Chronology of Gradual Liberalisation of Exchange Control Rules

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2010
Foreign currency transactions by licensed onshore banks
ECM2 -Dealings in
foreign currency with non-residents
• Allow licensed onshore banks to buy or sell ringgit against
foreign currency on spot or forward basis with a non-resident
for settlement of goods and services with a resident

Anticipatory hedging by residents

• Abolish the limit on anticipatory hedging of current account
transactions by residents with licensed onshore banks

2008
Dealing and payment in foreign currency
• Allow International Islamic Banks to conduct the following
transactions with any person in or outside Malaysia:
¾ Buy or sell foreign currency against another foreign
currency; or
¾ Borrow or lend in foreign currency

• Allow all International Islamic Banks, International Takaful

Operators, International Currency Business Units and Takaful
and Retakaful operators to make payment in foreign currency to
resident intermediaries for the financial services rendered by the
intermediaries
2007
Forward Foreign Exchange Contracts by residents
• Abolition of registration requirement for forward foreign
exchange contracts exceeding RM50 million equivalent per
contract for permitted capital account transactions and
anticipatory current account transactions.

• Allow a resident to enter into forward foreign exchange contracts

with a licensed onshore bank to hedge foreign currency loan
repayment up to the full loan amount (previously only up to the
amount payable within 24 months).

Foreign currency business by investment bank

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

Net Open Position (NOP)

▪ Abolish the foreign currency NOP limit imposed on a licensed
onshore bank.

Foreign currency account

▪ Abolish the aggregate overnight balance limit imposed on a
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Chronology of Gradual Liberalisation of Exchange Control Rules
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licensed onshore bank for all the foreign currency accounts

maintained by residents.

Settlement of ringgit assets by non-residents

▪ Allow a licensed onshore bank to appoint overseas branches of
its banking group as a vehicle to facilitate the settlement of any
ringgit assets of its non-resident investors.

2006
Net Open Position (NOP)
Licensed banks and approved merchant banks shall:

• Determine own overnight Net Open Position (NOP) limit in

foreign currencies, long or short, spot or forward, capped at
20% of the licensed banks’ and approved merchant banks’
capital base as at end of the previous month; and

• Compute foreign currency option (FX option) position in

the NOP based on delta value.
2005

Forward Foreign Exchange Contracts by residents

▪ Allow residents to enter into forward foreign exchange
contracts to buy or sell foreign currency against ringgit or
another foreign currency to hedge:

(a) Anticipatory payments for imports or receipts from

exports of goods and services up to the amount paid or
received in the preceding 12 months. There is no
restriction on the tenure of the forward contracts;

(b) Payment for permitted investment abroad including

lending to non-residents in foreign currency;

(c) Foreign currency exposure of permitted investment

abroad; and/or

(d) Amount of prepayment or repayment of permitted

foreign currency credit facilities that is payable within
the next 24 months.

Forward Foreign Exchange Contracts by Non-residents

▪ Non-residents may enter into forward foreign exchange
contracts to buy or sell foreign currency against ringgit to
hedge committed:

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Chronology of Gradual Liberalisation of Exchange Control Rules
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(a) payments or receipts for current account transactions,

provided the payments to or receipts from residents
are permitted to be settled in ringgit; and

(b) inflows and outflows for investments in, or divestments

of, ringgit assets other than:

(i) Funds in External Account, including fixed

deposits;
(ii) Negotiable instruments of deposits in ringgit; and
(iii) Over-the-counter derivatives or structured
products which tantamount to lending or
borrowing of ringgit between residents and non-
residents.

2004
Forward Foreign Exchange Contracts by residents
▪ Allow residents to enter into forward foreign exchange contracts
to sell foreign currency receivables (other than export receipts)
to an authorised dealers against ringgit or another foreign
currency for any tenure, provided the transactions are supported
by firm underlying commitment.

▪ For forward foreign exchange contracts to purchase export

proceeds receivables against ringgit or another foreign currency,
the maturity date of the contract continues to be subject to not
exceeding 6 months from the intended date of export.

▪ Allow residents to enter into interest rate swap arrangements

with authorised dealers, approved merchant banks and licensed
offshore banks in Labuan (excluding licensed investment banks)
to swap interest payments arising from permitted foreign
currency loans.
2003
Forward Foreign Exchange Contract
▪ Allow residents to sell forward of up to 12 months foreign
currency receivables for ringgit with an authorised dealer for any
purpose provided that the transaction is supported by firm
underlying commitment to receive such currency.

2000
Investment Abroad by Authorised Dealers and Approved
Merchant Banks
▪ Allow authorised dealers and approved merchant banks to
invest abroad subject to the following conditions the
institutions:
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Chronology of Gradual Liberalisation of Exchange Control Rules
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o comply with the requirement of the Banking and Financial

Institution Act 1989;
o comply with their net foreign currency overnight open
position limit; and
o remittance is made in foreign currency

1999
Forward Foreign Exchange Contract
▪ Authorised dealers are allowed to enter into short-term currency
swap arrangement with non-resident stockbrokers and outright
ringgit forward sale contract with non-residents to cover payment
for their share purchases on the KLSE.

