KUALA LUMPUR: Bank Negara Malaysia (BNM) has announced several liberalisation measures as part of continuous efforts to enhance competitiveness of the economy and further develop the domestic financial market.
Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said to spur the domestic foreign exchange market through greater demand for foreign currency products and services, residents are free to invest in onshore foreign currency-denominated assets.
"To further promote the development of the Islamic financial market through the greater flow of cross-border Islamic financial activities and greater use of Islamic financial intermediaries, resident takaful operators are also permitted to undertake investments abroad of any amount on behalf of their resident clients," she told a press conference on Bank Negara's Annual Report 2012 here on Wednesday.
She said resident takaful operators and resident insurers shall only be subject to their risk-based capital framework, when undertaking investments abroad for their own account to further enhance regulatory efficiency.
To enhance the depth and breadth of the domestic capital market by facilitating fund raising activities and promoting Malaysia as a centre of origination, Zeti said residents are permitted to issue any securities, provided the issuance of debt securities to non-residents are subject to the prevailing rules on borrowing from non-residents.
"Non-residents are also permitted to issue foreign currency securities in Malaysia," she added.
The Governor said to promote the risk management culture and support development of the foreign exchange market, residents are permitted to undertake anticipatory hedging involving the ringgit for financial account transactions with onshore banks.
"Non-residents are also permitted to undertake anticipatory hedging involving the ringgit for current account transactions with onshore banks," she added.
Zeti said non-residents are allowed to hedge ringgit exposure arising from ringgit investments acquired prior to April 1, 2005, with onshore banks. This is in addition to the current flexibility to hedge ringgit investments acquired from April 1,2005.
In addition, to enhance regulatory efficiency and reduce the cost of doing business, entities registered with the Labuan Financial Services Authority are automatically designated as non-residents.
The liberalisation will take effect when the Financial Services Act and Islamic Financial Services Act come into force, Zeti said. - Bernama
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