Bank Negara Malaysia wishes to announce further liberalisation of the foreign exchange administration (FEA) policy aimed at providing greater flexibility and efficiency for businesses to better manage their foreign exchange (FX) risk and conduct their daily operations.
i. Residents can hedge their foreign currency current account obligations up to their underlying tenure
Flexibility for residents to hedge their foreign currency current account obligations is now extended up to the underlying tenure to promote sound risk management and business efficiency. Residents may obtain approval from the Bank to hedge financial account obligations up to the underlying tenure.
ii. Resident treasury centres can hedge on behalf of their related entities
To facilitate greater efficiency in centralised risk management operations, treasury centres in Malaysia are free to hedge on behalf of their related entities via a licensed onshore bank.
iii. Non-resident treasury centres can hedge on behalf of their related entities upon a one-time registration with Bank Negara Malaysia
Non-resident treasury centres outside Malaysia are free to hedge on behalf of their related entities in Malaysia and overseas via a licensed onshore bank or appointed overseas office (AOO) upon one-time registration with Bank Negara Malaysia.
iv. Non-residents can hedge on anticipatory basis
Flexibility for non-residents to hedge on an anticipatory basis via an AOO for settlement of trade in goods and services.
The exemption of credit facilities for miscellaneous expenses from the definition of domestic ringgit borrowing
i. Revised definition of domestic ringgit borrowing
Credit facilities which are used by corporates for miscellaneous expenses such as sundry and employees’ travel expenses are excluded from domestic ringgit borrowings under applicable FEA policies on investment abroad. This is to facilitate the management of operational expenses by residents without impacting their investment activities.
The above measures will be effective on 30 August 2019. Further details on the above liberalisation will be provided in the Supplementary Notice No. 6 on Foreign Exchange Administration Rules issued by the Bank on the same date.
- Bank Negara Malaysia