▪ The permission is subject to the condition that such contracts

are based on firm commitment and not on anticipated
purchases, and for maturity period of up to five working days
with no rollover option.

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2010
Settlement of Goods and Services by Residents and Non-
ECM3 – External
Account residents
• Allow residents to make payments to, or receive payments
from, non-residents in ringgit, in addition to payments in
foreign currency, as settlement for goods and services. This
is provided that:
¾ Payment in ringgit by resident to the non-resident must
be made into the External Account of the non-resident; or
¾ Receipt of ringgit by the resident company from the non-
resident can be effected from the External Account of the
non-resident or an External Account of an appointed
overseas branch of the same banking group of an
onshore bank.

2001
Transfer of funds by way of Internet Banking, ATM Cards and
Ringgit Cheques
• Allow banking institutions in Malaysia to effect transfers involving
External Accounts and another External Account and/or
Resident Account of different account holders by way of –

(a) Automated Teller Machine transfer up to RM5,000 per

person/ company, per day, per bank for any purpose;
and/or

(b) Internet-bank transfers up to RM5,000 per person/

company, per day, per bank for any purpose

(c) Cheques up to RM5,000 per cheque for any purpose.

Review of Operational Guidelines involving External Account

and Special External Account of Non-residents
▪ Non-resident investors are no longer required to maintain
Special External Accounts and Designated External Accounts as
of July 2001.

▪ Non-residents holding different ringgit accounts are allowed to

merge these accounts into one External Account.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2010
Invoicing in ringgit between residents and non-residents
ECM4-General • Allow residents to invoice in ringgit its exports, or accept and
Payments
invoice in ringgit for its imports, of goods and services with
non-residents.

General Payments
• Allowed resident futures brokers to make payments to non-
residents for foreign currency-denominated derivatives (other
than currency contracts) transacted on overseas specified
exchanges

• Allowed residents to transact foreign currency-denominated

derivatives (other than currency contracts) on overseas specified
exchanges through resident futures brokers as follows:
(a) any amount for transactions that are supported by firm
underlying commitment; and
(b) subject to limits on investment in foreign currency assets
for transactions that are not supported by firm underlying
commitment

General Payments
• Allowed resident and non-resident participants# undertaking
commodity murabahah through resident commodity trading
service providers to make –
(a) payment in foreign currency between resident participants;
(b) payment in ringgit onshore between-
(i) resident and non-resident participants; and
(ii) non-resident participants.

#
The participants of commodity murabahah comprise financial
institutions, companies or individuals, commodity brokers, commodity
suppliers, commodity buyers and commodity trading service provider
2007
Payment in foreign currency between residents
• Allow resident companies with export earnings to pay another
resident company in foreign currency for the settlement of goods
and services.

• Allow residents to pay another resident in foreign currency for

the settlement of foreign currency investment products offered
onshore.

Threshold for Reporting Payment and Receipt

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Chronology of Gradual Liberalisation of Exchange Control Rules
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• Increase the individual reporting threshold for transactions

between residents and non-residents to RM200,001 or its
equivalent in foreign currency from RM50,001 per transaction.

Financial Guarantee
y Allow licensed onshore bank to:

(a) Issue a financial guarantee of any amount on behalf or in

favour of a non-resident; or

(b) Obtain a financial guarantee of any amount from a non-

resident.

The above financial guarantees issued or obtained by the

licensed onshore bank are not required to be registered with the
Controller.

• Allow non-bank resident to:

(a) Issue a financial guarantee of any amount on behalf or in
favour of a non-resident; or

(b) Obtain a financial guarantee of any amount from a non-

resident.

This is provided that the financial guarantee is registered with the

Controller at least seven (7) working days prior to the issuance or
obtaining of the financial guarantee, if –

¾ the aggregate amount of financial guarantees issued

or obtained by the non-bank resident exceeds RM50
million, respectively; and

¾ the financial guarantee is to secure a credit facility

that has not been approved by the Controller and that
credit facility is extended by –

(i) a resident (bank or non-bank) to

another resident (bank or non-
bank);

(ii) a resident (bank or non-bank) to a

non-resident;

(iii) a non-resident to a resident (bank

or non-bank); or
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Chronology of Gradual Liberalisation of Exchange Control Rules
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(iv) a non-resident to another non-

resident.

2004
Reporting Payments and Receipts by Residents
▪ The requirement to complete a Form P for residents who make
payments in excess of RM50,000 or its equivalent in foreign
currency is discontinued.

