Indonesian, Malaysian banks expand local currency settlement framework

Jakarta (VNA) – Bank Negara Malaysia (BNM) and Bank Indonesia (BI) on August 2 agreed on the expansion of the ringgit-rupiah settlement framework between the two countries in accordance with a Memorandum of Understanding that was signed in 2016.

This expansion, which became effective from August 2, is part of the continuous effort to facilitate wider use of local currencies for settlement of trade and direct investment between Malaysia and Indonesia.

BNM said in a statement that the expanded framework now includes direct investment, income and transfer, in addition to trade, as eligible underlying transactions.

It also includes expansion of eligible users of the framework, such as individuals, and additional foreign exchange policy flexibility, such as simpler documentation requirements, to facilitate the operationalisation of the framework.

Given the expansion, BNM and BI have also appointed additional qualified commercial banks in both countries to support the operationalisation of the expanded ringgit-rupiah settlement framework.

The appointed banks are experienced in facilitating trade and direct investment between the two countries, have a wide customer base and have established strong business relationships with banks in the counterparty country./.