Bank Negara Malaysia, Bank Indonesia, and the Bank of Thailand have launched harmonized guidelines for local currency transactions, expanding eligible transactions to include portfolio investments. This move simplifies cross-border trade and investment, promoting the use of local currencies and reducing reliance on the US dollar.
17 February 2025 – In a significant move to bolster regional economic integration, Malaysia, Indonesia, and Thailand have unveiled a harmonized Local Currency Transaction Framework Operational Guidelines (LCTF OG). This initiative streamlines cross-border transactions by standardizing procedures and expanding the scope of eligible activities. The new framework consolidates existing bilateral guidelines, creating a more transparent and efficient system for participating financial institutions and their clients. A key feature of the updated LCTF is the inclusion of portfolio investments alongside trade in goods and services and direct investments. This expansion offers investors greater flexibility and reduces exposure to exchange rate fluctuations. The central banks of the three nations are encouraging qualified commercial banks to join the expanded LCTF, leveraging their expertise and networks to facilitate local currency transactions. This initiative builds on the growing trend of local currency usage in bilateral trade between the three countries and underscores their commitment to promoting regional economic cooperation.