▪ Banking institutions are, however, required to provide specific

information to the Bank when effecting any payment exceeding
RM50,000 or its equivalent in foreign currency on behalf or a
resident or for its own account, to a non-resident.

2003
Threshold for Reporting Payments and Receipts
▪ Increase the threshold for transactions between residents and
non-residents to RM50,001 in ringgit or its equivalent in foreign
currency from RM10,001, irrespective of purpose of payment.

▪ Accordingly, the threshold for reporting payments and receipts

under Cash Balance of Payments System is increased to
RM50,001 respectively.
2002
Settlement of Ringgit Assets by Residents and Non-residents
• Payments between residents and non-residents as well as
between non-residents for ringgit assets is liberalised to allow
payments to be made either in ringgit or foreign currency.
(Previously, payments are made only in ringgit.)
1998
Obtaining of financial and non-financial guarantee
▪ Residents were allowed to obtain financial and non-financial
guarantees (except trade guarantees) in ringgit from Licensed
Offshore Banks in Labuan.

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2010

ECM5-Export of Settlement of Goods and Services by Residents and Non-

Goods residents
• Allow residents to make payments to, or receive payments
from, non-residents in ringgit, in addition to payments in
foreign currency, as settlement for goods and services. This
is provided that:
¾ Payment in ringgit by resident to the non-resident must
be made into the External Account of the non-resident; or
¾ Receipt of ringgit by the resident company from the non-
resident can be effected from the External Account of the
non-resident or an External Account of an appointed
overseas branch of the same banking group of an
onshore bank.

2004
Reporting on Export by Residents
▪ The requirement to submit annual reports for exports in excess
of RM100,000 f.o.b. is abolished.

▪ Only resident exporters with gross annual exports (based on the

previous year’s gross exports) exceeding RM50 million are
required to submit quarterly report on the export of goods.

2003
Reporting on Export by Residents
▪ Abolish the requirement to complete Form KPW X for exports in
excess of RM100,000 f.o.b.

▪ Resident exporters only need to continue to submit quarterly and

annual reports on their export related transactions.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2010

ECM6-Credit Lending in ringgit by licensed onshore banks

Facilities to Non- • Allow licensed onshore banks to grant any amount of ringgit
residents trade financing to non-residents to finance the purchase or
sale of goods or services with residents

2008
Lending in ringgit by residents to non-residents

• Allowed a resident company or individual to lend in ringgit of

any amount to non-resident non-bank companies and
individuals to finance activities in the real sector in Malaysia
(previously, only allowed up to RM10,000).

• Allowed a licensed onshore bank to lend in ringgit of any

amount to non-resident non-bank companies and individuals
to finance activities in the real sector in Malaysia (previously,
only allowed up to RM10 million in aggregate).

2007
Abolition of registration requirements on residents as follows:
• Ringgit-denominated loans exceeding RM50 million extended by
a resident to a non-resident for purchase or construction of
residential and commercial properties in Malaysia.

• Investment in foreign currency assets exceeding RM50 million

equivalent by a resident (individual or company on corporate
group basis) without domestic ringgit borrowing.

Ringgit credit facility to non-resident

▪ Abolish the previous RM200 million limit on ringgit overdraft
facilities to a non-resident stockbroking company or a custodian
bank to facilitate the settlement for purchase of ringgit
instruments traded on Bursa Malaysia to avoid settlement failure
due to inadvertent delays.

▪ Abolish the limit on the number of residential or commercial

property loans obtained by a non-resident (previously limited to
only three loans).

▪ Expand the scope on the utilisation of the overdraft facilities to

also include ringgit instruments settled through the Real Time
Electronic Transfer of Funds and Securities System.

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Chronology of Gradual Liberalisation of Exchange Control Rules
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Foreign currency credit facility to non-residents

▪ Allow a resident corporation (with or without domestic ringgit
credit facilities) to lend in foreign currency, the ringgit proceeds
from the listing of shares through an Initial Public Offering on the
Main Board of Bursa Malaysia to a non-resident.

▪ Allow a resident corporation with domestic ringgit credit

facilities convert ringgit into foreign currency up to RM50
million equivalent in aggregate per calendar year on
corporate group basis for lending to non-residents

▪ Allow a resident individual with domestic ringgit credit facilities to

convert ringgit into foreign currency up to RM10 million
equivalent in aggregate per calendar year for lending to non-
residents.

2005
▪ Allow residents to convert ringgit into foreign currency for
lending to non-residents as follows:

(a) Any amount for residents (corporations and individuals)

without domestic credit facilities.

(b) Up to RM10 million per calendar year on a corporate

group basis by resident corporations with domestic
credit facilities.

(c) Up to RM100,000 per calendar year by resident

individuals with domestic credit facilities.

▪ Allow residents to lend any amount to non-resident using own

foreign currency funds.

