Foreign Exchange Administration (FEA) Rules.
Foreign Exchange Administration Rules.
(Incorporating Supplementary Notices on FEA Rules issued on 2 December 2016 and 2 May 2017) GENERAL GUIDE.
In 2013, Bank Negara Malaysia had issued Notices (“2013 Notices”) on Foreign Exchange Administration Rules (“FEA Rules”) so as to continue to support and enhance the competitiveness of the economy through the creation of a more supportive and facilitative environment for trade, business and investment activities.
The 2013 Notices have been effective since 30 June 2013 and set out transactions that are allowed by Bank Negara Malaysia which otherwise are prohibited under Section 214 read together with Schedule 14 of the Financial Services Act 2013 [Act 758] and Section 225 read together with Schedule 14 of the Islamic Financial Services Act 2013 [Act 759].
On 2 December 2016, Bank Negara Malaysia issued the Supplementary Notice that sets out a set of measures in respect of FEA rules to further facilitate foreign exchange risk management, promote settlement of trade and investment in ringgit and enhance depth and liquidity of onshore financial market. The Supplementary Notice is to be read together with the 2013 Notices and if there is any inconsistency between the Supplementary Notice and the 2013 Notices, the Supplementary Notice shall prevail only to the extent of the inconsistency.
It should be noted that below is a general guide on FEA Rules applicable to generally common transactions that individuals, sole proprietors, partnerships and small and medium business entities who are Residents and Non-Residents, may have and is meant for information only. It is not offered as advice on any particular matter, and should not be taken as such. Please note that the list below is not exhaustive and the reader should receive specific professional advice from the reader’s own advisors on the particular facts and circumstances at issue before acting or refraining from acting on the basis of any matter contained in this guide. Citibank Berhad expressly disclaims all liability to any person in respect of the consequences of anything done or omitted to be done wholly or partly in reliance on the whole or any part of the contents of this general guide.
The two (2) types of Foreign Currency Accounts (FCA) below may be offered by licensed onshore banks in Malaysia to:
Up to 25% of receipt of export of goods upon receipt of the proceeds Conversion of ringgit up to six (6) months foreign currency obligations Other foreign currency funds.
Up to RM10 million equivalent of foreign currency borrowing from a licensed onshore bank or a non-resident.
Up to RM1 million equivalent** in aggregate per calendar year using funds from : Conversion of ringgit Swapping of financial assets Transfer from Trade FCA.
**applicable to resident individual, sole proprietor or general partnership with domestic ringgit borrowing.
Foreign Currency obligations.
вњ“ Import payment.
вњ“ Foreign currency loan repayment.
Transfer into Investment FCA subject to investment limit Other current international transactions.
Up to 25% of receipt of export of goods upon receipt of the proceeds Conversion of ringgit up to six (6) months foreign currency obligations Other foreign currency funds.
Up the amount of: Approved FC borrowing from non-resident FC sourced from Initial Public Offering on the main market of Bursa Malaysia.
Up to RM50 million equivalent* in aggregate per calendar year on a corporate group basis from: Conversion of ringgit FC borrowing from a licensed onshore bank for purposes other than DIA Swapping of financial assets Transfer from Trade FCA * applicable to resident entities with domestic ringgit borrowing.
Foreign Currency obligations.
вњ“ Import payment.
вњ“ Foreign currency loan repayment.
Transfer into Investment FCA subject to investment limit Other current international transactions.
In Citibank Berhad, currently, all our consumer foreign currency accounts are designated as Investment FCA.
The above will be subjected to all other rules set out in the Notices on FEA Rules.
Residents who are individuals, sole proprietor or general partnership without domestic ringgit borrowing are free to undertake an Investment Abroad and investment in foreign currency asset onshore of any amount. Residents who are individuals, sole proprietor or general partnership with domestic ringgit borrowing are allowed to undertake an Investment Abroad and investment in foreign currency asset onshore using:
Resident entities without domestic ringgit borrowing are free to undertake an Investment Abroad and investment in foreign currency asset onshore of any amount. Resident entities with domestic ringgit borrowing are allowed to undertake an Investment Abroad and investment in foreign currency asset onshore using amongst others :
For this purpose, a Resident entity is deemed to have domestic ringgit borrowing when the Resident entity or another Resident entity within its group of entities with parent-subsidiary relationship has a ringgit borrowing.
• To facilitate the operation of the Foreign Currency account by a resident, a licensed onshore bank may offer two types of foreign currency accounts, which is explained in the Section 1 above.
