The Indonesian Chamber of Commerce and Industry (Kadin) proposed strengthening the use of local currency transactions (LCT) to maintain the rupiah exchange rate from weakening. This was conveyed by the Vice Chairman of Kadin Indonesia For Coordinator on Organization, Law and  Communication, Yukki Nugrahawan Hanafi (20/6/2024).

According to him, this can be an alternative choice for national entrepreneurs and foreign business partners in bilateral trade to reduce dependence on the US dollar.

"We underline the use of LCT to strengthen the stability of the rupiah exchange rate while maintaining the resilience of the domestic financial market," said Mr Hanafi.

He said, so far LCT cooperation has been running with China, Japan, Malaysia, and Thailand, where the transaction process uses local currency without having to use the US dollar.

Yukki said that the trend of increasing LCT usage reached US$6.3 billion in 2023 or 53% compared to the previous year. Therefore, the government is expected to provide administrative ease in using the LCT mechanism and expand the number of trading partner countries from non-traditional markets.

In addition, Kadin Indonesia also encourages the government and BI to strengthen coordination to maintain macroeconomic stability and maintain growth momentum, including encouraging financing credit to the business sector.

"Because, with a higher BI interest rate, of course the business world will recalculate business operations and business," he explained.

The business world, continued Yukki, can take short-term anticipatory steps, such as calculating in reducing business expenses with efficiency, postponing expansion or investment, to finding alternative raw materials to reduce dependence.

"The business world also encourages all parties to work together in maintaining economic stability and support the steps taken by the government in the face of an increasingly uncertain and volatile global economy," he said.