|1. Foreign currency accounts||
The above is subject to all other rules set out in the FE Notices.
|2. Investment in Foreign Currency Assets||
|4. Payments and receipts||
|5. Buying and selling of currency||
|6. Import and Export of Currency||
|7. Financial Guarantee||
A Resident guarantor is allowed to give a Financial Guarantee in any amount in Ringgit or Foreign Currency to secure any Borrowing obtained by a Resident in Ringgit or Foreign Currency as approved in Notice 2 or otherwise approved in writing by BNM.
A non-bank Resident guarantor is allowed to give a Financial Guarantee in any amount in Ringgit or Foreign Currency to secure a Borrowing obtained by a Non Resident in Ringgit or Foreign Currency as approved in Notice 2 or otherwise approved in writing by BNM, excluding a Financial Guarantee given to secure a Borrowing—
Foreign Exchange Rules
Bank Negara Malaysia ("BNM") Foreign Exchange Notices ("FE Notices") GENERAL GUIDE
FE Notices are a set of rules issued by BNM to maintain monetary and financial stability. The FE Notices set out transactions that are allowed by BNM which otherwise are prohibited under Section 214 read together with Schedule 14 of the Financial Services Act 2013 and Section 225 read together with Schedule 14 of the Islamic Financial Services Act 2013.
It should be noted that this is a general guide on the FE Notices relating to common transactions that individuals, sole proprietors, partnerships and small and medium business entities who are Residents or Non-Residents, may enter into or undertake and it is meant for information and educational purposes only. Please refer to the complete FE Notices available on BNM's website (https://www.bnm.gov.my/fep) for full details.
This general guide 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 seek and receive specific professional advice from the reader's own advisors on the reader's particular facts and circumstances before acting or refraining from acting on the basis of any matter contained in this guide. The reader is responsible to ensure compliance with the applicable laws, rules and regulations including the FE Notices on the basis of the advice of the reader's own advisors.
(A) RULES APPLICABLE TO RESIDENTS
1. Investment in Malaysia
Non-Residents are free to invest in any form of Ringgit Assets either as direct or portfolio investments.
The investments can be funded through-
- the conversion of Foreign Currency to Ringgit with LOB (excluding International Islamic Banks) or through an Appointed Overseas Office of LOB; or
- Foreign Currency borrowings from LOBs; or
- Ringgit borrowing from LOB for Real Sector Activity in Malaysia, which includes activities relating to the construction or the purchase of residential and commercial properties in Malaysia except for the purchase of land which will not be used for construction.
Non-Residents are free to remit out divestment proceeds, profits, dividends or any income arising from investments in Malaysia. Repatriation, however must be made in Foreign Currency and the conversion of Ringgit into Foreign Currency is undertaken in accordance with Part B of Notice 1. 2. Borrowing
Borrowing in Ringgit
- A Non-Resident Individual is allowed to borrow in Ringgit
in any amount from—
(i) an Immediate Family Member; (ii) a licensed insurer or a licensed takaful operator up to the attained cash surrender value of any life insurance policy or family takaful certificate purchased by the Non-Resident; or (iii) his employer in Malaysia for use in Malaysia
A Non-Resident, excluding a Non Resident Financial Institution, is allowed to borrow in Ringgit in any amount from—
(i) a Resident to finance Real Sector Activity in Malaysia; or (ii) a Resident with a stockbroking license under the CMSA, in the form of margin financing for products traded on Bursa Malaysia.
A Non-Resident is allowed to borrow in Ringgit from a LOB—
(i) in any amount of trade financing for settlement of trade in goods or services with a Resident; (ii) up to the amount of an overdraft facility (not exceeding two (2) business days and with no roll over option) to avoid settlement failure for purchase of shares or Ringgit instrument traded on Bursa Malaysia or through RENTAS due to inadvertent delay of payment by the Non-Resident. Such overdraft facility shall only be eligible to be utilised by—
a) a Non-Resident custodian bank, stockbroking corporation, trust bank or international central securities depository acting on behalf of Non-Resident investor; or
b) a Non-Resident investor purchasing shares or Ringgit instrument mentioned above for its own account; or
(iii) up to RM10 million in aggregate via a repurchase agreement or sale buy back agreement.
