The use of local currency in Malaysia's cross-border trade and investment has shown a significant increase over the past 16 years, reflecting the country's strategic shift in the international financial system.
As of November 2025, a total of RM82.1 billion in transactions were settled using local currency, with China contributing RM62.6 billion, followed by Thailand with RM10 billion and Indonesia with RM9.5 billion.
This figure has increased sharply compared to only RM3.6 billion in 2009, indicating the rapid development in the use of alternative mechanisms to traditional global payment systems.
This move is driven by the government and Bank Negara Malaysia's efforts to reduce dependence on the US dollar and minimize the risk of exchange rate fluctuations in international trade.
Among the key initiatives are the implementation of direct renminbi-ringgit transactions since 2010, the renminbi liquidity facility, and the appointment of a special clearing bank to facilitate transactions with China.
In addition, Malaysia has also expanded the local currency transaction framework with Thailand since 2016 and Indonesia since 2017 to strengthen regional financial cooperation.
At the same time, Bank Negara Malaysia is exploring the use of a central bank digital currency through the Dunbar Project as an alternative to existing payment systems.
This approach aims to reduce reliance on the SWIFT system, which is a global network for transferring payment instructions between banks but often involves high costs and the need to convert to US dollars.
Overall, these developments show that Malaysia is moving towards a trading system that is freer, more efficient and less vulnerable to global financial stress.
