ASEAN Agree to Strengthen Regional Payment Connectivity

Armfalcon.com, JAKARTA — In the 42nd ASEAN 2023 Summit in Labuan Bajo which took place on 10-11 May 2023, on the economic pillar, ASEAN country leaders have agreed to strengthen regional or regional payment connectivity. Payment Connectivity (RPC). Likewise, with local currency transaction agreements for each country or Local Currency Transaction (LCT).

“Implementation of local currency transactions and digital payment connectivity between countries agreed to be strengthened, this is in line with the cross-ASEAN central goal so that ASEAN will become stronger and more independent,” said President Joko Widodo (Jokowi) in a written statement released by Bank Indonesia, Friday (12/12/2019) 5/2023).

The two outputs aim to build a vision among ASEAN Country Leaders to develop a stable financial sector as a foundation for regional economic integration. RPC and LCT are a means of advancing regional payment connectivity and local currency transaction mechanisms for each ASEAN Country.

These two things are part of the three Priority Economy Deliverables (PEDs) of the 2023 ASEAN Chair Economic Pillar which aim to demonstrate commitment and determination with ASEAN leaders. In particular, to deepen financial integration and stability.

RPC as part of efforts to strengthen regional economic integration takes advantage of opportunities to expand payment connectivity cooperation in ASEAN in a multilateral manner. Such cooperation can facilitate cross-border payments in various jurisdictions and shorten the processing chain which in turn magnifies the benefits of cross-border payments.

Currently the RPC collaboration has resulted in the implementation of QR Code-based cross-border payments between Indonesia and Thailand and Malaysia. To complement regional payment connectivity initiatives, an LCT framework was developed to expand the local currency transaction mechanism of each ASEAN country regionally.

This will support ASEAN’s efforts to deepen comprehensive financial integration. Previously, ASEAN member countries had developed the ASEAN Local Currency Settlement Cooperation Framework Guidelines to promote the use of local currencies in the ASEAN region for cross-border trade, investment settlement, and income or transfers.

At present there has been the implementation of LCT cooperation between a number of ASEAN countries and other countries, namely Malaysia, Thailand, Japan and China. Meanwhile, Singapore and South Korea are in the stage of building a cooperation framework.

Later, LCT transactions will be developed for trade and investment and all economic and financial transactions. Some of them, such as demand deposits, capital transactions, and financial transactions.