Borrowing in Foreign Currency
A Non-Resident is allowed to borrow in Foreign Currency –
(i) in any amount from a LOB, a Resident Immediate Family Member or a Non-Resident in Malaysia; or (ii) up to the limit stated in Parts A and B of Notice 3 from another Resident.
3. Buying or selling of currency
Buying or selling of Foreign Currency against Ringgit
Non-Residents are free to buy or sell Foreign Currency against Ringgit for own account with LOBs (excluding International Islamic Banks) on spot basis.
Transactions with AOO and transactions on Forward Basis are subject to the conditions set out in Part B of Notice 1
Buying or selling of Foreign Currency against another Foreign Currency
Non-Residents in Malaysia are free to buy or sell Foreign Currency against another Foreign Currency on Spot Basis or Forward Basis with a LOB.
4. Opening and maintaining of account
Non-Residents are allowed to open and maintain :
(i) FCAs with LOBs individually or jointly with another Resident Individual. (ii) an External Account, which is an account in Ringgit opened with any Financial Institution in Malaysia
NOTE: FCAs opened by Non-Resident Individually with Citibank Berhad, are not required to be designated unlike for Residents (see Section 1 - Foreign Currency Accounts under Rules Applicable to Residents).
Funds in these accounts are free to be remitted abroad in Foreign Currency. The conversion of Ringgit into Foreign Currency however must be undertaken in accordance with Part B of Notice 1.
Any payment, receipt or transfer into or from an External Account is subjected to RM10,000 per transaction for any purpose, including cash deposit. For cheque, the limit applies on per cheque basis.
The above limits shall not apply to -
- a Consulate;
- a High Commission;
- an Embassy;
- an individual participating in the Malaysia My Second Home Programme (MM2H); 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 cash withdrawal over-the-counter from an External Account or transfer between External Accounts of the same account holder. 5. Import and Export of Currency
Non-Residents are free to import into and export from Malaysia any amount of Foreign Currency including traveller's cheques.
Non-Resident travelers are allowed to carry ringgit on his person or in his baggage or in his possession, only up to an amount not exceeding in aggregate USD10,000 equivalent upon arrival or leaving Malaysia. 6. Payment and receipts
In Ringgit between Non-Residents and Resident or Non-Resident in Malaysia
1) A Non-Resident is allowed to make or receive payment in Ringgit, in Malaysia to or from another Resident or Non-Resident for, amongst others:
- any purpose between Immediate Family Members;
- income earned or expense incurred in Malaysia;
- settlement of— (i) a trade in goods or services, excluding payment between Non-Residents for settlement of a trade in goods or services outside Malaysia;
(ii) a Ringgit Asset including any income and profit due from the Ringgit Asset;
(iii) a commodity murabahah transaction between Non-Residents undertaken through a Resident commodity trading service provider, excluding payment between Non-Residents for settlement of a commodity murabahah transaction undertaken through a Non-Resident commodity trading service provider.
2) A Non-Resident is allowed to make or receive payment in Ringgit, in Malaysia to or from another Resident or Non-Resident for, amongst others:
(i) a court judgement where the transaction under litigation is undertaken in compliance with the FE Notices; or
(ii) a reinsurance for domestic insurance business or a retakaful for domestic takaful business between a Resident and a person licensed to carry out Labuan insurance business under the Labuan Financial Services and Securities Act 2010 (LFSSA) or Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA).
In Foreign Currency between Non-Resident and Resident
A Non-Resident is allowed to make or receive payment to or from a Resident in foreign currency for any purpose, excluding payment made or received for:-
i) a Foreign Currency-denominated derivative or Islamic derivative offered by a Resident^;
ii) a derivative or Islamic derivative which is referenced to Ringgit^; or
iii) an Exchange Rate Derivative offered by a Non-Resident^
^unless approved by BNM under applicable Notices or otherwise approved in writing by BNM
In Foreign Currency between Non-Residents
A Non-Resident is allowed to make or receive payment in Foreign Currency, in Malaysia, to or from another Non-Resident for any purpose.
