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Foreign Exchange Policy

Overview

Malaysia continues to maintain liberal FE policies, which are part of broad prudential toolkits to maintain monetary and financial stability.

The Bank is committed in ensuring the policy continues to support competitiveness of the economy through facilitation of a more conducive environment for cross-border real economic activities.

Latest refinement in FE policies aimed to provide greater flexibility for corporates to improve business efficiency and enhance FX risk management:

  1. Summary note [PDF]
  2. Infographics [PDF]
  3. Frequently Asked Questions [PDF]

 

Rules by Residency

Rules Applicable to Residents:    

“Resident” means –  

  1. A citizen of Malaysia, excluding a citizen who has obtained permanent resident status in a country or a territory outside Malaysia and is residing outside Malaysia;
  2.  A non-citizen of Malaysia who has obtained permanent residency status in Malaysia and is ordinarily residing in Malaysia;
  3.  A body corporate incorporated or established, or registered with or approved by any authority, in Malaysia;
  4.  An unincorporated body registered with or approved by any authority in Malaysia; or
  5.  The Government or any State Government.
Exports (updated)

An exporter of goods can receive trade proceeds either in ringgit or foreign currency (FC). Upon receipt, the exporter shall repatriate the export proceeds to Malaysia in full value within 6 months from the date of shipment. An exporter with export proceeds of RM200,000 equivalent or less per invoice however may repatriate within 24 months from the date of shipment for permitted reasons.

An exporter can retain the export proceeds received in FC in Trade Foreign Currency Account (TFCA) maintained with a licensed onshore bank up to 25% of the proceeds, with the balance to be converted into ringgit. However, for an exporter with FC obligations (e.g. import payment, foreign currency loan obligation and foreign currency payable to resident SME net importer), they can retain FC up to their 6-month FC obligations, whichever is higher. This requirement however does not apply to receipt of export proceeds of up to RM200,000 per transaction where such proceeds can be fully retained in the TFCA.

Large exporter with annual gross export exceeding RM50 million equivalent in the preceding year shall submit report on quarterly basis to BNM within 21 days after the end of each reporting quarter.

Further Information

  1. Notice 7 - Export of Goods [PDF]
  2. Policy on Export of Goods Report Submission [PDF]
  3. Frequently Asked Questions (FAQs) [PDF]

Application Submission

Resident exporters must apply before undertaking transactions other than stated above through online submission portal. Relevant application forms for reference and user guides are listed below. Please do not submit hardcopy application.

Application

Document Reference

Extend repatriation of receipts and export proceeds

Form 5E [PDF]
Form 5E – User Guide [PDF]
Form 5E – Information Required [PDF]

Net off or write off export proceeds

Form 5N [PDF]
Form 5N – User Guide [PDF]
Form 5N – Information Required [PDF]

Retain export proceeds overseas

Form 7C [PDF]
Form 7C – User Guide [PDF]
Form 7C – Information Required [PDF]

Offsetting arrangement

Form 11 [PDF]
Form 11 – User Guide [PDF]
Form 11 – Information Required [PDF]

 

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Investing in Foreign Currency Assets (updated)

A resident without domestic ringgit borrowing is free to invest any amount in foreign currency (FC) assets onshore and abroad.

“Domestic ringgit borrowing” is defined as borrowing in ringgit obtained by a resident from another resident. For a resident entity, the borrowing shall exclude borrowing from another resident entity within its group of entities with parent-subsidiary relationship.

A residents 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 group basis (include resident entities within the group with parent-subsidiary relationship),

    “parent-subsidiary relationship” means direct or indirect relationship where a resident entity is – (a) a holding entity or ultimate holding entity of another resident entity; (b) a subsidiary of another resident entity; or (c) a subsidiary of a non-resident entity, where the ultimate holding entity is a resident entity;

    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 clients in conventional and Shariah compliant assets; or
  • Up to 50% of NAV or total funds belonging to a resident clients 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.

“investment in foreign currency asset onshore” means making of any payment in Malaysia for –

  • purchase of foreign currency-denominated security or Islamic security offered in Malaysia by a resident as approved by the Bank;
  • purchase of foreign currency-denominated financial instrument or Islamic financial instrument offered in Malaysia by a resident as approved by the Bank; or
  • placement into foreign currency account with a licensed onshore bank other than placement for investment abroad;

Further Information

  1. Notice 3 – Investment in Foreign Currency Asset [PDF]
  2. Frequently Asked Questions (FAQs) [PDF]

Application Submission

A resident entity or individual must apply before undertaking transactions other than stated above through online submission portal. Relevant application forms for reference and user guides are listed below. Please do not submit hardcopy application. 

