logo
Asean accelerates de-dollarisation

Asean accelerates de-dollarisation

The Star18-07-2025
Whenever he travels around the Southeast Asian region or to China, Malaysian private equity investor Ian Yoong Kah Yin always uses his e-wallet to settle all payments. Yoong, a former investment banker, seldom travels with a big chunk of cash, preferring to use an app he downloaded on his phone so he can use a QR code to pay in Malaysian ringgit or any local currency.
Yoong said using a QR code is not only convenient but also cuts transaction costs as he does not need to convert ringgit to US dollar first and then to another local currency, avoiding double currency conversion rates.
The reduced role of the US dollar and the growing role of the Chinese yuan and local currencies used by members of the Association of Southeast Asian Nations is "inevitable", according to Yoong, who noted there are about 100 banks in the ASEAN region that are part of the yuan-based Cross-border Interbank Payment System, or CIPS.
"ASEAN economies are accelerating the move away from the US dollar as geopolitical uncertainties, monetary shifts and increasing currency volatility prompt de-dollarisation in the region," Yoong told China Daily. He said Washington's "erratic trade policy decisions" combined with the recent "sharp underperformance" of the US dollar are fueling a rapid shift to other currencies.
Yoong's personal experience and insights on using more Chinese and ASEAN currencies in cross-border transactions reflect how ASEAN countries are gradually reducing their dependence on the US dollar to cut transaction costs, enhance efficiency and mitigate the impact of foreign exchange fluctuations.
ASEAN leaders have committed to promoting local currency settlements, as stated in the ASEAN Economic Community Strategic Plan 2026-2030 adopted at the 46th ASEAN Summit held on May 26 in the Malaysian capital city Kuala Lumpur. The regional bloc aims to deepen financial integration and inclusion through several measures such as liberalising capital accounts to facilitate seamless cross-border investments and financing, strengthening regional payment connectivity and promoting local currency settlements. Enhancing payment connectivity is also seen as aiding trade and investments in the region.
The strategic plan was formulated at a time when the US dollar, which has long dominated global trade and investment, was sinking to multi-year lows. On April 21, for example, the US Dollar Index fell to a three-year low following US President Donald Trump's criticism of Federal Reserve Chair Jerome Powell.
On June 26, the dollar sank to a fresh three-year low on the back of a report that Trump was considering nominating the next Fed chair early or a few months before Powell's formal departure in May 2026.
Fragility underscored
Dutch investment bank ING said the escalating tensions in the Middle East "underscored the recent fragility" of the US dollar. "A spike in geopolitical risk and oil prices should have sent an oversold and undervalued dollar soaring, but the support for the greenback was instead small in size and duration," ING said in its research paper on June 26.
Nawazish Mirza, a professor of finance at the Excelia Business School in France, said by allowing direct payments in local currencies, ASEAN states have reduced their reliance on intermediary currencies such as the US dollar, and this has led to lower transaction costs, reduced exchange rate risks, and enabled faster settlement times.
Mirza said ASEAN's move toward de-dollarisation has been "unmistakable" over the last two years. He noted that in 2024, the share of intra-ASEAN trade settled in local currencies was above 25 percent, compared to less than 10 percent in 2019.
While the US dollar remains dominant overall, accounting for over 70 percent of global trade invoicing, ASEAN's initiatives to promote local currencies and the renminbi are gaining traction, he said.
Mirza said policies such as currency swap lines, bilateral local currency settlement agreements, and digital payment innovations, are making non-dollar settlements more viable and attractive.