Borrowing (a) any utilised or unutilised credit facility or financing facility; (b) any utilised or unutilised trade financing facility, including but not limited to, trade guarantee or guarantee for payment of goods; (c) redeemable preference share or Islamic redeemable preference share; or (d) Corporate Bond or Sukuk. Notwithstanding the above, the following are excluded from the definition of Borrowing— (i) a trade credit term extended by a supplier for any goods or services; (ii) a credit limit that a LOB apportions for its client to undertake a Forward Basis transaction, excluding a transaction that involves— (a) exchanging or swapping of Ringgit or Foreign Currency debt for another Foreign Currency debt; or (b) exchanging of Foreign Currency debt for a Ringgit debt; (iii) a Financial Guarantee or Non-Financial Guarantee (iv) an operational leasing facility; (v) a factoring facility without recourse; (vi) a credit card or charge card facility obtained by an Individual from a Resident and used for payment for retail goods or services only; or (vii) a credit facility or financing facility obtained by a Resident Individual from a Resident to purchase one (1) residential property and one (1) vehicle.
Note: For clarity purposes, the transactions in paragraphs (ii)(a) and (ii)(b) shall be considered as Borrowing.
Direct Investment Abroad/DIA (a) an investment in Foreign Currency Asset Offshore by a Resident resulting in at least 10% equity ownership or control of a Non-Resident Entity outside Malaysia or a Labuan Entity; (b) an inter-company lending by a Resident Entity to a Non-Resident Entity outside Malaysia within the Resident Entity's Group where the Non-Resident Entity is outside Malaysia or Labuan Entity; (c) a capital expenditure by a Resident investor in an unincorporated Entity outside Malaysia or a project outside Malaysia by an agreement with no establishment created, where the Resident investor— - (i) contributes capital of at least 10% of the cost of the project; (ii) is entitled to at least 10% of profits from the unincorporated Entity or project; or (iii) have management control of the unincorporated Entity or project. Direct Shareholder A shareholder with at least 10% effective shareholding in a Resident Entity. Domestic Ringgit Borrowing (a) any Borrowing in Ringgit obtained by a Resident from another Resident; or
(b) any obligation considered or deemed as Domestic Ringgit Borrowing under any of the FE Notices.
Note: For purposes of determining the Domestic Ringgit Borrowing status of a Resident Entity—
(a) the Resident Entity is deemed to have a Domestic Ringgit Borrowing when another Resident Entity with Parent Subsidiary Relationship has a Domestic Ringgit Borrowing; and
(b) the following shall not be considered as Domestic Ringgit Borrowing—
(i) a Borrowing obtained from another Resident Entity with Parent-Subsidiary Relationship;
(ii) a Borrowing obtained from its Direct Shareholder; or
(iii) any facility including credit facility or financing facility which is used for Sundry Expenses or Employees' Expenses only.
- "Sundry Expenses" refers to small and infrequent expenses for office supplies (e.g. stationaries), ancillary services (e.g. software and online subscription) and other minor expenses to facilitate daily business operation.
- "Employees' Expenses" refers to business-related expenses which may include, but not limited to, travel (e.g. lodging and transportation), entertainment, health, insurance, takaful and other employees' expenses, excluding investment.
- "Borrowing" refers to the definition of "Borrowing" above.
Entity (a) any corporation, statutory body, local authority, society, cooperative, limited liability partnership and any other body, organisation, association or group of persons, whether corporate or unincorporate, in or outside Malaysia; or
(b) the Federal Government, any State Government or any other government.
External Account An account in Ringgit opened with any Financial Institution in Malaysia—
(a) by a Non-Resident— (i) individually; (ii) jointly with another Non-Resident; or (iii) jointly with a Resident, excluding— (A) for a joint venture in Malaysia; (B) a husband and wife; or (b) by a person who operates the account in trust for or on behalf of a Non-Resident. The designation of the account shall be determined based on the residency of the beneficiary. Financial Guarantee Any guarantee, indemnity or undertaking to secure the repayment of a Borrowing. Foreign Currency includes— a) currency notes or coins which are legal tender in any country, territory or place outside Malaysia; b) any right to receive foreign currency—
i. in respect of any credit or balance at a licensed bank or any other similar institution in or outside Malaysia; or
ii. from any person in or outside Malaysia; or
c) any document or device of a kind intended to enable the person to whom the document or device is issued to obtain foreign currency from another person on the credit of the person issuing it, and in particular, any traveller's cheque or other draft or letter of credit so intended. Foreign Currency Asset Offshore (previously referred to as "Investment Abroad") (a) a financial asset in Malaysia swapped for a financial asset in a Labuan Entity or outside Malaysia;
(b) Foreign Currency Borrowing given to a Non-Resident; (c) working capital arising from the set up of any business arrangement outside Malaysia (including a joint venture project where no Entity is created or established); (d) deposit in a Foreign Currency Account (FCA) maintained with a Labuan Entity or outside Malaysia excluding reasonable amount of deposit for education, employment or migration outside Malaysia; or (e) Foreign Currency-denominated –
(i) (asset (tangible or intangible) offered by a Non-Resident or any person whose residency cannot be determined.