• The definition of “export of goods” was amended in Supplemental Notice of 2 May 2017.
Foreign currency borrowing by Resident individuals, sole proprietor or general partnership from licensed onshore banks and Non-Residents, is subject to an aggregate limit of RM10 million equivalent. A resident individual however is allowed to borrow in foreign currency in any amount from his immediate family member.
A prudential limit of RM100 million equivalent in aggregate is applicable to borrowing by Resident entities from other non-residents including Non-Resident financial institutions and other Non-Residents which are not part of its group of entities.
(ii) High Commission;
(iii) Labuan Entity;
(iv) Central Bank;
(vii) International Organization; and.
As for Resident sole proprietor or general partnership, a Resident sole proprietor or general partnership is allowed to borrow up to RM1 million in aggregate from other Non-Residents (other than Non-Resident financial institutions) for use in Malaysia only.
Note: All settlement of domestic trade in goods and services between residents shall be made only in ringgit.
Residents are free to buy or sell ringgit against foreign currency with a licensed onshore bank (excluding international Islamic banks) on spot basis.
Residents are free to buy or sell foreign currency against another foreign currency with a licensed onshore bank.
To secure borrowing obtained by a non-resident which is not part of the resident’s group of entities; To secure borrowing obtained by a non-resident which obtains financing from a non-resident financial institution or any person which is not part of the resident entity’s group of entities or not its direct shareholder; or (ii) financial guarantee in any amount where payment will be made in ringgit to or by a non-resident for an underlying foreign currency borrowing.
the conversion of foreign currency to ringgit with licensed onshore banks (excluding licensed international Islamic banks) or through an appointed overseas office of the licensed onshore bank’s banking group; or foreign currency borrowings from the licensed onshore banks; or ringgit borrowing from licensed onshore banks (excluding licensed international Islamic banks) for Activities in the Real Sector and for the purchase of residential and commercial properties in Malaysia except for the purchase of land only.
Non-Residents are allowed to obtain any amount of ringgit borrowing from licensed onshore banks (excluding licensed international Islamic banks) to finance.
Non-Residents individuals are allowed to obtain any amount of ringgit financing from:
Resident companies, sole proprietors, partnerships and individuals to finance Activities in the Real Sector in Malaysia. individuals who are immediate family members, for any purpose. a licensed insurer or takaful operator up to the attained cash surrender value of any life insurance policy or family takaful certificate purchased by the Non-Resident. Resident employer in Malaysia pursuant to the terms and conditions of service and for use in Malaysia only. his Non-Resident employer in Malaysia as set out below subject to the terms and conditions of his service and for use in Malaysia only:
Non-Residents are free to buy or sell ringgit against foreign currency with licensed onshore banks (excluding licensed international Islamic banks) on spot basis.
Non-Residents in Malaysia are free to buy or sell foreign currency against another foreign currency with a licensed onshore bank.
For foreign currency opened by Non-residents with Citibank Berhad, such accounts are not required to be designated unlike for Residents (see Section 1 - Foreign Currency Accounts of the guide for Residents).
The above limits shall not apply to - a consulate; a high commission; an embassy; an individual who participates 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.
There is no limit for any cash withdrawal over-the-counter from an External Account.
(ii) The purchase of security or Islamic security;
(iii) The purchase of financial instrument or Islamic financial instrument; or.
Trade credit terms extended by a supplier for all types of goods or services; Forward contract with a licensed bank in Malaysia excluding a contract that involves.
purchase of foreign currency-denominated security or Islamic security offered in Malaysia by a resident as approved by Bank Negara Malaysia; purchase of foreign currency-denominated financial instrument or Islamic financial instrument offered in Malaysia by a resident as approved by Bank Negara Malaysia; or placement into foreign currency account with a licensed onshore bank other than placement for investment abroad;
For joint accounts where the relationship is a husband and wife relationship only and one of the joint account holders is a Resident while the other is a Non-Resident, this joint account will be a Resident account. Otherwise, the joint account will be treated as a Non-Resident account where one of the joint account holders is a Non-Resident.

Bnm forex admin

Quick Comments On Bank Negara Malaysia's New Foreign Exchange Administration (FEA) Rules.
