Bank of China ‘ready’ to use RMB in Indonesia
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The Bank of China (BOC) has said it is ready to broaden the usage of renminbi (RMB) or yuan in its trade and investment activities in Indonesia in line with Beijing’s efforts to internationalise the Chinese currency.
BOC Jakarta branch manager Zhang Min said the bank could offer the full range of cross-border yuan products and services in Indonesia, such as cross-border trade settlement, deposits and loan facilities, remittances, cash exchange, global market products and banknotes.
"For example, BOC Jakarta has brought RMB banknotes amounting to 2.7 billion yuan to the Indonesian market. In the first half of this year, our branch's cross-border RMB clearing amounted to 129.77 billion, up 387 percent from the same period in 2015," he said in Jakarta on Wednesday.
The broad usage of RMB between the two countries, he added, would reduce losses caused by US dollar exchange rate fluctuations and would help develop healthy bilateral trade and investment relations.
Sahala Lumban Gaol, a special staff member at the State-Owned Enterprises (SOE) Ministry, said import of capital goods and investment from China had increased despite decreasing trade between the two countries, as many big Chinese companies were participating in important projects in Indonesia.
He expressed his optimism that the usage of RMB would have a huge impact on Indonesian-Chinese trade. "It will reduce the cost of trade, and our dependence on the US dollar will decline in the long run," Sahala said.
Zhang Min also called on Indonesian businesspeople to intensify the usage of yuan to promote trade with Chinese counterparts and reduce foreign exchange losses.
He said China is the biggest trading partner and the third biggest foreign direct investment (FDI) for Indonesia, which currently stands as the biggest economy in Southeast Asia and plays an important role in the world.
"The extensive usage of RMB will certainly promote trade and economic development of both countries […] It will reduce the losses caused by the US dollar fluctuations," he said during the Bank of China RMB Forum Indonesia in Jakarta on Wednesday.
He further said the inclusion of RMB in Special Drawing Rights (SDR) basket showed International Monetary Fund's (IMF) affirmation over RMB’s role in the global economy.
Until June, the Chinese central bank People's Bank of China (PBOC) and 35 monetary authorities have signed currency swap agreements worth more than 3.3 trillion yuan. Over 30 monetary authorities have also brought RMB into their foreign reserve totaling 864.7 billion yuan in 2015.
“With the implementation of RMB within SDR basket, and Chinese strategy of the ‘one belt, one road’ initiative, we are sure the market demand for RMB will be effectively stimulated," Zhang Min added.
SDR is an international reserve asset created by the International Monetary Fund (IMF) in 1969 to supplement its members' reserves. RMB accounts for 10.92 percent in SDR basket, following the US dollar and the euro which stands at 41 percent and 30.93 percent respectively.