 

Application

Document Reference

Invest abroad beyond permissible limit by lending in foreign currency to non-residents

Form 6B – Investment Abroad (Foreign currency borrowing by non-resident from resident) [PDF]

Form 6B – User Guide [PDF]

Form 6B – Information Required [PDF]

Invest abroad beyond permissible limit in equity

Form 9A – Investment Abroad (Equity) [PDF]

Form 9A – User Guide [PDF]

Form 9A – Information Required [PDF]

Invest abroad beyond permissible limit in foreign currency assets other than equity

Form 9C – Investment Abroad (Others) [PDF]

Form 9C – User Guide [PDF]

Form 9C – Information Required [PDF]

Contact Us

 

Foreign Currency Borrowing in Malaysia and from Abroad

By resident entity    

“Entity” means any corporation, statutory body, local authority, society, cooperative, limited liability partnership and any other body, organisation, association or group of persons, whether corporate or unincorporate, in or outside Malaysia and also includes the Federal Government, State Government or any other governments

Resident entities are free to borrow any amount in foreign currency (FC) from:

  • Licensed onshore banks
  • Resident or non-resident entities within its group of entities

    “Group of entities” means a resident entity’s –

    • ultimate holding entity;
    • parent or head office;
    • branch;
    • subsidiary where the resident entity owns more than 50% of shares in the subsidiary;
    • associate company where the resident entity owns between 10% and 50% of shares in the associate company; or
    • sister company where the resident entity and its sister company have common shareholder.
  • Resident or non-resident direct shareholders
  • Another resident through issuance of FC debt securities

Resident entities may borrow in FC up to a prudential limit of RM100 million equivalent in aggregate from non-resident financial institutions and other unrelated non-residents, including through issuance of securities or Islamic securities denominated in FC.

By resident individual                                             
A resident individuals, sole proprietor or general partnership may obtain up to a limit of RM10 million equivalent in aggregate from licensed onshore banks and non-residents other than immediate family members.

Further Information

  1. Notice 2 - Borrowing and Guarantee [PDF]
  2. Notice 5 - Security, Islamic Security, Financial Instrument or Islamic Financial Instrument [PDF]
  3. Information Note on Sukuk and Bonds
  4. Frequently Asked Questions (FAQs) [PDF]

Application Submission
Resident entities and individuals must apply before undertaking transactions other than stated above through online submission portal. Relevant application forms for reference and user guides are listed below. Please do not submit hardcopy application. 

Application

Document Reference

Borrowing beyond permissible limit from non-resident

Form 10A [PDF]
Form 10A – User Guide [PDF]
Form 10A – Information Required [PDF]

Changes to the approved borrowing beyond permissible limit from non-resident:

  1. Reduction of amount
  2. Change of purpose
  3. Change of other Terms and Conditions

Form 10D [PDF]
Form 10D – User Guide [PDF]
Form 10D – Information Required [PDF]

Borrow beyond permissible limit through issuance of redeemable preference shares to non-residents

Form 10F [PDF]
Form 10F – User Guide [PDF]
Form 10F – Information Required [PDF]

Changes to the approved borrowing beyond permissible limit through issuance of redeemable preference shares to non-residents

  1. Reduction of amount
  2. Change of purpose
  3. Change of other Terms and Conditions

Form 10G [PDF]
Form 10G – User Guide [PDF]
Form 10G – Information Required [PDF]

 

Contact Us

 

Ringgit Borrowing from Non-Resident (updated)

By resident entity    
A resident entity is free to borrow:

“Entity” means any corporation, statutory body, local authority, society, cooperative, limited liability partnership and any other body, organisation, association or group of persons, whether corporate or unincorporate, in or outside Malaysia and also includes the Federal Government, State Government or any other governments

  • Any amount of ringgit to finance activities in the real sector in Malaysia from either non-resident entity within its group of entities or non-resident direct shareholder;

    activities in the real sector” means activities relating to –

    • the production or consumption of goods or services, other than –
      • activities in the financial services sector, whether Islamic or otherwise;
      • the purchase of security or Islamic security;
      • the purchase of financial instrument or Islamic financial instrument; or
    • the construction or purchase of a residential or commercial propoerty excluding the purchase of land only;
  • 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 in Malaysia to non-resident.

