As most of Jabatan Dasar Pertukaran Asing staff continue to work from home, any public enquiries may be directed to our email at FEPinfo@bnm.gov.my
Overview
Bank Negara Malaysia (BNM) continues to maintain a liberal foreign exchange policy (FEP), which is part of its broad prudential toolkits to maintain monetary and financial stability.
BNM is committed in ensuring FEP continues to support the competitiveness of the Malaysian economy by facilitating a more conducive environment for domestic and cross-border real economic activities.
Rules by Residency
Export of Goods
An exporter of goods can receive proceeds from its export of goods in ringgit or foreign currency (FC). The exporter shall repatriate the export proceeds to Malaysia in full value within 6 months from the date of shipment. Repatriation up to 24 months is only allowed for reasons beyond the exporter's control and other permitted reasons.
An exporter can undertake offsetting, netting-off and writing-off arrangement of export proceeds subject to permitted reasons only.
An exporter with annual gross exports value exceeding RM250 million equivalent in the preceding year shall submit a report on quarterly basis to BNM within 21 days after the end of each reporting quarter upon notification by BNM.
Further Information
- Notice 7 - Export of Goods [PDF]
- Policy on Export of Goods Report Submission [PDF]
- Frequently Asked Questions (FAQs) [PDF]
Application Submission
Resident exporter must apply before undertaking transactions other than stated above through the online submission portal. Relevant application forms and user guides are listed below for reference. Please do not submit hardcopy application.
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Investing in Foreign Currency Assets (updated as at 27 January 2022)
A resident without domestic ringgit borrowing is free to invest any amount in foreign currency (FC) assets onshore and abroad.
A resident with domestic ringgit borrowing is free to invest:
- Up to RM1 million equivalent in aggregate per calendar year on individual basis; or
- Up to RM50 million equivalent per calendar year in aggregate on corporate group basis (include resident entities within the group with parent-subsidiary relationship),
sourced from conversion of ringgit and Trade FCA.
A licensed onshore bank, a licensed insurer or licensed takaful operator is free to invest abroad for its own account.
A resident licensed unit trust companies, entity offering collective investment schemes including closed-end funds, fund managers or licensed insurer is free to invest abroad on behalf of their resident or non-resident client as follows:
- Up to 100% of Net Asset Value (NAV) or total funds belonging to resident client without domestic ringgit borrowing and non-resident client in conventional and Shariah compliant assets; or
- Up to 50% of NAV or total funds belonging to a resident client with domestic ringgit borrowing in conventional assets.
A licensed takaful operator is free to undertake investment abroad up to 100% of the NAV of ringgit or FC-denominated investment-linked funds belonging to their clients.
Further Information
- Notice 3 – Investment in Foreign Currency Asset [PDF]
- Frequently Asked Questions (FAQs) [PDF] (updated)
Application Submission
A resident entity or individual must apply before undertaking transactions other than stated above through the online submission portal. Relevant application forms and user guides are listed below for reference. Please do not submit hardcopy application.
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Ringgit Borrowing from Non-Resident
- Any amount of ringgit to finance real sector activities in Malaysia from either non-resident entity within its group or non-resident direct shareholder;
- Up to RM1 million in aggregate from any other non-resident, other than a non-resident financial institution, for use in Malaysia; and
- Any amount through issuance of tradable securities or redeemable preference shares (RPS) denominated in ringgit to non-resident for use in Malaysia.
By resident individual
Resident individual is free to borrow:
- Any amount of ringgit from non-resident immediate family member; and
- Up to RM1 million in aggregate from other non-resident, other than a non-resident financial institution for use in Malaysia.
Further Information
Application Submission
A resident must apply before undertaking transactions other than stated above through
online submission portal. Relevant application forms and user guides are listed below for reference. Please do not submit hardcopy application.
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Financial Guarantee
Obtained by resident from non-resident
A resident is free to obtain financial guarantee from a non-resident.
Issued by resident to non-resident
A resident is free to issue financial guarantee to or on-behalf of non-resident to secure borrowing obtained by a non-resident with some exceptions as follows:
- the non-resident borrower is a special purpose vehicle (SPV), therefore the resident shall be subjected to the rules on external borrowing; or
- the underlying borrowing will be repaid by a resident, other than when financial guarantee is called upon. In such cases, the resident shall be subjected to the rules on investing in foreign currency assets.
Further Information
- Notice 2 - Borrowing, Lending and Guarantee [PDF]
- Frequently Asked Questions (FAQs) [PDF]
Application Submission
A resident must apply before undertaking transactions other than stated above through
online submission portal. Relevant application forms and user guides are listed below for reference. Please do not submit hardcopy application.