2004
Ringgit credit facility to non-resident
▪ Increase the aggregate overnight limit for overdraft facilities to
RM200 million from RM10 million, extended by authorised
dealers to a non-resident stockbroker or custodian bank to
facilitate settlement for the purchase of securities listed on
Malaysian Securities Exchange Berhad to avoid settlement
failure due to inadvertent delays.

▪ All permitted ringgit credit facilities for various purposes

extended by banking institutions to a non-resident (excluding
stockbroking company, custodian bank or correspondent bank)
are consolidated into one aggregate limit of RM10 million.
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Chronology of Gradual Liberalisation of Exchange Control Rules
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The ringgit credit facilities may be used for any purpose in

Malaysia, except for financing/refinancing the purchase or
construction of immovable properties and the purchase of land
only.
• Residents (banks and non-banks) may extend ringgit credit
facilities in aggregate up to 3 property loans to a non-resident to
finance or refinance the purchase or construction of immovable
properties in Malaysia, except for purchase of land only.

Issuance of Ringgit-Denominated Bonds in Malaysia by

Multilateral Development Banks (MDBs) and Foreign
Multinational Companies (MNCs)
▪ Applications for the following may be considered by Bank
Negara Malaysia on the merits of each case:

(a) For Multilateral Development Banks (MDBs) and foreign

multinational companies (MNCs), which are not
incorporated in Malaysia but have presence in Malaysia
through subsidiaries or related companies, to issue
ringgit-denominated bonds in Malaysia. The ringgit-
denominated bonds may be purchased by resident and
non-resident investors;

(b) For MDB and MNC issuers of ringgit-denominated bonds

to enter into forward foreign exchange contracts to sell
foreign currency for ringgit to meet coupon or principal
payment of the bonds; and

(c) For non-resident investors purchasing the ringgit-

denominated bonds issued by MDBs and MNCs to
hedge their ringgit investments.
2003
Ringgit Overdraft Facilities to Non-residents
▪ Commercial banks and Islamic banks in Malaysia are now
allowed to extend overdraft facilities in ringgit not exceeding
RM500,000 in aggregate to a non-resident, provided such
facilities are covered by fixed deposits placed by the non-
resident with the commercial banks and Islamic banks in
Malaysia.

▪ These overdraft facilities are in addition to all ringgit credit

facilities allowed to be extended freely by banking institutions
since 21 November 2002.

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Chronology of Gradual Liberalisation of Exchange Control Rules
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2002
Refinancing of Property Loans obtained by Non-residents
• Allow non-residents to refinance their domestic ringgit property
loans. This is subject to a maximum of three property loans.

Financing of Projects undertaken by Non-residents in Malaysia

▪ Banking institutions in Malaysia are allowed to extend additional
ringgit credit facilities to non-resident up to an aggregate of RM5
million per non-resident to finance projects undertaken in
Malaysia.

▪ Prior to this, credit facilities in ringgit to a non-resident, for

purposes other than purchases of three immovable properties or
a vehicle, were limited to RM200,000.

2001
Financing of Immovable Property in Malaysia by Non-residents
▪ Allow resident financial institutions to extend credit facilities in
ringgit to non-residents to finance the purchase or construction
of any property in Malaysia (excluding for the purchase of land
only), subject to their own internal credit assessment guidelines.

▪ Resident companies are allowed to extend credit facilities to

their non-resident employees subject to terms and conditions of
employment to finance the purchase or construction of property
(excluding for the purchase of land only) in Malaysia.

• A non-resident may only obtain, at any one point in time, a

maximum of three property loans (including loans obtained in
foreign currency and from resident companies under the terms
and conditions of employment and from resident financial
institutions).

Financing of Immovable Property in Malaysia by Non-residents

• Allow banking institutions in Malaysia to extend credit facilities in
ringgit to finance the purchase and/or construction of one
immovable property for non-residents who participate in the
Silver Hair Programme implemented by the Immigration
Department of Malaysia.

2000
Ringgit Credit Facilities to Non-Residents
▪ Allow licensed commercial banks and Bank Islam Malaysia
Berhad in Malaysia to extend in aggregate an intra-day
overdraft facility of not exceeding RM200 million and an
overnight facility of not exceeding RM10 million to non-resident
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Chronology of Gradual Liberalisation of Exchange Control Rules
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stockbroking companies and non-resident global custodian

banks to finance funding gaps due to inadvertent delay in
relation to settlement for trade on the KLSE.

▪ In addition, they can also enter into short-term currency swap

and/or outright forward contracts to cover for purchase of
shares on the KLSE.

1999
Ringgit Credit Facilities to Foreign Stockbroking Companies
▪ Licensed commercial banks and Bank Islam Malaysia Berhad
in Malaysia were freely allowed to extend overdraft facility in
aggregate of not exceeding RM200 million for intra-day and
not exceeding RM5 million for overnight to non-resident
stockbroking companies.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2007
ECM7-Foreign
Abolition of reporting requirements
Currency Accounts
• With effect from 1 January 2008, the requirement on resident
companies to submit the Overseas Account Statement (Statement
OA) was abolished.