Following the measure to discourage the trading of non-deliverable forwards (NDFs) offshore, the Financial Markets Committee (FMC) and Bank Negara Malaysia (BNM) announced measures to deepen the onshore foreign exchange market, effective 5 Dec. These measures include liberalization and deregulation of the onshore Ringgit hedging market and the imposition of new rules for the settlement of trade. Some of the key highlights are as follows:
(i) Residents will be allowed to hedge up to a net open position of RM6m of US$ and CNH exposures per client, subject to a one-off declaration of non-participation in speculative activity, without documentary evidence with a licensed onshore bank. Any amount exceeding RM6m will be subjected to normal due diligence processes by the banks.
(ii) Resident and non-resident institutional investors can now actively manage their FX exposure up to 25% of their invested assets, without documentary evidence with a licensed onshore bank (or an appointed oversea office for foreign investors). Any amount exceeding 25% of assets will subject to approval by BNM.
(iii) 25% of the new export proceeds from 5 Dec onwards will be allowed to be retained in foreign currency with onshore banks only, while the rest shall be converted into Ringgit. Any amount exceeding 25% of new export proceeds will subject to approval by BNM. Exporters are allowed to hedge and un-hedge up to a limit of 6 months of imports and loan obligations.
From our understanding so far, the existing Foreign Exchange Administration (FEA) rules are stringent (many restrictions involved) prior new measures. Previously, any activities related to buying and selling Ringgit must be backed by trade activities and transfer of Ringgit assets. Having new measures (i) and (ii) implemented would reduce the restrictions for buying and selling Ringgit and give greater flexibility to local and foreign institutional investors to manage their FX exposures. Hence, we believe it is a good news for institutional investors.
As for trade related measures (iii), we believe this measure will increase Ringgit demand - a catalyst that could drive the Ringgit higher moving forward. Best case scenario: assuming a 75% conversion and Malaysia’s average trade surplus over 2011-2015 of RM92bn, this measure could create RM69bn of additional Ringgit demand annually. The amount equates to 17% of Malaysia’s foreign reserves of RM399.6bn as of 30th Nov 16. We believe repatriation and conversion of the trade surplus by exporters from foreign currencies to the Ringgit will help to lift the international reserves, addressing concerns of a depleting foreign exchange reserves-which has contributed weak sentiment towards Ringgit recently.
However, we believe these new measures will have an impact on the banking sectors as repatriation and conversion of the trade surplus by exporters will lead to a surge in short term liquidity. This might lead to difficulty for the banks to lend out all of these additional funds. Exporters would also now incur additional hedging costs and double conversion costs and that could have otherwise benefitted from a natural hedge if they could opt to retain their export proceeds in foreign currencies.
Although these new measures are positive for Ringgit, our existing view has already incorporated our expectation of a gradual appreciation of Ringgit moving forward, considering it has deviated significantly from its fundamental value based on real effective exchange rate. These new measures only serve as a catalyst to materialize our existing expectation. As such, we maintain our star rating at 3.0 Stars “Attractive” .

Bnm forex admin

The Statement on Overseas Account (OA) is to be submitted by the resident companies maintaining overseas accounts with the non-residents and the information required are all the debits and credits effected through the overseas accounts.
This statement can be completed using the online form completion .
FirstlyFirstly, you need to download and read the Reporting Guidelines [PDF, 338 KB]. This will guide you on the completion and submission of the Statement OA.
Secondly, you need to download and read the User Guide [PDF, 3.1MB]. This is to assist you when you fill up the online form under this website.
When you are ready to complete the online form, CLICK HERE .
Note: If you wish to use the interface file format to upload the details of the debits, credits and, the payment and receipt settlement, you need to input the details into a Microsoft Excel file according to the format given in the Overseas Account Statement Interface File [PDF, 15.2MB]. This Excel file is to be uploaded through this website using the online form completion.
If you need to assign users to manage the submission on behalf of your company, CLICK HERE.
For hardcopy submission , you need to download and print the following Report Template. [Right-click on the link and choose "Save Target As. "] Statement on Overseas Account [PDF, 86.4MB]
The completed Statement on Overseas Account is to be submitted to the following address: Pengarah.
Jabatan Perkhidmatan Statistik.
Bank Negara Malaysia.
50480 Kuala Lumpur.
If you need help or have enquiries , CLICK HERE. The subsequent page will list the Frequently Asked Questions and the relevant contact details if you need further information.

New Foreign Exchange Administration Measures to Promote the Development of the Malaysian Financial Market.
