BANK Negara will loosen exchange control rules effective April 1 to give Malaysians as well as foreigners greater flexibility in sourcing ringgit funds, managing their foreign exchange exposure and improving operational efficiency.
More funds would also be made available to small and medium enterprises at reasonable cost, Bank Negara said in a statement yesterday.
The restriction on foreign-owned banks to extend not more than 50% of all credit facilities from banking institutions would be abolished to allow non-resident companies to obtain domestic credit facilities.
The amount of credit that can be extended to foreign-owned companies would be extended to RM50mil from RM10mil.
The compliance with the 3:1 gearing ratio for domestic debt and eligible funds remain but the computation of domestic debt and eligible capital funds would be liberalised and the gearing ratio to be computed on per corporate group basis or on a single entity.
The maximum overnight limit of foreign currency accounts maintained by Malaysian exporters with onshore commercial banks and Islamic banks is raised to US$50mil from US$10mil.
Additional flexibility would be granted for Malaysian exporters to retain in the account another 10% of subsequent export proceeds repatriated to Malaysia.
The foreign currency account limit for approved operational headquarters would be raised to US$70mil from US$10mil.
The rules on hedging will be liberalised in stages. In addition to current rules, Malaysians are allowed to sell forward their foreign currency receivables for any purpose to authorised dealers provided the transaction is supported by a firm commitment to receive currency receivables and the tenure of the contract does not exceed 12 months.
To reduce administrative costs, the threshold for completing Form P for payments to foreigners by Malaysians will be increased to RM50,001 from RM10,001 or the equivalent amount of foreign currency.
Payments for overseas investment, including extension of loan to non-residents continue to require prior approvals if the amount exceeds RM10,000.
The requirement for Malaysian exporters to complete Form KPW X for exports in excess of RM100,000 f.o.b. will be abolished.
Malaysian exporters need only to submit quarterly and annual reports on their export related transactions.
In addition to the new exchange control rules, the central bank announced it was adding an extra RM600mil to the Fund for Small and Medium Industries 2, which now totals RM1.25bil, and RM400mil to the New Entrepreneurs Fund 2, bringing the size of that fund to RM900mil.
Bank Negara also announced it was establishing the International Centre for Leadership in Finance that will provide a focused a coordinated approach towards human resource development for senior management in the financial sector.
The centre, to be headed by special project advisor Rafiah Salim, would accelerate the development of intellectual capital and managerial capabilities of senior management of financial institutions and corporations.
The centre would enter into strategic alliances with renowned international business schools and leading institutions. Bank Negara was allocating RM500mil as an endowment fund to establish the centre and income generated from the investment of the fund would be used to cover operational expenses of the centre.
In terms of new legislation, a new payment systems bill and regulatory framework for investment banks would be introduced. Also in the pipeline, on the consumer side, are deposit insurance system and service quality index.