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February 10, 2025 | 02:43 pm
TEMPO.CO, Jakarta - Bank Permata Chief Economist Josua Pardede assessed that Indonesia's membership in BRICS does not necessarily mean supporting the dedollarization agenda echoed by China and Russia. According to him, this decision is more aimed at expanding trading partners and strengthening Indonesia's economic position in the global arena.
Josua explained that the government is indeed encouraging the Local Currency Transaction (LCT) scheme to reduce dependence on the US dollar in international trade. However, he emphasized that it is not part of a grand strategy to abandon the dollar altogether.
"We are entering BRICS not to support the dedollarization of China and Russia, but rather to expand trading partners. The dedollarization that we are encouraging is to provide an option for the business world not to always depend on the dollar," said Josua in a discussion on Exchange Rate Dynamics Amid Global Uncertainty at Bank Indonesia Aceh Province, Saturday, February 8, 2025.
Josua also highlighted the challenges of implementing LCT which he said so far have been driven more by Indonesia, while the central banks of partner countries have not shown a similar commitment. He gave an example of the use of QRIS in Thailand, which apparently is still not fully understood by Thai banking, even though the system can already be used by Indonesian tourists there.
"We already have QRIS, we already have LCT, but the central banks of partner countries are not fully ready. Don't let BI push, but other central banks have not shown similar seriousness," said Josua.
According to him, for the LCT scheme to be successful, partner countries must participate in encouraging its use, both for import and export transactions. If only one party is active, this initiative will not run optimally.
Josua also dismissed speculation that Indonesia would follow in the footsteps of China and Russia in creating a single currency to replace the US dollar. He said Indonesia's focus is on providing more options for the business world, not shifting the role of the dollar in the global financial system.
"China and Russia do have an agenda to create a special currency to replace the dollar, but Indonesia has no intention of going in that direction," he said.
Thus, Indonesia remains open to opportunities for currency diversification in international transactions, but without leaving the global financial system which is still dominated by the US dollar. This step is considered a more pragmatic strategy in maintaining national economic stability amidst global geopolitical dynamics.
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