Joint foreign currency account by resident individuals

▪ Allow resident individuals to open and maintain joint foreign
currency accounts for any purpose.
2005
Offshore foreign currency account
▪ Allow residents to open foreign currency accounts with offshore
banks for any purpose except for retention of export receipts.

Uplift limit on export foreign currency account

▪ The aggregate overnight limits imposed on export foreign currency
accounts maintained by residents with licensed onshore banks are
abolished.

2004
Threshold on export foreign currency account (FCA) by Approved
Operational Headquarters (OHQ)
▪ The overnight limit has been increased to USD100 million from
USD70 million.

Threshold on export FCA by resident exporters

• Increase the limits on export FCA based on the average monthly
export proceeds as follows:

Overnight limit Average monthly export receipts

(USD mil)
100 Exceeding RM100 million
60 Exceeding RM50 million up to RM100 million
30 Up to RM50 million or new exporters

Opening and maintaining of non-export FCA by resident

corporations
▪ Resident companies, with or without domestic borrowings, may
open non-export FCA with:

(a) Authorised dealers with no overnight limits; and

(b) Licensed offshore banks in Labuan up to an aggregate

overnight limit of USD500,000.

• Resident companies may also merge their onshore export FCA and
non-export FCA
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Chronology of Gradual Liberalisation of Exchange Control Rules
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Opening and maintaining of FCA by resident individuals

▪ Resident individuals may maintain FCA to facilitate education
and employment abroad as follows:

(a) Authorised dealers up to an aggregate overnight limit

of USD150,000;
(b) Licensed offshore banks (excluding licensed offshore
investment banks) up to an aggregate overnight limit of
USD150,000; and
(c) Overseas banks up to an aggregate overnight limit of
USD50,000.

Funds to be credited into these accounts may be sourced from

the conversion of ringgit, subject to compliance with the limit
imposed.

▪ Resident individuals with foreign currency funds abroad may

maintain receivables FCA onshore and offshore, including with
licensed offshore banks (excluding licensed offshore investment
banks) in Labuan, without any limit.

The account must be funded solely from foreign currency

funds sourced from abroad with no conversion from ringgit.

2003
▪ Increase the export foreign currency account (export FCA)
overnight limit for Approved Operational Headquarters has been
increased from USD10 million to USD70 million.

• The limits on foreign currency export proceeds retained by

resident exporters in export FCA have also been raised. The
revised limits, based on the average monthly export proceeds
are as follows:

Overnight limit Average monthly export proceeds

(USD mil)
50 Exceeding RM100 million
30 Exceeding RM50 million up to RM100 million
10 Exceeding RM20 million up to RM50 million
5 Exceeding RM10 million up to RM20 million
3 Exceeding RM5 million up to RM10 million
1 Not exceeding RM5 million or new exporters

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2005

ECM8 – Domestic Domestic Credit Facilities to Non-Resident Controlled

Credit Facilities to Companies
Non-Resident • Allow residents (bank and non-bank) to extend any amount of
Controlled Companies domestic credit facilities to Non-Resident Controlled Companies
(NRCC).

▪ Abolish the RM50 million limit and 3:1 gearing ratio requirement
for domestic credit facilities obtained by NRCC above the RM50
million limit.
2003
Domestic Credit Facilities to Non-Resident Controlled
Companies
• Abolish the requirement that at least 50% of all credit facilities
extended by banking institutions must be extended by
Malaysian-owned banking institutions.

▪ In addition, credit facilities that can be granted by residents to

NRCCs have been revised to RM50 million from RM10 million in
aggregate.

▪ The NRCC would have to continue to comply with the 3:1

gearing ratio requirement of domestic debt against eligible
capital funds.

2002
Overdrawing of Ringgit Account by Non-Resident Controlled
Companies
• Licensed banks are also permitted to allow NRCCs to overdraw
their current accounts for amounts to overdraw their current
accounts for amounts of up to RM500,000 per account for a
period not exceeding 2 working days.

2000

Domestic Credit Facilities extended by Resident Banking

Institutions to Non-Resident Controlled Companies
▪ Foreign-owned banking institutions in Malaysia may extend up
to 50% of the total domestic credit facilities to non-resident
controlled companies (NRCCs) from the maximum of 40%
funding previously.

▪ This is to fulfil Malaysia's commitment under the General

Agreement on Trade and Services (GATS).

Private Debt Securities (PDS)

• Resident companies in Malaysia are freely allowed to issue PDS
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Chronology of Gradual Liberalisation of Exchange Control Rules
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for permitted purposes without prior written approval from BNM.