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Payment in Foreign Currency
Payment in foreign currency between residents
A resident is free to pay or receive foreign currency (FC) to or from another resident for the following:
- Any purpose between immediate family members;
- Education, employment or migration outside Malaysia;
- A transaction between the resident and a licensed onshore bank, a licensed international takaful operator or an international currency business unit of a licensed takaful operator, in the conduct of the latter’s business involving FC;
- Settlement of –
- a FC-denominated derivative, excluding exchange rate derivatives, transacted on a Specified Exchange under CMSA between the resident and a resident futures broker;
- a commodity murabahah transaction between residents undertaken through a resident commodity or a non-resident trading service provider; or
- a domestic trade in goods or services between a resident exporter and resident entities involved in Global Supply Chain operations in Malaysia, subject to specified conditions .
Payment in foreign currency between resident and non-resident
A resident is free to make or receive FC payment to or from non-resident for any purpose, except for –
- FC-denominated derivatives offered by the resident unless it is approved by BNM or allowed under Part B of Notice 5;
- ringgit derivatives unless it is approved by BNM or allowed under Part B of Notice 5; or
- exchange rate derivatives offered by a non-resident unless it is approved by BNM or allowed under Notice 1
Further Information
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Buying and Selling of FX
A resident is free to buy or sell ringgit against foreign currency (FC) with a licensed onshore bank (excluding international Islamic banks) on spot or forward basis for current and financial account transactions either on firm commitment or anticipatory basis.
A resident is free to cancel or unwind their existing forward position involving ringgit for any underlying commitment (except portfolio investment) with any licensed onshore bank.
Under Dynamic Hedging Framework, a resident institutional investor registered with BNM is free to enter into forward contracts to buy ringgit up to 100% of its invested underlying FC-denominated asset or unwind the forward contracts entered, without documentary evidence with a licensed onshore bank, for the purpose of managing its FC exposure. The unwinding of its initial forward contract can be undertaken with the same or different counterparty licensed onshore bank it has entered the initial forward contract with.
A resident is also free to hedge non-FX derivative contracts offered by a resident provider up to the net open position (NOP) of the FX exposure with any licensed onshore bank. The resident is required to unwind the forward position if it exceeds the NOP.
A resident entity is free to undertake the FX transactions above on behalf of the resident and non-resident within its group of entities (excluding financial institutions).
Further Information
- Notice 1 - Dealings in Currencies, Gold and Other Precious Metals [PDF]
- Frequently Asked Questions (FAQs) [PDF]
Application Submission
Resident can register for dynamic hedging framework by submitting
Forward Market Participation Form – Institutional Investors for Dynamic Hedging Framework [PDF]
Investing in Malaysia
A non-resident investor is free to –
- undertake any type of investment in ringgit asset or foreign currency (FC) asset in Malaysia (direct or portfolio investment) without any restriction;
- open a ringgit account or FC account (FCA) with a licensed onshore bank. Funds are free to be remitted into and out of such accounts, subject to normal due diligence process by the licensed onshore bank; and
- repatriate divestment proceeds, profits, dividends or any income arising from the investments in Malaysia. Repatriation shall be made in FC.
A non-resident investor also has the flexibility to hedge FX exposure arising from their investments in Malaysia either via a licensed onshore bank or an Appointed Overseas Office (AOO). Further details on AOO is covered in Buying and Selling of FX section below.
Further Information
- Notice 3 – Investment in Foreign Currency Asset [PDF]
- Frequently Asked Questions (FAQs) [PDF]
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Borrowing in Malaysia
Borrowing in foreign currency
A non-resident is free to obtain foreign currency (FC) borrowing from any licensed onshore bank for use in or outside Malaysia.
A non-resident is free to issue FC-denominated sukuk/bonds in Malaysia for use in or outside Malaysia.
Borrowing in ringgit
A non-resident other than financial institution is free to borrow in ringgit:
- Any amount from any resident (including a licensed onshore bank) to finance or refinance real sector activities in Malaysia.
- Any amount from immediate family members for any purpose;
- Any amount from employer in Malaysia under the employment terms and conditions for use in Malaysia;
- Any amount of margin financing from -
- resident stock-broking corporation; or
- licensed onshore bank with stockbroking license,
to purchase securities or financial instruments traded on Bursa Malaysia; or
- Up to attained cash surrender value of any life insurance policy or family takaful certificate purchased from licensed insurer or a licensed takaful operator.
A non-resident custodian bank, stock broking corporation, trust bank or international central securities depository acting on behalf of non-resident investor or a non-resident investor purchasing shares or ringgit instrument traded on Bursa Malaysia or RENTAS for its own account is allowed to obtain overdraft facilities (maximum tenure of 2 business days) from licensed onshore banks solely for the purpose of mitigating settlement failure for ringgit securities and instruments due to inadvertent delay of payment by the non-resident.
