Jakarta, July 23 -- Indonesia's plan to issue its renminbi-denominated Panda Bonds worth approximately US$1 billion serves as part of a strategic effort to diversify state funding sources and reduce dependence on the US dollar.

"This is a diversification of our funding sources. Previously, global funding was only dollars, but we're diversifying to Japan, Australia, and China," Finance Minister Purbaya Yudhi Sadewa told reporters at the Presidential Palace Complex in Jakarta on Thursday.

A central component of the strategy is linking the debt issuance directly with Local Currency Transaction (LCT) frameworks already established between Bank Indonesia (BI) and the People's Bank of China.

By settling trade and financial transactions in lo...