Bank Negara Malaysia wishes to announce further liberalisation of the foreign exchange administration rules on borrowing in foreign currency by residents as well as borrowing and lending in ringgit between residents and non-residents, with immediate effect. This liberalisation is part of the continuous efforts to enhance Malaysia's competitiveness by facilitating greater access to financing and reducing the cost of doing business.

I. Borrowing in foreign currency by residents

(a) A resident company is free to borrow any amount in foreign currency from -

(i) its non-resident non-bank parent company;
(ii) other resident companies within the same corporate group in Malaysia (previously, approval required for any amount); and
(iii) licensed onshore banks.

(b) A resident company is free to obtain any amount of foreign currency supplier's credit for capital goods from non-resident suppliers; and

(c) A resident company or an individual is free 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 would no longer be applicable for the above financing activities.

II. Borrowing in ringgit by residents from non-residents

(a) A resident company is allowed to borrow in ringgit, including through the issuance of ringgit-denominated redeemable preference shares or loan stocks:

(i) of any amount from its non-resident non-bank parent company to finance activities in the real sector in Malaysia; and
(ii) up to RM1 million in aggregate from other non-resident non-bank companies and individuals for use in Malaysia; and

(b) A resident individual is allowed to borrow in ringgit up to RM1 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.

III. Lending in ringgit by residents to non-residents

(a) A resident company or individual is free 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).

(b) A licensed onshore bank is free 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).

Details of the foreign exchange administration rules can be obtained from Bank Negara Malaysia's website (http://www.bnm.gov.my/fxadmin) or by contacting the BNMTELELINK at:

Address: BNMTELELINK
Mezzanine Floor, Block C
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur
Email: [email protected]
Telephone: 1-300-88-LINK (5465)
Fax: 03-2174-1515 / 03-2174-1616