By resident individual                                             
Resident individual is free to borrow:

  • Any amount of ringgit from non-resident immediate family members; and

    “immediate family members” in relation to an individual means his spouse, parents, children or siblings

  • Up to RM1 million in aggregate from other non-residents, other than a non-resident financial institution for use in Malaysia

Further Information

Application Submission
Resident must apply before undertaking transactions other than stated above through online submission portal. Relevant application forms for reference and user guides are listed below. Please do not submit hardcopy application. 

Application

Document Reference

Borrowing from non-resident

Form 10A [PDF]
Form 10A – User Guide [PDF]
Form 10A – Information Required [PDF]

Borrowing from non-resident:

  • Reduction of amount
  • Change of purpose
  • Change of other Terms and Conditions

Form 10D [PDF]
Form 10D – User Guide [PDF]
Form 10D – Information Required [PDF]

 

Contact Us

 

Financial Guarantee (updated)

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 entity 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 foregin currency.

Further Information

  1. Notice 2 - Borrowing, Lending and Guarantee [PDF]
  2. Frequently Asked Questions (FAQs) [PDF]

Application Submission
Resident must apply before undertaking transactions other than stated above through online submission portal. Relevant application forms for reference and user guides are listed below. Please do not submit hardcopy application.

Application

Document Reference

Financial Guarantee

Form A [PDF]
Form A – User Guide [PDF]
Form A – Information Required [PDF]

Changes to Financial Guarantee:

  • Renewal
  • Extension
  • Cancellation
  • Change amount

Form B [PDF]
Form B – User Guide [PDF]
Form B – Information Required [PDF]


Financial Guarantee Called-Upon

Form C [PDF]
Form C – User Guide [PDF]
Form C – Information Required [PDF]

Consequential Loan to Non-Resident arising from Guarantee Terms and Conditions

Report 6 [PDF]
Report 6 – User Guide [PDF]

Consequential Debt of Resident arising from Guarantee Terms and Conditions

Report 10 [PDF]
Report 10 – User Guide [PDF]

 

Contact Us

 

Payment in Foreign Currency (updated)

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;

    “immediate family members” in relation to an individual means his spouse, parents, children or siblings

  • 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 trading service provider; or
    • a domestic trade in goods or services between a resident entity with FC export earnings (payor) and a resident entity which is a Small and Medium Enterprise (SME) and a net importer (payee), subject to specified conditions.

A non-SME resident net importers may apply for approval by submitting an application via email to Foreign Exchange Policy Department.

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 –

  1. FC-denominated derivatives offered by the resident unless it is approved by BNM or allowed under Part B of Notice 5;
  2. FC-denominated derivatives offered by the non-resident; or
  3. ringgit derivatives unless it is approved by BNM or allowed under Part B of Notice 5.

However, foreign currency payment relating to (2) above can still be undertaken for –

  • FC-denominated derivatives, except for ringgit exchange rate derivatives,  purchased by a licensed onshore bank for its own account;
  • FC-denominated interest rate swap between a resident and Labuan bank to manage interest rate exposure arising from foreign currency borrowing; or
  • FC-denominated derivatives, except for exchange rate derivatives, offered on a Specified Exchange stipulated under the Capital Markets and Services Act 2007 [Act 671] undertaken through a resident futures broker by a resident with a firm commitment; or
  • FC-denominated derivatives, except for exchange rate derivatives, purchased by a resident individual from a non-resident, subject to the applicable limit on investment in FC asset in Notice 3.

Further Information

 

Contact Us

 

Buying and Selling of FX (updated)

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.

For hedging of FC obligations, a resident is free to buy or sell ringgit against FC with a licensed onshore bank on –

  1. spot basis up to the aggregate of its 6 months FC obligations; or
  2. forward basis up to the underlying tenure of FC obligations.

A resident is free to cancel or unwind their existing forward positions 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 or non-resident within its group of entities (excluding financial institutions).

Further Information

  1. Notice 1 - Dealing in Currencies, Gold and Other Precious Metals [PDF]
  2. 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]



Rules Applicable to Non-Residents:    

“Non-resident” means –  

  1. Any person other than resident;
  2. An overseas branch, a subsidiary, regional office, sales office or representative office of a resident company;
  3. Embassies, Consulates, High Commissions, supranational or international organisations; or
  4. A Malaysian citizen who has obtained permanent resident status of a country or territory outside Malaysia and is residing outside Malaysia.
Investing in Malaysia (updated)

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 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 investments in Malaysia. Repatriation shall be in FC.

A non-resident investor also has the flexibility to hedge FX exposures 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

  1. Notice 3 – Investment in Foreign Currency Asset [PDF]
  2. Frequently Asked Questions (FAQs) [PDF]

Contact Us

 

Borrowing in Malaysia (updated)

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.

