Currency frameworks to complement close partnership — BNM
KUALA LUMPUR: The implementation of the Local Currency Trade Settlement Frameworks between Bank Indonesia (BI) – Bank Negara Malaysia (BNM) and Bank of Thailand (BOT), as well as, the expansion of the BNM –BOT Framework will complement the existing close partnership and cooperation existing among the three countries which share common objectives and aspirations, says BNM Governor Tan Sri Muhammad Ibrahim.
All three frameworks, namely rupiah-ringgit framework, rupiah-baht framework; and expanded baht-ringgit framework, will be effective from Jan 2, 2018.
Mohammad said within the region, Indonesia and Thailand were important partners to Malaysia, both in trade and direct investments, where there were continuous growth propelled by inter-company linkages and crossborder investments.
“In 2016, Malaysia shared a bilateral trade volume of US$13.8 billion (US$1= RM4.08) with Indonesia and US$13 billion with Thailand. However, only 5.8 per cent and 11.4 per cent of our trade with Indonesia and Thailand, respectively, were settled in local currencies,” he said in a statement.
Similarly, on the investment front, the Governor said Malaysia has invested US$13 billion and US$2 billion in direct investments into Indonesia and Thailand, respectively, as at the second quarter of 2017.
“This is an enormous business
In 2016, Malaysia shared a bilateral trade volume of US$13.8 billion (US$1= RM4.08) with Indonesia and US$13 billion with Thailand. Tan Sri Muhammad Ibrahim, BNM Governor
opportunity for the financial sector, which has yet to be realised,” he said.
Muhammad said with the introduction of the three frameworks, the three nations had reached a new pinnacle of regional initiatives where cross-border settlements using local currencies to settle trade and direct investments have taken shape.
“We expect this to be strengthened further, supported by the strong growth of intra-ASEAN trade, which contributed US$521 billion or 23.5 per cent of total trade in 2016,” he added.
He said last year, Intra-Asean investments rose to US$24 billion and accounted for 25 per cent of total foreign direct investment flows into the region.
“On this note, I look forward to witnessing the growth in the use of the rupiah, baht and ringgit for cross-border settlement of trade between Indonesia and Malaysia and, Thailand and Malaysia, respectively,” he added. — Bernama