▪ PDS to be issued by non-resident controlled companies

(NRCCs) would be exempted from the RM10 million limit and
the 50:50 requirement for issuance of PDS on tender basis
through the Fully Automated System for Tendering (FAST).

▪ Allows residents to extend credit facilities in ringgit to an NRCC

operating in Malaysia up to an aggregate limit of RM10 million
per corporate group and any amount of short-term trade
financing where the tenure does not exceed 12 months.

• Foreign-owned banking institutions may only extend credit

facilities to NRCC up to a maximum of 50%, with the balance
from Malaysian-owned banking institutions.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2008
Investment in foreign assets
ECM9-Investment • Exclude investments in USD denominated crude palm oil
Abroad futures contract (USD FUPO) from the investment in foreign
currency assets rule, if resident investors-
¾ pay in ringgit to commodity futures brokers for the
purchase of USD FUPO; and
¾ receive in ringgit from the commodity futures brokers the
proceeds arising from the investment in USD FUPO.

• Investment in USD FUPO on Bursa Malaysia by residents will be

subject to investment in foreign currency assets rule, if the
resident investors-
¾ pay in foreign currency to commodity futures brokers for
the purchase of USD FUPO; and
¾ receive in foreign currency or ringgit from the commodity
futures brokers the proceeds arising from the investment in
USD FUPO.

2007
Abolition of registration requirements on residents
• Investment in foreign currency assets exceeding RM50 million
equivalent by a resident (individual or company on corporate
group basis) without domestic ringgit borrowing.

Investment by a resident corporation

▪ Allow a resident corporation to utilise proceeds offshore
arising from the listing of shares through an Initial Public
Offering on the Main Board of Bursa Malaysia.

▪ Allow a resident corporation to utilise up to RM100 million

equivalent from permitted foreign currency credit facilities for
investment in foreign currency assets.

▪ Allow a resident corporation with domestic ringgit credit facilities

to convert ringgit into foreign currency up to RM50 million in
aggregate per calendar year on a corporate group basis for
investment in foreign currency assets (previously up to RM10
million).

Investment by a non-resident corporation

▪ Allow a non-resident corporation to utilise offshore, proceeds
arising from the listing of shares through an Initial Public
Offering on the Main Board of Bursa Malaysia.

Investment by an individual
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Chronology of Gradual Liberalisation of Exchange Control Rules
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▪ Allow a resident individual with domestic ringgit credit facilities to

convert ringgit into foreign currency up to RM1 million in
aggregate per calendar year for investment in foreign currency
assets (previously up to RM100,000).

Investment by resident institutions

▪ Allow a resident unit trust company to invest in foreign currency
assets up to 50% of the Net Asset Value (NAV) attributable to its
resident investors (previously up to 30% of the NAV).

▪ Allow a resident fund management company to invest in foreign

currency assets up to 50% of the funds managed for its resident
clients with domestic ringgit credit facilities (previously up to
30% of the funds).

• Allow resident insurer and a takaful operator to invest in foreign

currency assets up to:
¾ 50% of the NAV of the investment-linked funds marketed by
them (previously up to 30% of the NAV).
¾ 10% of margin of solvency for insurer
¾ 5% of total assets for takaful operator

▪ Abolish the thresholds (50% of net asset value (NAV) for unit
trust companies and total funds attributable to residents with
domestic ringgit borrowing for fund management companies)
on investments of Islamic funds in foreign currency assets.

2005
Investment by residents
▪ Allow residents to convert ringgit into foreign currency for
investment abroad, including lending to non-residents and
crediting into own foreign currency accounts maintained with
licensed onshore banks and offshore banks as follows:

(a) Any amount for residents (corporations and individuals)

without domestic credit facilities.

(b) Up to RM10 million per calendar year on a corporate

group basis by resident corporations with domestic
credit facilities.

(c) Up to RM100,000 per calendar year by resident

individuals with domestic credit facilities.

▪ Allow residents to invest any amount abroad using own foreign

currency funds maintained onshore or offshore.
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Chronology of Gradual Liberalisation of Exchange Control Rules
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Investment by resident institutions

▪ Allow resident unit trust companies to invest up to 30% of the
Net Asset Value (NAV) attributable to their resident investors.

▪ Allow resident asset/fund management companies to invest

abroad:
(a) Any amount of funds of resident clients with no
domestic credit facilities; and
(b) Up to 30% of the funds managed for resident clients
with domestic credit facilities.

▪ Allow resident insurance companies and takaful operators to

invest abroad up to 30% of NAV of the investment-linked
funds they market.
2004
Authorised dealers and approved merchant banks
▪ Uplift the requirement for authorised dealers and approved
merchant banks to finance the purchase of foreign currency
securities issued offshore by residents solely from offshore
borrowings.

Investment by an individual
▪ Resident individuals employed or staying abroad may use their
foreign currency funds abroad to invest in any foreign currency
assets.