"The speed of this transition will depend on sustained market confidence, liquidity, and the stability of these alternative currencies," he said.
Ying Jian, principal strategist at Bank of China's Hong Kong Financial Research Institute, said Chinese enterprises are the "most active participants and promoters" of the international use of the renminbi, and their growing presence in ASEAN has spurred demand for renminbi settlement, trading and financing.
In a research paper published in 2024, Ying wrote that in 2023, the renminbi cross-border receipts and payments for trade in goods between ASEAN and China exceeded 2 trillion yuan ($279 billion) for the first time, or 47.8 percent higher than the level in the previous year, and accounted for over 30 percent of the total bilateral trade.
Ying also noted that China supports ASEAN's move to explore local currency settlement.
The People's Bank of China, the nation's central bank, has signed bilateral currency swap agreements with the central banks of Thailand, Malaysia, Indonesia and Laos.
Mirza also hailed ASEAN countries' decision a few years ago to implement a QR code payment system that allows direct payments in local currencies, noting this represents a "significant leap" for ASEAN's regional integration.
As early as 2020, Cambodia and Thailand launched a cross-border QR payment system. Singapore's payment linkage with Thailand was established in 2021, and it launched a pilot with Indonesia in 2022. Five Southeast Asian central banks — Indonesia, Malaysia, the Philippines, Singapore, and Thailand — signed a memorandum of understanding on regional cross-border payments ahead of the G20 summit held in Bali, Indonesia, in November 2022.
Payment connectivity
At the 42nd ASEAN Summit held in May 2023 at Labuan Bajo, Indonesia, ASEAN leaders signed an agreement to advance regional payment connectivity and promote local currency transactions.
"The QR interoperable payment system is the way to go," said Joanne Lin Weiling, a senior fellow and co-coordinator of the ASEAN Studies Center at the ISEAS-Yusof Ishak Institute in Singapore. She said this system promotes regional integration and trade and enhances the region's resilience against external headwinds, including growing trade protectionism.
Lin, who has used digital wallets while traveling around the region, can personally attest that a QR code payment system is "quicker, more convenient and easily accessible by all citizens as long as they have a smartphone, and bank account that is linked to QR payment".
Kriengsak Chareonwongsak, president of the Bangkok-based Institute of Future Studies for Development, said it is crucial for countries like Thailand to promote the use of renminbi to facilitate cross-border payments, given ASEAN's strategic economic ties with China. He cited Bangkok Bank, which is the first Thai bank approved by China's central bank to become a direct participant in China's CIPS.
In a statement released in April, Bangkok Bank said becoming a direct participant allows it to facilitate direct international transactions in renminbi via CIPS. This reduces transaction time and ensures faster payments, the bank said.
"If they reduce the use of the US dollar (in international transactions), where do they go? They have to go for alternatives. And renminbi is one alternative," he said.
For Mirza of Excelia Business School, the main benefits of using the renminbi include reduced foreign exchange costs, diversification of reserves, and closer trade links with China.
"Furthermore, while the People's Bank of China has signed several bilateral swap agreements with ASEAN central banks, the operationalisation of the renminbi as a primary settlement currency still lags behind the US dollar in scale and acceptance. For ASEAN, the key is balancing diversification with financial stability, especially as renminbi's full internationalisation remains a gradual process," he said. - China Daily/ANN
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Chinese startup brings cutting-edge AI glasses to the masses
Chinese startup brings cutting-edge AI glasses to the masses

