JAKARTA, April 11 (Xinhua) -- Indonesia-China financial cooperation makes trade and investment more efficient and reinforces Indonesia's confidence and liquidity resilience amid external uncertainty, said Luhut Binsar Pandjaitan, chairman of Indonesia's National Economic Council, on Friday.
"Trade patterns are shifting. Supply chains are being recalibrated. Capital is becoming more selective," said Luhut, adding that stronger regional cooperation, including a more credible regional financial safety net, becomes increasingly important.
Local currency settlement can reduce transaction costs, improve predictability, and lessen exposure to exchange-rate volatility, he said at a multilateral business dialogue focusing on local currency transactions in Jakarta.
"At a deeper level, this is about resilience. It is about ensuring that our economic architecture evolves with a changing world, and that our economies have greater room to maneuver in times of uncertainty," he said.
Indonesia and China renewed their bilateral swap arrangement in January 2025, increasing the swap line to 400 billion yuan (about 59 billion U.S. dollars).
Yang Jun, vice president of Bank of China, said that Indonesia, as the largest economy in ASEAN, plays an important role in promoting regional cooperation and the local currency settlement mechanism.
The China-Indonesia Local Currency Settlement (LCS) mechanism was launched in 2021 and upgraded to the Local Currency Transaction (LCT) mechanism in 2025, expanding the scope of local currency settlement from trade and investment to all areas of the balance of payments, Yang said.
As an authorized cross-currency market maker under the Indonesia-China and Indonesia-Thailand-Malaysia LCT mechanisms, Bank of China has facilitated bilateral local currency settlements in trade for approximately 200 Chinese and Indonesian enterprises, Yang added.
Bank of China will work closely with central banks, regulatory authorities, and financial peers to continuously improve the regional LCT mechanism, further innovate renminbi products, provide renminbi financing support for offshore market entities, assist enterprises in raising renminbi funds through panda bond issuances, and offer comprehensive solutions covering exchange rate hedging and asset allocation, thereby enhancing the facilitation of cross-border investment, financing, and settlement, Yang said.
Li Hongwei, minister counselor of the Chinese Embassy in Indonesia, noted that bilateral trade between the two countries exceeded the historic milestone of 150 billion dollars in 2025, reaching 167.49 billion dollars. China's direct investment in Indonesia also reached 7.5 billion dollars.
Financial institutions from both sides have worked closely together to build a multi-tiered financial service system, supporting the construction of a number of key cooperation projects, Li said.■
