Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS) have officially operationalised a bilateral transaction framework allowing direct settlement in Indonesian Rupiah (IDR) and Singapore Dollar (SGD). The Local Currency Transaction (LCT) framework aims to facilitate cross-border trade, direct investments, and payment flows between the two nations without relying on third-party currencies.
The initiative follows a Memorandum of Understanding signed by both central banks in August 2022 and operational guidelines agreed upon in April 2026. The framework is formally governed by the Regulation of the Members of the Board of Governors No. 25 of 2026 regarding Bilateral Transaction Settlement between Indonesia and Singapore using Rupiah and Singapore Dollar through Banks.
According to BI and MAS, allowing market participants to settle directly in local currencies reduces foreign exchange exposure risks and lowers transaction overheads for commercial entities.
A central feature of the framework is the establishment of direct exchange rate quotations between the Rupiah and the Singapore Dollar, alongside regulatory relaxations designed to encourage broader commercial adoption.
Beyond strengthening bilateral economic ties, the initiative is structured to support wider regional financial integration across the Association of Southeast Asian Nations (ASEAN).
“The regulation serves as an operational guideline for LCT implementation,” said Ramdan Denny, Head of the Communication Department at Bank Indonesia.
Denny noted that the framework is structured to enhance trade efficiency while furthering financial collaboration across the region.
“This is expected to provide greater certainty for business entities and users conducting transactions in local currencies, whilst simultaneously reducing exchange rate risks and transaction costs,” Denny stated.
To execute the framework, both central banks have designated Appointed Cross Currency Dealer (ACCD) banks in their respective jurisdictions. In Indonesia, the appointed ACCD institutions include PT Bank Central Asia Tbk, PT Bank CIMB Niaga Tbk, PT Bank DBS Indonesia, PT Bank Mandiri (Persero) Tbk, PT Bank Maybank Indonesia Tbk, PT Bank Negara Indonesia Tbk, PT Bank OCBC NISP Tbk, PT Bank Pembangunan Daerah Jawa Timur Tbk, and PT Bank UOB Indonesia.
In Singapore, the designated ACCD institutions comprise DBS Bank Ltd., Oversea-Chinese Banking Corporation Limited, and United Overseas Bank Limited.
Implication for Expatriates in Indonesia and Singapore
The operationalisation of the LCT framework introduces practical advantages for expatriates, international workers, and foreign entrepreneurs operating between Indonesia and Singapore.
Traditionally, cross-border remittances and capital transfers between the two countries required intermediary currency conversions, typically converting local funds into United States Dollars before converting them into the target destination currency. This process incurred dual conversion spreads and administrative handling charges.
With direct IDR-SGD conversion and quotation mechanisms, expatriates transferring funds for personal maintenance, salary repatriation, property investments, or corporate expenses can access direct exchange rates through participating ACCD institutions.
The elimination of third-party currency intermediation lowers cross-border transfer costs, minimizes settlement delays, and provides enhanced predictability regarding net received amounts for individuals and businesses managing cross-border finances within the corridor.