“Entity” means any corporation, statutory body, local authority, society, cooperative, limited liability partnership and any other body, organisation, association or group of persons, whether corporate or unincorporate, in or outside Malaysia and also includes the Federal Government, State Government or any other governments

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:

  1. Any amount from any resident (including licensed onshore banks) to finance or refinance real sector activities in Malaysia.

    activities in the real sector” means activities relating to –

    • the production or consumption of goods or services, other than –
      • activities in the financial services sector, whether Islamic or otherwise;
      • the purchase of security or Islamic security;
      • the purchase of financial instrument or Islamic financial instrument; or
    • the construction or purchase of a residential or commercial propoerty excluding the purchase of land only;
  2. Any amount from immediate family members for any purpose;
  3. Any amount from employer in Malaysia under the employment terms and conditions for use in Malaysia;
  4. Any amount of margin financing from -
    • resident stock-broking corporate; or
    • licensed onshore banks 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 licensed onshore banks to facilitate settlement of shares or ringgit instrument due to inadvertent delay of payment by the non-resident.

Further Information

  1. Notice 2 – Borrowing, Lending and Guarantee [PDF]
  2. Notice 5 – Security and Financial Instrument [PDF]
  3. Frequently Asked Questions (FAQs) [PDF]

Application Submission
Resident must apply before undertaking transactions other than stated above through online submission portal. Relevant application forms for reference and user guides are listed below. Please do not submit hardcopy application. 

Application

Document Reference

Borrow ringgit beyond permissible limit

Form 6A – Ringgit Borrowing by Non-Residents [PDF]
Form 6A – User Guide [PDF]
Form 6A – Information Required [PDF]

 

Contact Us

 

Payment in Ringgit (updated)

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-Resident

Settlement of a ringgit asset including any income and profit due from the ringgit asset

Settlement of trade in goods

Settlement of services, in any manner

Income earned or expense incurred, in Malaysia

Settlement of a commodity murabahah transaction between a resident and non-resident participant undertaken through a resident commodity trading service provider

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

 

Settlement of a non-financial guarantee denominated in ringgit for use in Malaysia

“non-financial guarantee” means any guarantee other than a financial guarantee, and includes a performance bond, tender bond, guarantee for the supply of goods or services or shipping guarantee in which such guarantee was issued or obtained not for purposes of securing borrowing

For any purpose between immediate family members

Payment on behalf of non-resident clients using funds in the external account is allowed as follows:

“External account” means an account in ringgit opened with any financial institutions in Malaysia –

  • by a non-resident –
    • individually;
    • jointly with another non-resident;
    • jointly with a resident other than –
      • for a joint venture in Malaysia;
      • a husband and wife; or
  • by a resident who operates the account in trust for or on behalf of a non-resident;

By

For the purpose of

Non-resident financial institution

Settlement of international trade of goods or services with a resident.

Non-resident intermediary or non-resident custodian or trust bank

Settlement of ringgit assets.

Payments or receipts into or from an External Account is subjected to RM10,000 per account per day. The limits 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 requirements above (documentary evidence should be provided to financial institutions).

Further Information

  1. Notice 4 – Payments [PDF]
  2. Frequently Asked Questions (FAQs) [PDF]

 

Contact Us

 

Buying and Selling of FX (updated)

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 transaction involving ringgit directly overseas via the Appointed Overseas Offices 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 to 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 can enter into FX transaction on behalf of its non-resident clients for settlement of international goods and services with a resident.

Apart from FX transaction, 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.

Further Information

  1. Notice 1 – Dealings in Currency, Gold and Other Precious Metals  [PDF]
  2. Frequently Asked Questions (FAQs) [PDF]
  3. List of financial institutions under the Appointed Overseas Office (AOO) Framework:
  4. Minimum Due Diligence for FX Transactions (issued by ABM and AIBIM) [PDF]
  5. Forward Market Participation Form – Institutional Investors [WORD]
  6. Forward Market Participation Form – Global Custodians and Trust Banks [WORD]
  7. NRFI Custody Passive Foreign Exchange Transaction Registration Form [WORD]

 

Contact Us

 

 


 

Labuan as non-resident

All Labuan entities are deemed as non-residents under the FEA 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
  1. All payments to and from a Specified Person arising from international trade in goods and services requires the prior approval of the Bank. Payments for all other purposes are prohibited.
  2. All dealings or transactions using or involving a Restricted Currency are prohibited.
  3. No person shall open an account for a Specified Person or in a Restricted Currency unless with approval of the Bank.

 

 

 

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