Jakarta, [14 Februari 2024] – Bank Indonesia (BI) continues to strive to strengthen economic integration in the ASEAN region through increased payment system cooperation. This effort is in line with Indonesia’s commitment to encourage regional connectivity and facilitate cross-border transactions.
Background
Increasing payment system cooperation in the ASEAN region is increasingly important considering the closer economic relations between member countries. With the integration of payment systems, it is expected to improve transaction efficiency, reduce costs, and encourage the growth of trade and investment in the region.
Bank Indonesia’s Efforts
Some of the efforts that have been and are being made by Bank Indonesia to enhance payment system cooperation in ASEAN include:
- ASEAN Payment Connectivity (APC) Initiative: BI together with the central banks of other ASEAN countries have initiated the APC to harmonize the payment system in the region. Through APC, various initiatives such as the development of the ASEAN QR Code (ASQR) standard and the interconnection of real-time payment systems have been carried out.
- Cooperation with Central Banks of Member States: BI actively establishes bilateral cooperation with central banks of other ASEAN countries to discuss various issues related to the payment system, such as payment infrastructure development, system interoperability, and risk mitigation.
- Participation in International Forums: BI actively participates in various international forums related to the payment system, such as the G20 meeting and other regional forums. It aims to share experiences and learn from the best practices of other countries.
Benefits of Improved Payment System Cooperation
Increased payment system cooperation in ASEAN provides various benefits, including:
- Improves Transaction Efficiency: Cross-border transactions become faster, easier, and cheaper.
- Driving Trade and Investment Growth: With an integrated payment system, trade and investment in the ASEAN region will increase.
- Increasing Financial Inclusion: ASEAN communities will have wider access to financial services.
- Strengthening Financial Stability: A more integrated payment system can help maintain financial stability in the ASEAN region.
Challenges and Opportunities
Although much progress has been made, there are still several challenges that need to be overcome in an effort to improve payment system cooperation in ASEAN, such as:
- Regulatory Differences: Regulatory differences in each member state can be an obstacle in integrating payment systems.
- System Security: Payment system security is a major concern given the increasing risk of cybercrime.
- Infrastructure: Sufficient investment is needed to develop adequate payment infrastructure across the region.
In a significant step towards deeper regional economic integration, Bank Indonesia has strengthened its collaboration with ASEAN member countries in the development of a unified payment system. This initiative aims to facilitate smoother cross-border transactions, promote trade and investment, and increase financial inclusion across Southeast Asia.
The ASEAN Payment System Initiative focuses on creating interoperability between national payment systems, enabling real-time transactions in local currencies without the need for conversion to global benchmarks like the US dollar. This move is expected to reduce transaction costs and bolster the use of local currencies in regional trade.
The Governor of Bank Indonesia emphasized the importance of this initiative, stating, “This collaboration will strengthen ASEAN’s economic resilience and foster greater financial integration, benefiting businesses and consumers alike.”
The first phase of the initiative involves linking the payment systems of Indonesia, Thailand, Malaysia, Singapore, and the Philippines. The system leverages advanced technology, including blockchain and real-time gross settlement mechanisms, to ensure secure and efficient transactions.
Economic analysts view this as a strategic move to reduce dependency on external currencies and enhance the region’s financial stability. “The adoption of a unified payment system in ASEAN is a game-changer that will not only boost trade but also support regional economic growth,” said a senior economist.
Small and medium enterprises (SMEs), which constitute a significant portion of ASEAN’s economy, stand to gain the most from this development. Easier access to cross-border payment systems will enable these businesses to expand their markets and improve competitiveness.
Bank Indonesia is also working closely with its counterparts to develop regulatory frameworks that ensure the security and efficiency of the system while protecting consumer interests. Training programs and workshops are being conducted to familiarize financial institutions and businesses with the new system.
Moving forward, Bank Indonesia plans to expand the initiative to include more ASEAN member states and explore the integration of other financial services, such as credit and insurance. The success of this collaboration could serve as a model for other regions seeking to enhance economic integration through innovative financial solutions.