As part of Bank Negara Malaysia’s continuous effort to further enhance the business environment, increase efficiency of the regulatory delivery system and promote wider risk management options, further relaxations of the foreign exchange administration rules are made with effect from 1 April 2005.
In addition, Bank Negara Malaysia has also reviewed and further liberalised the fixed deposit rate placed by non-SME corporations and non-residents with immediate effect.
Liberalisation of foreign exchange administration rules
Effective 1 April 2005, the following foreign exchange administration rules and procedures are liberalised further.
A. Overseas investment
To give greater flexibility for overseas investment, changes are made to the thresholds for investment abroad, including extension of credit facilities to non-residents and placement of funds by residents from the current limit of RM10,000 to the following :-
B. Foreign Currency Account (FCA)
Rules on retention of foreign currency by residents are further liberalised :-
For education or overseas employment purposes
For other purposes
Exporters may now retain any amount of their foreign currency export proceeds onshore with licensed banks. The current limits of between USD30 million and USD100 million are abolished. All export proceeds continue to be required to be repatriated to Malaysia onshore.
C. Foreign Currency Credit Facilities
To enhance access to foreign currency funding, limits for foreign currency credit facilities that can be obtained by residents from non-residents, licensed onshore banks and licensed merchant banks have been increased as follows :-
To facilitate better and more efficient risk management of currency exposure, rules on hedging are also liberalised further to allow residents as well as non-residents to enter into hedging arrangements with licensed onshore banks as follows :-
Any inflow or outflow of funds for firm committed transactions.
E. Domestic borrowing by Non-Resident Controlled Companies
The rules for domestic borrowing by Non-Resident Controlled Companies are fully liberalised by removing the current RM50 million limit and the 3:1 gearing ratio requirement.
Prior registration for statistical purposes
For purpose of compiling balance of payment statistics on the inflow and outflow of funds from the country, transactions involving investment abroad, hedging and foreign currency credit facilities would continue to be reported to Bank Negara Malaysia through a registration process. In summary, the following transactions under the liberalised rules are required to be registered-
Bank Negara Malaysia has also launched the Exchange Control Approval and Monitoring System (ECAMS) for online submission of application on foreign exchange administration transactions. Information on the foreign exchange administration rules and the application/registration forms for online submission may be obtained on the Bank Negara Malaysia website at www.bnm.gov.my/fxadmin.
Liberalisation on fixed deposit rates
With immediate effect, fixed deposits placed by non-SME corporations and non-residents, regardless of the amount, will be on a full-negotiated basis and no longer subject to the floor rates prescribed by Bank Negara Malaysia.
Fixed deposits of up to RM1 million placed by individuals, SMEs and other depositors for tenures of 1 to 12 months will continue to be subject to the prescribed floor rates.
The prescribed floor rates remain unchanged at 3% per annum for 1-month and 3.70% per annum for 12-month deposits.
Further information can be obtained by contacting the helpdesk at 03-2693 2617 or 03-2691 6606 which is open from 24 March 2005 to 30 April 2005 during office hours (9.00 am to 5.00 pm) on Monday to Friday.
Members of the public may also forward their enquiries via e-mail address: ecams_jppa @bnm.gov.my or fax : 03-2694 3991, 03- 2691 3266 or 03-2693 7732.
Bank Negara Malaysia 23 March 2005
© Bank Negara Malaysia, 2005. All rights reserved.
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