Borneo Post

timean hour ago

  • Borneo Post

Chinese startup brings cutting-edge AI glasses to the masses

Zhu Mingming, founder and CEO of Rokid, a Hangzhou-based technology company, poses for a photo at Rokid's flagship store in Yujiang District of Yingtan, east China's Jiangxi Province, July 10, 2025. (Xinhua/Liu Jinhai) NANCHANG (July 28): A decade after founding Rokid, entrepreneur Zhu Mingming turned heads at an economic forum in February with a simple remark: 'My speech is in my glasses, so I don't need a transcript.' Standing casually behind the podium in a hooded sweatshirt, Zhu confidently told the audience he was using a smart ring to flip through virtual slides on his AI glasses. Within hours, the clip went viral on Chinese social media, sparking a wave of inquiries from viewers eager to know where they could buy the product. Zhu, known as 'Misa' in tech circles, recently showcased the same model, Rokid Glasses, at an experience store in his hometown, Yujiang District of Yingtan City, in east China's Jiangxi Province, a region long regarded as a trade and production hub for eyewear. What made that February moment stand out wasn't just the technology; it was how seamlessly the glasses blended into everyday life. 'While I'm speaking here, I'm also checking my WeChat messages on a virtual screen right in front of my eyes, and you probably didn't even notice,' he said at the store. 'In the past, many people wanted smart glasses, but they were either too bulky, too clunky, or their AI capabilities were not strong enough, so in the end, they were little more than a Bluetooth headset,' Zhu said. Unlike those early models, the new-generation Rokid Glasses weigh just 49 grams, resemble regular eyewear, and offer robust battery life. Zhu credits much of this progress to rapid AI advancements in recent years. Zhu encouraged visitors at the store to try on the smart glasses. 'Give them a try, and you'll decide for yourself whether they could become an everyday device like smartphones in the future,' he said. 'A good product should first be a good pair of glasses,' Zhu added. 'Then a good headset, a good camera, and ultimately, a great AI device.' In addition to browsing social media and watching videos, the device can project real-time captions, translations, navigation prompts, and AI-generated answers directly onto the lens, powered by leading Chinese AI models such as DeepSeek and Doubao. With simple voice commands, users can ask for directions, identify objects, receive call notifications, or even solve math problems, without ever reaching for their phone. A staff member demonstrates a pair of smart glasses developed by Hangzhou-based technology company Rokid at Rokid's flagship store in Yujiang District of Yingtan, east China's Jiangxi Province, July 10, 2025. (Xinhua/Liu Jinhai) 'It's rare, even globally, for a company to develop such a highly integrated and fully functional product in such a lightweight form,' Zhu said. 'That's only possible because we've stayed committed to this path for the past 10 years.' Around 90 percent of Rokid's funding goes into research and development (R&D), which makes it a highly R&D-driven company even by global standards. 'Our booth is very popular in the Consumer Electronics Show in Las Vegas,' Zhu said. He noted that Rokid aims to make smart glasses an affordable everyday tech product. Priced at around 3,000 yuan, they are far more accessible than many international models that cost over 10,000 yuan. While similar products from other companies failed to win over consumers, Rokid is now facing the challenge of fulfilling orders on time, with over 300,000 units already sold. 'We didn't expect to be overwhelmed this quickly,' Zhu admitted. He is convinced that smart glasses are set to become the next transformative platform after smartphones. However, he acknowledges the industry is still in its early stages, with the main challenge being educating the market to attract more users. With a series of Rokid's innovative products in tow, Zhu is taking his next big step in his hometown. Yujiang is home to over 260 eyewear companies and ranks among China's top five optical manufacturing bases. But most of its industry remains focused on trade and conventional manufacturing. Rokid has signed a strategic agreement with the local government and plans to establish a production base, integrate the local supply chain, and forge cooperation with local colleges to train a new generation of technicians. 'The talent is already here,' Zhu said. 'People in Yujiang understand eyewear. Now we just need to help them understand smart glasses.' Zhu acknowledged the journey won't be quick, but he remains optimistic. 'If we can help transform the local traditional eyewear industry into a more innovative one, that would be the most rewarding outcome of all.' – Xinhua AI glasses artificial intelligence China technology

Nurul Izzah Calls On Bangladesh Interim Government Chief
Nurul Izzah Calls On Bangladesh Interim Government Chief

Barnama

time7 hours ago

  • Barnama

Nurul Izzah Calls On Bangladesh Interim Government Chief

WORLD By Shakir Husain NEW DELHI, July 27 (Bernama) -- Parti Keadilan Rakyat (PKR) deputy president Nurul Izzah Anwar called on Bangladesh interim leader Muhammad Yunus in Dhaka on Sunday. Yunus, during the meeting, sought Malaysia's support for Bangladesh to join the Association of Southeast Asian Nations (ASEAN). "We want to become a part of ASEAN, and we will need your support," he told Nurul Izzah, according to a Bangladesh Sangbad Sangstha report. Bangladesh applied to become an ASEAN sectoral dialogue partner in 2020. Yunus also invited Malaysian companies to invest in Bangladesh's growing economy. "Asia is ageing rapidly, but Bangladesh has a lot of young people. Half of our population is under the age of 27. Set up your industries here and export from Bangladesh. It will help both our economies," he said. The interim government's chief advisor informed the PKR deputy chief about Bangladesh's political reforms following last year's uprising, which ended Sheikh Hasina's nearly 16-year rule. Nurul Izzah spoke at Dhaka University on Sunday at a conference marking the first anniversary of the July Revolution.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store