Bank Negara relaxes forex policies

Governor of Bank Negara Malaysia Datuk Nor Shamsiah Mohd Yunus

KUALA LUMPUR: Bank Negara has announced five new measures to further liberalise the foreign exchange policy (FEP) to allow greater flexibility for businesses and to foster a conducive environment in attracting foreign direct investment (FDI) to Malaysia.

The central bank will be lifting the export conversion rule, which will allow resident exporters to manage their own export conversions according to their foreign exchange cash flow needs.

Secondly, exports will be allowed to settle domestic trade in foreign currency with other resident corporates operating in the global supply chain.

Exporters will also be allowed to net off export proceeds in its permitted foreign currency obligations as a move to enhance business efficiency and cash flow management for exporters.

The fourth measure allows exporters to repatriate their export proceeds beyond six months in exceptional circumstances such as when their buyers are in financial difficulty.

Finally, resident corporates can now undertake commodity derivatives hedging directly with non-resident counterparties.

The five new measures will come into effect on April 15 and further details will be provided on the same day in the revised Foreign Exchange Notices issued by Bank Negara.

Bank Negara Governor Datuk Nor Shamsiah Mohd Yunus said the central bank has in recent years progressively liberalised its FEP to improve both business efficiency and the private sector’s management of foreign exchange risk.

“Recognising Malaysia’s vital position in the global supply chain and to foster a more conducive environment in attracting quality investments, the bank is pleased to announce the further liberalisation measures,” she said during a media briefing in conjunction with the central bank’s release of its Annual Report 2020, Economic and Monetary Review 2020 and the Financial Stability Review for the second half 2020.