The 43rd ASEAN Summit will occur in Jakarta on September 5-7, 2023. Previously, as Chair of ASEAN 2023, Indonesia had successfully held the 42nd ASEAN Summit in Labuan Bajo on 10-11 May 2023. The 42nd ASEAN Summit in Labuan Bajo resulted in various agreements among country leaders in the region.

Many important and intense issues were discussed at the 42nd ASEAN Summit in Labuan Bajo, from protecting fishermen and migrant workers, eradicating human trafficking to issues related to regional payment connectivity and local currencies in the ASEAN region.

The issues prioritize using local currency in transactions and payment systems connected in the region, namely with two schemes using local currency in the region (Local currency transaction/LCT) and regional payment connectivity (RPC). If this agreement is implemented in the region, the currency exchange rates of ASEAN countries are expected to be more stable and no longer dependent on the US dollar.

In addition, reducing the use of US Dollars or de-dollarization will also reduce global risks to countries in the ASEAN region. Thus, it can accelerate the transformation of the digital economy and develop a stable financial sector as the foundation for regional economic integration. This is one of the missions in Indonesia's Chairmanship in ASEAN 2023.

Faster and Easier Transactions

The agreement in prioritizing regional payment connectivity and local currency transactions will positively impact countries in the region. In addition, the two schemes, RPC and LCT, are part of the 3 Priority Economy Deliverables (PEDs) of the 2023 ASEAN Chair Economic Pillar.

For example, implementing the RPC scheme will include digital payment systems in regional countries, using the QR Code Indonesian Standard (QRIS), and fast payments. So, cross-border payments in the ASEAN region will be faster, cheaper, and inclusive.

Meanwhile, the LCT scheme is a bilateral trade and investment transaction between countries in the region that no longer requires US Dollars as a payment system but uses the local currency of each country in the region.

So far, five countries in the Southeast Asia region have agreements to pay transactions using local currency, namely Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Vietnam will be the sixth country in the region that will participate in realizing the agreement.

However, to realize this agreement, several things still need to be prepared. One of them is the involvement of private banks to facilitate transactions using local currency, as well as the participation of private exporters.

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