▪ Resident individuals in Malaysia who have foreign currency

funds may invest in foreign currency products offered by
authorised dealers.
Investment by resident institutions
▪ Allow unit trust management companies to invest abroad up
to the full amount of Net Asset Value (NAV) subscribed by
non-residents and up to 10% of the NAV per fund
subscribed by residents.

▪ Allow insurance companies and takaful operators to invest

abroad up to 5% of their Margin of Solvency (MOS) and up
to 5% of their total assets respectively.

▪ Insurance companies and Takaful operators may invest

abroad up to 10% of the NAV of investment-linked funds
that they market.

▪ Fund/asset managers may invest abroad up to the full

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Chronology of Gradual Liberalisation of Exchange Control Rules
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amount of investments by their non-resident clients and up

to 10% of investments by resident clients.

2002
Investment Abroad by Residents in Employee Share Option
Purchase Scheme (ESOS)
▪ Remove the limit of RM10,000 equivalent in foreign currency for
investment abroad by residents under the Employee Share
Option/Purchase Scheme.

▪ Effective this date, general permission is granted for overseas

investment for this purpose.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2010

ECM10 - Foreign Borrowing in Foreign Currency by Residents

Currency Credit • Allow resident companies to borrow any amount in foreign
Facilities and Ringgit currency from non-resident non-bank related companies#
Credit Facilities From
Non-residents #
Related companies include the ultimate holding, parent/head office,
subsidiary/branch, associate or sister (common shareholder) company.

2008
Borrowing in foreign currency by residents
• Allowed a resident company to borrow any amount in foreign
currency from:
¾ Its non-resident non-bank parent company;
¾ Other resident companies within the same corporate group
in Malaysia (Previously approval is required for any amount);
and
¾ Licensed onshore banks and licensed International Islamic
Banks

• Allowed a resident company to obtain any amount of foreign

currency supplier’s credit for capital goods from non-resident
suppliers

• Allowed a resident company or an individual to refinance

outstanding approved foreign currency borrowing, including
principal and accrued interest

The thresholds for foreign currency borrowing of RM100

million in aggregate by a resident company on a corporate
group basis and RM10 million for a resident individual is not
applicable to the above financing activities.

Borrowing in ringgit by residents from non-residents

• Allowed a resident company to borrow in ringgit, including

through the issuance of ringgit-denominated redeemable
preference shares or loan stocks:
¾ of any amount from its non-resident non-bank parent
company to finance activities in the real sector in
Malaysia; and
¾ up to RM1 million in aggregate from other non-resident
non-bank companies and individuals for use in Malaysia;
and

• Allowed a resident individual to borrow in ringgit up to RM1

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Chronology of Gradual Liberalisation of Exchange Control Rules
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million in aggregate from non-resident non-bank companies

and individuals for use in Malaysia

Previously, borrowing in ringgit of any amount from non-

residents required prior permission of the Controller of
Foreign Exchange.

2007
Abolition of registration requirements on residents for foreign
currency borrowings as follows:
• Borrowings in aggregate between RM50,000,001 and up to
RM100 million equivalent by a resident company on a corporate
group basis from licensed onshore banks and non-residents.

• Borrowings exceeding RM50 million equivalent by an Approved

Operational Headquarters from licensed onshore banks and
non-residents to finance its own operation.

• Borrowings exceeding RM50 million equivalent by a resident

company from another resident company within the same
corporate group using proceeds from an Initial Public Offering on
foreign stock exchanges.

• Prepayment exceeding RM50 million equivalent on permitted

foreign currency borrowing from a non-resident lender

Threshold of foreign currency credit facilities

▪ Increase the limit of foreign currency credit facilities obtained by
a resident corporation from a licensed onshore bank and a non-
resident and also through the issuance of onshore foreign
currency bonds, to RM100 million equivalent in aggregate, on
corporate group basis (previously up to RM50 million).

▪ Allow a resident corporation to borrow in foreign currency within

the same corporate group, the proceeds arising from listing of
shares on the foreign stock exchanges.

▪ Allow the proceeds from the foreign currency credit facilities to

be used in Malaysia or offshore.

2005
▪ Increasing limits on foreign currency credit facilities that can be
obtained by residents from licensed onshore banks, licensed
merchant banks and non-residents as follows:

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Chronology of Gradual Liberalisation of Exchange Control Rules
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(a) Up to an equivalent of RM50 million in aggregate for

resident companies on corporate group basis; or

(b) Up to an equivalent of RM10 million in aggregate for

resident individuals;

▪ Allowing prepayment of foreign currency credit facilities; and

▪ Allowing residents to use up to RM10 million equivalent in

foreign currency credit facilities obtained onshore or offshore to
finance investment abroad activities.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2007
ECM11-Inter- Abolition of reporting requirements
Company Accounts • With effect from 1 January 2008, the requirement on resident
companies to submit the Inter-company Account Statement
(Statement IA) was abolished.