Further Information
- Notice 2 – Borrowing, Lending and Guarantee [PDF]
- Notice 5 – Securities and Financial Instruments [PDF]
- Frequently Asked Questions (FAQs) [PDF]
Application Submission
Resident must apply before undertaking transactions other than stated above through
online submission portal. Relevant application forms and user guides are listed below for reference. Please do not submit hardcopy application.
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Payment in Ringgit
A non-resident is allowed to make or receive payment in ringgit in Malaysia, to or from a resident or a non-resident, for the purposes as follows:
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Purpose of Use and Source of Funds
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Between Non-Resident and Resident
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Between
Non-Residents
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Settlement of a ringgit asset including any income and profit due from the ringgit asset
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Settlement of trade in goods
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Settlement of services, in any manner
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Income earned or expense incurred, in Malaysia
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Settlement of a commodity murabahah transaction undertaken through a commodity trading service provider
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Settlement of reinsurance for domestic insurance business or retakaful for domestic takaful business between a resident and a person licensed to undertake Labuan insurance or takaful business
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Settlement of court judgement where the transaction under litigation is undertaken in compliance with the FE Notices
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For any purpose between immediate family members
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Payments on behalf of non-resident clients using funds in the external account is allowed as follows:
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By
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For the purpose of
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Non-resident financial institution
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Settlement of international trade of goods or services with a resident.
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Non-resident intermediary or non-resident custodian or trust bank
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Settlement of ringgit assets.
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Payments or receipts from or into an External Account is allowed provided that the non-resident is able to produce documentary evidence that the purpose of transaction complies with relevant FE Notices in accordance with onshore banks’ internal due diligence process.
Further Information
- Notice 4 – Payment and Receipt [PDF]
- Frequently Asked Questions (FAQs) [PDF]
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Buying and Selling of FX
Any non-resident will find the Malaysian financial market is easily accessible and open through its large network of licensed onshore banks. Non-resident can also undertake FX transactions involving ringgit directly overseas via the Appointed Overseas Offices (AOO) of the licensed onshore banks.
A non-resident may undertake the following FX transactions via a licensed onshore bank or an AOO:
FX transaction for own account
- Buy or sell foreign currency (FC) against ringgit on spot basis for any purpose.
- Buy or sell FC against ringgit on forward basis based on underlying obligation. A ringgit derivatives contract other than exchange rate offered by a resident is considered as part of underlying obligation. There is also no restriction to unwind or cancel the forward transaction for any underlying except portfolio investment.
FX transaction on behalf
- A non-resident entity can enter into FX transaction involving ringgit (spot or forward basis) on behalf of its resident and non-resident related entity.
- A non-resident institutional investor (NRII), including custodian/trust bank, can enter into FX transaction on behalf of its non-resident clients. The NRII may also participate in the Dynamic Hedging Framework to actively manage its ringgit FX exposure.
- A non-resident financial institution to enter into FX transaction on behalf of its non-resident clients for settlement of international trade in goods or services with a resident.
Apart from FX transaction, any non-resident (with or without underlying) may also trade ringgit-denominated interest rate derivative with a licensed onshore bank or an AOO.
For ease of reference, further information on hedging of FX exposures may be found here:
- Notice 1 – Dealings in Currency, Gold and Other Precious Metals [PDF]
- Frequently Asked Questions (FAQs) [PDF]
- List of financial institutions under the Appointed Overseas Office (AOO) Framework:
- Forward Market Participation Form – Institutional Investors[WORD]
- Forward Market Participation Form – Global Custodians and Trust Banks[WORD]
- NRFI Custody Passive Foreign Exchange Transaction Registration Form [PDF]
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Labuan as non-resident
All Labuan entities are deemed as non-residents under the FE pursuant to sections 214 and 215 of the Financial Services Act 2013 and sections 225 and 226 of the Islamic Financial Services Act 2013.
Carrying physical notes
- No restriction for resident and non-resident to carry in and out foreign currency notes up to any amount and ringgit notes up to USD10,000 equivalent.
- However, currency declaration to carry physical notes of both currencies more than USD10,000 equivalent is required. For more information on the declaration, please refer to Malaysian Customs Department’s website at www.customs.gov.my
Dealing with Specified Person and in Restricted Currency (updated as at 27 December 2021)
1. No person in Malaysia shall undertake or engage in any dealing or transaction with a Specified Person. Notwithstanding, a person may enter into, or make or receive payment arising from an international trade with or involving a Specified Person if such trades are allowed by relevant authority in Malaysia.
2. Where an international trade with or involving a Specified Person does not fall under any relevant authority purview, a person may make or receive payment arising from such trade only with the written approval of the Bank.
3. All dealings or transactions using or involving a Restricted Currency are prohibited.
4. No person shall open an account for a Specified Person or in a Restricted Currency unless with prior approval from the Bank.
Direction on dealings with specified person and in restricted currency can be found here [PDF]
Click here for the full FE rules documents archives.
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