Forex admin rules to be eased further from April

BANK Negara has announced further liberalisation to foreign exchange administration rules to take effect from April 1 in line with the country's strategic objectives and supported by progress achieved from previous liberalisation.

To provide greater flexibility to licensed onshore banks to undertake foreign currency business:

# Abolish net open position limit of licensed onshore banks previously capped at 20% of banks' capital base.

# Abolish limit on licensed onshore banks for foreign currency accounts maintained by residents.

# Allow investment banks in Malaysia to undertake foreign currency business subject to a comprehensive supervisory review on the capacity and capability of the investment banks.

To widen investor base for ringgit assets and financial products:

# Allow non-resident stockbroking companies and custodian banks to obtain ringgit overdraft facility from licensed banks by removing the previous overdraft limit of RM200mil and expanding the facility utilisation to include ringgit instruments settled through the Real Time Electronic Transfer of Funds and Securities System and Bursa Malaysia.

# Abolish the limit of the number of residential or commercial property loans obtained by non-residents.

# Allow licensed onshore banks to appoint their banking groups' overseas branches to settle any ringgit assets of their non-resident clients.

# Allow non-resident corporations to utilise proceeds from initial public offerings on the main board of Bursa Malaysia, abroad.

# Remove the restriction on Labuan offshore banks to transact in ringgit financial products for non-resident clients.

To reduce the cost of doing business, enhance business efficiency and promote Malaysia as a centre of origination:

# Increase the limit of foreign currency borrowing that can be obtained by resident corporations from licensed onshore banks and non-residents and through onshore foreign currency bonds issuance to a total of RM100mil.

# Allow residents to hedge foreign currency loan repayment up to the full amount.

# Increase the limit for resident individuals with domestic ringgit borrowing to invest in foreign currency assets up to RM1mil per calendar year.

# Increase the limit for resident corporations with domestic ringgit borrowing to invest in foreign currency assets up to RM50mil per calendar year.

# Allow resident corporations to utilise proceeds arising from listing of shares through IPO on the main board of Bursa Malaysia for offshore investments.

# Increase the limit for resident institutional investors to invest in foreign currency assets – unit trust companies: up to 50% of net asset value (NAV) attributable to residents; fund management companies: up to 50% of funds of resident clients with domestic credit facilities and insurance; and takaful operators: up to 50% of NAV of investment-linked funds marketed.

# Allow resident corporations to lend in foreign currency, the proceeds from listing of shares on foreign stock exchanges to other resident companies in the same group.

# Abolish restrictions on payments in foreign currency between residents for settlement of foreign currency financial products offered onshore.

# Allow resident individuals to open and maintain joint foreign currency accounts for any purpose.

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