2005
Private Debt Securities
ECM12-Securities
▪ Revoking the guidelines on private debt securities for lead
arrangers issued on 30 June 2000.

2010
ECM13-Import and ▪ Allow resident and non-resident travellers to import –
Export of Currency ¾ ringgit notes up to USD10,000 equivalent; and
¾ any amount of foreign currency notes.

▪ Allow resident travellers to export ringgit notes, foreign

currency notes and traveller’s cheques up to an aggregate
amount of USD10,000 equivalent.

▪ Allow non-resident travellers to export –

¾ ringgit notes up to USD10,000 equivalent; and
¾ foreign currency notes and traveller’s cheques up to the
amount brought into Malaysia.

2000
▪ Residents and non-residents is not required to make a
declaration in the Travellers Declaration Form (TDF) as long as
they carry currency notes and/or traveller’s cheques within the
permissible limits.

• For non-residents, the declaration would be incorporated into the

Embarkation Card issued by the Immigration Department

1999
Import and Export of Ringgit
▪ Border traders who carry out their trades between Malaysia and
Thailand at specified border areas (Bukit Kayu Hitam in Kedah,
Padang Besar and Wang Kelian in Perlis, Pengkalan Hulu in
Perak, Pengkalan Kubor, Bukit Bunga and Rantau Panjang in
Kelantan) can carry up to RM10,000.

▪ Border traders will be issued with Traveller’s Declaration Pass

(TDP) and are not required to complete the TDF.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2005
Dealings with Specified Persons
ECM14-Dealings
with Speciafied ▪ The restriction on dealing with Serbia and Montenegro is lifted.
Persons and in ▪ Accordingly,
Restricted (a) “Restricted Currencies” means the currency of the
State of Israel; and

(b) “Specified Persons” means –

(i) The State of Israel or their residents;
(ii) The authorities of the State of Israel;
(iii) The agencies and instrumentalities of the State
of Israel or its residents;
(iv) Any entity owned by or controlled directly or
indirectly by the State of Israel or its residents;
and
(v) Individual or entity as listed pursuant to the
United Nations Security Council Resolution
(UNSCR) No. 1333 (2000) and No. 1267 (1999)
relating to Osama bin Laden and The Taliban,
UNSCR 1532 (2004) relating to Liberia and
UNSC 1483 (2003) relating to Saddam Hussein.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2007
ECM15-Labuan ▪ Abolish the restriction on Labuan offshore banks to transact in
International ringgit instruments on behalf of non-resident clients.
Offshore Financial
Centre
2000
Licensed Offshore Banks in Labuan International Offshore
Financial Centre
▪ Licensed Offshore Banks in Labuan would be allowed to invest
in ringgit assets/instruments in Malaysia for their own accounts
only and not on behalf of their clients.

▪ The investments must not be financed by ringgit borrowing and

must be transacted directly with onshore banks and brokers.

1998
▪ Licensed Offshore Banks can receive fees and commissions
in ringgit.

2007
ECM16-Approved ▪ Allow an Approved Operational Headquarters (OHQ) with
Operational domestic ringgit credit facilities to convert ringgit into foreign
Headquarters currency up to RM50 million per calendar year for investment in
foreign currency assets (previously up to RM10 million).
2005
• Allow OHQ to:

(a) Retain any amount of export proceeds in their

foreign currency accounts maintained with licensed
onshore banks;

(b) Obtain any amount of domestic ringgit credit

facilities; and

(c) Invest any amount abroad, including extension of

credit facilities to non-residents, if financed with own
foreign currency funds or with foreign currency credit
facilities. The company may also convert ringgit into
foreign currency to finance investment abroad up to:

(i) Any amount if it does not have any domestic

ringgit credit facilities; or

(ii) RM10 million equivalent if it has domestic ringgit

credit facilities.

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 Chronology of Gradual Liberalisation of Exchange Control Rules
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2001
Abolition of the Levy System
Levy system
• The levy was completely abolished on 2 May 2001.

Exit Levy System

• With effect from 1 February 2001, the 10% levy would apply only
on profits made from portfolio investments by non-residents,
which are repatriated 12 months or less from the month the
profits are realised.

1999
Standardised Levy of 10%
• All funds brought into Malaysia between 1 September 1998 and
14 February 1999 is exempted from levy on the principal sum.

• All profits repatriated from the Special External Accounts are

subject to a standard levy of 10%.

Exclusion of Property from Exit Levy

▪ No levy will be imposed on the repatriation of proceeds from
sale of investments in immovable property.

Introduction of the Levy System

▪ As economic condition stabilised, the 12-month holding period
was replaced by an exit levy system on 15 February 1999.

▪ The rule requiring non-residents to hold their principal sum of

portfolio investments for at least 12 months in Malaysia was
replaced by a two-tiered exit levy system.

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