Danamon Supports Trading Activities with Local Currency through Socialization of Local Currency Settlement Implementation

Press Release / 22 May 2023

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Surabaya, 22 May 2023 - PT Bank Danamon Indonesia Tbk ("Danamon" or the "Bank") sponsored and participated in the "Socialization of the Ministry of Industry Regulation No. 45 of 2022 on Industrial Standardization and Socialization of Local Currency Settlement" organized by the Regional Executive Board (Badan Pengurus Daerah or BPD) of the East Java Indonesian National Importers Association (Gabungan Importir Nasional Seluruh Indonesia or GINSI).

This new government-issued regulation aims for Industrial Standardization and the mandatory implementation of Standar Nasional Indonesia (SNI). 

The Local Currency Settlement (LCS) refers to a settlement of transactions performed bilaterally by business players, whether importers or exporters, by using the currency of each country through a bank that has been designated by Bank Indonesia as an Appointed Cross-Currency Dealer (ACCD). Bank Indonesia acts as the country’s payment system regulator. Based on the East Java GINSI database of early 2023, approximately 200 of its members still use the US$ currency, and these business players are those who potentially use the local currency in running their import and export business moving forward.

Irman Faiz, Danamon Economist, who participated in the socialization event, shared his views on the new regulation from a macroeconomic perspective. According to his view, the implementation of this new government regulation is an appropriate step in response to the dynamics and trends of the global economy.

"In recent years, the issue of de-dollarization, which pertains to the efforts of replacing the United States Dollar (USD) currency commonly used in international transactions, has been on the rise. These issues proved by the expansion of China and its currency’s role in global trade and trade activities with Indonesia. Several ASEAN member countries have also entered into agreements outlined in the Local Currency Transaction (LCT) which allows its citizens to perform transactions with trading partners countries using local currencies. The implementation of LCT in the future will greatly affect businesses involved in import and export activities," said Irman.

As an Appointed Cross-Currency Dealer (ACCD) by Bank Indonesia, Danamon actively commits to the successful of the implementation of LCS for importation of various vital commodities, especially those coming from the major trading partners countries, that benefit Indonesians.

Danamon have several superior banking products and services which can be utilized by all business players in Indonesia to support and facilitate their import and export activities, especially with the major trading partner country, such as 1) comprehensive accounts payable and receivable processing solutions; 2) Danamon Cash Connect (DCC) to easily monitor transactions and reduce manual processes; and 3) Trade Finance and Financial Supply Chain solutions that enable companies to effectively manage risks and optimize cash flow.

As one of the event’s speakers, Edy Supriyanto, Senior Vice President - Transaction Banking Sales Head of Danamon, expressed that banks in Indonesia support all the effort from Bank Indonesia to reduce the country’s dependence on the use of the United States Dollar (USD) for import and export activities.

"Danamon currently supports LCS products for two currencies, namely Thai Bhat (THB) and Chinese Yuan (CNY). In the future, Danamon commits to expand the scope of LCS products for other currencies. LCS assists Danamon's customers involved in the import and export business to improve effectiveness and efficiency of their international transactions."

Edy particularly emphasized the Danamon Cash Connect (DCC), banking solution which enables customers to significantly strengthen control of their company especially regarding accounts payable and receivable processes, reduce unnecessary manual processes, minimize dependence on paper processes and payments, and mitigate payment risks effectively and efficiently. Through adequate digital solutions, control of all transaction lies entirely in the hands of the customer.

BPD GINSI East Java Chairman Bambang Sukadi expressed his appreciation for Danamon's support and participation in the successful implementation of the new LCS regulation, especially in providing socialization and explanation to importers in the East Java region. "We greatly appreciate Danamon’s support in providing a comprehensive explanation of the implementation of the new LCS regulation issued by the Ministry of Industry to importers in the East Java region and assist all importers to get access to the banking products and services that facilitate the advancement and effectiveness of import activities not only in East Java but throughout Indonesia."

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