On 2 December 2016, Malaysia’s central bank, Bank Negara Malaysia ( BNM ) issued a Supplementary Notice on Foreign Exchange Administration Rules ( Supplementary Notice ). The Supplementary Notice provides a set of foreign exchange measures which seek to, amongst others, promote the settlement of trade and investment in ringgit, enhance liquidity of onshore financial market and stabilise the Malaysian currency (ringgit). The Supplementary Notice takes effect from 5 December 2016.
The significant measures introduced by BNM are summarised as follows:
A resident exporter is allowed to retain up to 25% of foreign currency export proceeds of goods and such foreign currency export proceeds must be retained only with Malaysian licensed banks. All settlement of domestic trade in goods or services between residents shall be made only in ringgit. A resident is allowed to hedge its foreign currency exposure up to an aggregate net open position limit of RM6 million per bank with any licensed onshore bank without providing documentary evidence. Foreign Currency Account I and Foreign Currency Account II have been renamed as Trade Foreign Currency Account and Investment Foreign Currency Account respectively.
Conversion of Export Proceeds into Ringgit.
Prior to the Supplemental Notice, resident exporters of goods were allowed to retain their export proceeds in ringgit or foreign currency. However, pursuant to the Supplementary Notice, a resident exporter of goods is only allowed to retain up to 25% of its export proceeds (which must be retained with Malaysian licensed banks) and is further required to convert 75% (or more) of its foreign currency export proceeds into ringgit with a licensed onshore bank. The ringgit funds can be converted into foreign currency to pay and service its import and loan obligations for up to 6 months.
As an incentive for resident exporters to retain more ringgit proceeds in Malaysia, all licensed onshore banks are now required to offer a special deposit facility (SDF) to resident exporters for conversion of foreign currency export proceeds into ringgit and the licensed onshore banks will pay a daily rate of 3.25% per annum under the SDF.
Settlement of Domestic Trade in Ringgit.
Prior to the new foreign exchange measure, a resident with export earnings could make payment in foreign currency to another resident for settlement of domestic trade in goods or services by using, amongst others, its foreign currency funds in its foreign currency account II.
The Supplementary Notice now imposes the requirement that all settlement of domestic trade in goods and services between residents must be made in ringgit only. This new measure may pose an issue with some resident entities who have existing contractual obligations to settle domestic trade in goods or services in foreign currency with no optional settlement in ringgit.
Hedging without Documentary Evidence.
The Supplementary Notice now accords more flexibility in terms of hedging, allowing residents to hedge their foreign currency exposure for USD/MYR and CNH/MYR with a licensed onshore bank up to an aggregate net open position limit of RM6 million per bank without the requirement for documentary evidence, provided that the resident makes a one-off declaration in writing to the licensed onshore bank prior to entering into any forward contract. It is worth noting that residents are still allowed to undertake hedging transactions exceeding RM6 million as long as they can provide the requisite documentary evidence and the normal due diligence process by the Malaysian licensed bank would apply.
Renaming of Foreign Currency Accounts.
The Supplementary Notice has renamed the existing Foreign Currency Account I and Foreign Currency Account II to Trade Foreign Currency Account and Investment Foreign Currency Account respectively. The change of name of these foreign currency accounts seek to provide clarity on the sources of funds and uses of funds in respect of each of these accounts. Most notably, residents may only apply the funds in the Trade Foreign Currency Account for limited purposes, such as import payments and foreign currency loan repayments, whereas they are free to use the foreign currency funds in the Investment Foreign Currency Account for any purpose.
Commentary and Observations.
BNM’s introduction of these measures, while is intended to create a long term development of the onshore financial market and to make the onshore foreign exchange market more efficient, may be seen by the market or some businesses or industries as disruptive to their business operations. These new measures could, during the initial adjustment period, possibly lead to increase in costs of doing business in Malaysia, especially amongst resident exporters that transact primarily in foreign currency, as it will be necessary for them to undertake multiple conversions of foreign currency into ringgit and vice versa given that only 25% of their export proceeds can be retained in foreign currency.
The sudden introduction of the Supplementary Notice has not allowed time for companies to gradually ease into the new measures, and BNM has not yet announced if a grace period will be provided for the compliance with these policies although BNM does not rule out the possibility of granting approval for resident exporters to retain more than 25% of their foreign currency export proceeds (which applications will be considered on the merit of each case).
This Client Alert has only highlighted the more noteworthy measures of the Supplementary Notice and companies likely to be affected are encouraged to consult their professional advisors for advise to comply with these new measures.