The latest data from Indonesia's Trade Ministry revealed that total trade between Indonesia and Thailand reached $17.71 billion last year with an increase of Rp30 billion in local currency settlement (LCS) transactions.
According to The Jakarta Post, the increase in local trade and LCS transactions suggests lesser dependence on third-party currencies such as the US dollar. Analysts further noted that increased trade indicates that the two countries' agreement on LCS transactions is substantially being kept.
"The development [and] implementation of the LCS [scheme] was one of the topics discussed in a bilateral meeting between BI Governor Perry Warjiyo and Bank of Thailand Governor Veerathai Santriprabhob," Bank of Indonesia (BI) spokesman, Onny Widjanarko, said on Monday.
For this year, there have already been developments in the two countries' bid to promote local currencies in trade transactions. The first two months of 2019 saw transactions worth Rp 121 billion settled through the use of local currencies. Industry experts believe this development could be a call for other Asian countries to start decreasing dependence on other currencies.
The LCS scheme includes plans to promote local currencies in Indonesia and Thailand in the digital economy. Central bank governors stressed that using local money in the virtual industry will help spur growth in gross domestic product (GDP) records.
According to Onny, Perry pointed out that strong cooperation between Thailand and Indonesia is a key driver in pushing the two countries forward amid uncertainties in the global market.
The LCS scheme was first established in December 2017, ANTARA News reported. Over a year later, the framework appears to have helped achieve the goal of increasing bilateral trade volume without the need to rely heavily on the US dollar and other international currencies.
Aside from agreeing to further increase bilateral trade, the Bank of Thailand and BI discussed potential risks of developing a payment scheme that will help maintain the LCS framework's financial system. Both sides also discussed strategies that will prevent money laundering activities.
In other news, Thailand announced that it will delay plans to decrease rubber exports as the election nears. According to Reuters, Thailand is part of the Tripartite Rubber Council (ITRC) that includes Indonesia and Malaysia. The three Asian countries announced earlier this month that they will cut on rubber experts by 240,000 tonnes.
It is unclear how the upcoming election is delaying Thailand's plan to cut on rubber exports. Officials from Indonesia and Malaysia also made the announcements but official statements have yet to be made by the ITRC members.
