February 2026 was mainly supported by non-oil and gas exports such as coal, palm oil, and iron and steel. Ferry made this statement while attending the Bank of China Multilateral Business Dialogue in Jakarta on Friday, 10 April 2026.
“Bank Indonesia and the Indonesian Government have jointly advanced the Local Currency Transaction/LCT framework to diversify bilateral payments,” said Ferry, as quoted from an official statement on Saturday, 11 April 2026.
In addition to diversifying bilateral payments, LCT is designed to increase market efficiency, deepen financial markets, and reduce exchange rate volatility while strengthening economic resilience.
He explained that the participation of state-owned enterprises is currently around 10-19 percent of total local currency/LCT transactions, which is seen as showing room for expansion. Indonesia’s LCT framework, according to him, has continued to develop since its launch in 2018 and has been utilised in various sectors such as manufacturing, electricity and gas, transportation, trade, and services.
According to Ferry, in 2025 LCT has been implemented with six main partners, namely Malaysia, Thailand, Japan, China, South Korea, and the United Arab Emirates. Bilateral arrangements are said to continue to be expanded to encourage the use of local currencies in regional financial cooperation.
In his explanation, Ferry detailed that the value of LCT transactions in January-February 2026 reached around US$8.45 billion, or an increase compared to the same period last year of US$3.21 billion. The number of users recorded was 14,621 in February 2026, with an average of 16,030 users per month, higher than the 2025 monthly average of 9,720 users.
In practice, he said, LCT enables cross-border transactions to be settled directly in local currencies without relying on the US dollar. This scheme is supported by Foreign Exchange Administration flexibility, monitoring and supervision mechanisms, and Appointed Cross Currency Dealers.
The government, Ferry stated, has also formed the National LCT Task Force consisting of 10 ministries and institutions to strengthen policy coordination and accelerate the adoption of local currency transactions, especially for export-import activities. Through this scheme, the government is said to be preparing facilities, incentives, and simplified processes for business actors.
Furthermore, Ferry views the development of LCT as a strategic step to increase efficiency, reduce external vulnerabilities, and strengthen multilateral financial cooperation through collaboration between the government, financial institutions, and business actors.