FE Policy - Key Rules

 

Key Foreign Exchange Rules Applicable to Non-Residents

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Investing in Malaysia

Non-residents are free to undertake investments in Malaysia

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Borrowing in Malaysia

Non-residents are free to borrow in ringgit or foreign currency from any onshore bank subject to limit and purpose

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Payment in Ringgit

Non-residents are free to make or receive payment in ringgit in Malaysia, to or from a resident or a non-resident subject to certain purposes

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Buying & Selling of FX

Non-residents may undertake buying or selling of ringgit or foreign currency with a licensed onshore bank or an Appointed Overseas Office

FE Policy - Investing in Malaysia

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. The 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.

FE Policy - Borrowing in Malaysia

Borrowing in Malaysia

Non-residents may borrow in foreign currency or in ringgit from any onshore bank subject to limit and purpose.

Borrowing in foreign currency

A non-resident entity is free to obtain foreign currency (FC) borrowing from any licensed onshore bank to use in or outside Malaysia.

A non-resident is free to issue FC-denominated sukuk or 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:

  1. Any amount from any resident (including a licensed onshore bank) to finance or refinance real sector activities in Malaysia.
  2. Any amount from immediate family members for any purpose;
  3. Any amount from an employer in Malaysia under the employment terms and conditions for use in Malaysia;
  4. Any amount of margin financing from:
    • a resident stock-broking corporation; or
    • a licensed onshore bank with stockbroking license
    to purchase securities or financial instruments traded on Bursa Malaysia; or
  5. 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 or non-resident stock broking corporation is free to obtain overdraft facilities from a licensed onshore banks to facilitate settlement of shares or ringgit instruments due to inadvertent delay of payment by the non-resident to avoid settlement failure.

FE Policy - Payment in RM

Payment in Ringgit

A non-resident is free to make or receive payment in ringgit in Malaysia, to or from a resident or a non-resident, for the following purposes:

Purpose of Use and Source of Funds Between Resident and Non-Resident Between Non-Residents
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 between a resident and non-resident participant undertaken through a resident 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 a non-financial guarantee denominated in ringgit for use in Malaysia
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For any purpose between immediate family members
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Payments or receipts on behalf of clients using funds in an External Account of a non-resident are allowed as follows:

By For the purpose of
A non-resident financial institution on behalf of non-resident clients Settlement of international trade in goods or services with a resident.
A non-resident intermediary or non-resident custodian or trust bank on behalf of resident or non-resident clients Settlement of ringgit assets.

Payments or receipts into or from an External Account is subjected to RM10,000 per account per day. The limit shall not apply to the following:

  1. Any cash withdrawal over-the-counter from an External Account.
  2. A consulate, a high commission, an embassy, an individual participating in the Malaysia My Second Home Programme, or an individual who is working or studying in Malaysia including the individual’s spouse, child or parent who is staying in Malaysia.
  3. Where the uses and sources of funds are permitted in accordance with the Foreign Exchange Notices (documentary evidence should be provided to financial institutions for verification purpose).

FE Policy - Buy Sell FX

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 derivatives, offered by a resident provider is considered as part of underlying obligation. There is also no restriction to unwind or cancel the forward transaction for any underlying commitment (except portfolio investment).
FX transaction on behalf
  • A non-resident entity to enter into FX transactions involving ringgit (spot or forward basis) on behalf of resident and non-resident entity within its group of entities.
  • A non-resident institutional investor (NRII), including custodian/trust bank, to enter into FX transactions involving ringgit 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 transactions involving ringgit on behalf of its non-resident clients for settlement of international trade in goods or services with a resident.

Apart from FX transactions, a non-resident entity (with or without underlying) and a non-resident financial institution (with underlying) may also trade ringgit-denominated interest rate derivative with a licensed onshore bank or an AOO.