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In earlier article, the Prime Minister has announced the abolishment of real property gain tax (wef 1/4/07) and proposed special incentives for Iskandar Dvelopment Region (IDR).Coupled with this, there is also the liberalization of the Foreign Exchange Administration Policies

With effect from 1 April 2007, the foreign exchange administration rules will be liberalized to facilitate further development of the financial and capital markets and provide greater flexibilities for businesses to actively manage financial risks.

Major areas of liberalization cover the following:

• Provide greater flexibility to licensed onshore banks to undertake
  foreign currency business;
• Widen the investor base for ringgit assets and financial products to
  promote Malaysia to non-residents as an investment destination;
  and
• Greater flexibility for residents to increase business efficiency by
  reducing the cost of doing business as well as enhancing the depth                 
  and  breadth of the capital market
  

The following are changes to Bank Negara Malaysia ( Central Bank) ECM regulations  (effective 01-Apr-07):

• net open positions of bank removed..(previosuly 20%)
• over night limits for bank removed
• investment banks can deal in foreign currency
• Malaysian Ringgit OD to non-resident stockbroking firms liberalised. No limits on amount, up to 2 working days.
• Malaysian Ringgit property loan obtained by non-residents. Non resident can obtain any number of credit facilities to finance purchase or construction of commercial/residential property.
• Resident can borrow up to MYR 100 mio in aggregate on corporate basis. (from previously RM 50M)
• Resident can now hedge foreign currecy loan to full tenure of loan (previously 2 years)
• Limits increased for resident can now invest in foreign currency,
  Resident individual from MYR 100k to MYR 1 mio ( with local borrowing)
  Resident Corp from RM 10 Mio to RM 50 Mio (with local borrowing)
  Unit Trust company 50 % NAV fund attributed to resident (previously 30%)
  Fund Manager  upto 50% of fund belonging to resident (previously 30%)
  Resident insurance up to 50 % of NAV investment linked fund (previously 30%)
• Payment of Foreign currency between resident now allowed for settlement of foreign currency products offered onshore.
• FCA( (foreign currency account) - Joint FCA between resident allowed for any purpose( previously only for education and employments)
   

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Related Entries

• All Topics Covered Under Heading Of Foreign Exchange Management
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• FX Management: A Practical Basic Understanding
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• Foreign Exchange Management: Before Even We Consider Hedging Strategy