Indonesia and the United Arab Emirates (UAE) are making progress in strengthening their financial ties by signing a memorandum of understanding (MoU) to link their payment systems. This necessary agreement is considered one of the outcomes of the visit of President Joko Widodo (Jokowi) to Abu Dhabi, where he met the President of the United Arab Emirates Mohamed bin Zayed Al Nahyan (MBZ).
The cooperation includes establishing a typical risk management and regulatory cooperation mechanism, in addition to protecting user rights in accordance with each country’s regulations. This partnership is predicted to enhance the liquidity, efficiency, transparency and affordability of payment systems in each countries.
The Central Bank of the United Arab Emirates (CBUAE) said this partnership is predicted to advertise the UAE as a worldwide hub for fintech and cross-border payments. Meanwhile, Bank Indonesia CEO Perry Warjiyo is optimistic that this collaboration will open up latest opportunities, including the potential for cross-border payments in local currencies, which is predicted to be operational by 2024.
The agreement is a continuation of the bilateral agreement signed on November 29, 2023, which strengthens cooperation and exchange of data, including: in the sphere of payment systems and digital innovations. The MoU also complements cooperation on using local currencies through the Local Currency Transaction (LCT) framework, which allows transactions in Indonesian rupiah or Emirati dirham, reducing dependence on the US dollar.
In 2023, trade between Indonesia and the UAE was USD 5 billion. Meanwhile, in the primary five months of 2024, total bilateral trade reached $1.9 billion. These numbers reflect the large potential and positive dynamics of economic cooperation between the 2 countries, signaling a promising latest chapter of their bilateral relations.
