KUALA LUMPUR: Greater economic integration within ASEAN is driving efforts to establish an independent regional financial system, reducing dependency on external currencies and improving monetary stability, according to a Malaysian analyst.
Lee Pei May, a political expert at the International Islamic University Malaysia, highlighted in an interview with Xinhua that these measures aim to mitigate financial volatility rather than target any specific country. The shift toward local currencies for intra-ASEAN trade will streamline cross-border transactions, expand market access for micro, small, and medium enterprises (MSMEs), and boost regional tourism.
“The push for the use of local currencies has been ongoing for some time, as it helps strengthen the economic integration of ASEAN member states -- an important goal that ASEAN seeks to pursue,“ Lee explained. She noted that other regions are also reducing reliance on dominant foreign currencies like the US dollar due to external interest rate fluctuations and policy shifts that can destabilize exchange rates.
Cross-border payments in local currencies offer faster, cheaper transactions while shielding businesses from external volatility. Lee emphasized the tourism sector as a key beneficiary, as travelers within ASEAN will no longer face the inconvenience of currency exchange.
The Regional Payment Connectivity (RPC) initiative, initially involving Malaysia, Thailand, Singapore, Indonesia, and the Philippines, has expanded to include Vietnam, Laos, Brunei, and Cambodia. “The participation would bring about seamless cross-border transactions and boost tourism in the region,“ Lee stated.
Growing awareness of risks tied to US dollar dependency has accelerated ASEAN’s push for financial resilience. “In the past, certain currencies were viewed as stable, but due to increasingly unpredictable global developments, this perception is shifting,“ Lee added. She warned that economic tools used to pressure policy differences could have adverse effects, reinforcing the need for regional financial safeguards.