(ii) asset (tangible or intangible) in or maintained with a Labuan Entity, or outside Malaysia;
(iii) Financial Instrument or Islamic Financial Instrument (excluding Exchange Rate Derivatives) without Firm Commitment offered on a Specified Exchange under the CMSA outside Malaysia undertaken by a Resident through a Resident futures broker; or
(iv) Financial Instrument or Islamic Financial Instrument (excluding Exchange Rate Derivatives) without Firm Commitment issued or offered by a Non-Resident
Foreign Currency Asset Onshore (a) Foreign Currency-denominated securities or Islamic securities offered in Malaysia by a Resident as approved in writing by BNM; (b) Foreign Currency-denominated Financial Instrument or Islamic Financial Instrument offered in Malaysia by a Resident as approved in writing by BNM excluding a derivative transaction entered with Firm Commitment;
(c) deposit in Investment FCA with a LOB or an approved Financial Institution as specified in Notice 3; or (d) any instrument offered by a LOB with Foreign Currency delivery at maturity (such as dual-currency investment). Forward Basis Buying or selling of any currency after two (2) business days (regardless of whether settlement is to be made on gross or net basis) through – a) a derivative as defined under section 2(1) of the Financial Services Act 2013; b) an Islamic derivative as defined under section 2(1) of the Islamic Financial Services Act 2013; or c) any other arrangement. General Partnership has the same meaning with the term "partnership" as defined in section 3(1) of the Partnership Act 1961 [Act 135]. Group An Entity's – (a) ultimate or direct Holding/Parent Entity; (b) head office; (c) branch; (d) subsidiary company where the Entity owns more than 50% of ordinary shares in the subsidiary Entity; (e) associate Entity where the Entity owns between 10% and 50% of ordinary shares in the associate Entity; or (f) sister company where the Resident Entity and its sister company have a common shareholder with minimum of 10% of ordinary shares in both the Entity and its sister company. Immediate Family Member A legal spouse, parent, legitimate child (including legally adopted) or legitimate sibling of an Individual. Individual A natural person. Labuan Entity An Entity which is created, incorporated, licensed or registered under any of the following legislation::
(a) Labuan Companies Act 1990 [Act 441]; (b) Labuan Trusts Act 1996 [Act 554]; (c) Labuan Financial Services and Securities Act 2010 [Act 704]; (d) Labuan Islamic Financial Services and Securities Act 2010 [Act 705]. (e) Labuan Foundations Act 2010 [Act 706]; (f) Labuan Limited Partnerships and Limited Liability Partnerships Act 2010 [Act 707]. Licensed onshore bank or LOB A licensed bank and a licensed investment bank under the Financial Services Act 2013 and a licensed Islamic bank under the Islamic Financial Services Act 2013. Non-Resident (a) any person other than a Resident; (b) an overseas branch, a subsidiary, regional office, sales office or representative office of a Resident company; (c) Embassies, Consulates, High Commissions, supranational or international organizations; (d) a Malaysian citizen who has obtained permanent resident status of a country or territory outside Malaysia and is residing outside Malaysia.
For the avoidance of doubt, this includes Malaysian Embassies, Consulates and High Commissions.
Parent-Subsidiary Relationship a relationship between a Resident Entity and its direct or indirect—
(a) Resident Holding/Parent Entity; or (b) Resident subsidiary.
For the avoidance of doubt, this includes a relationship between a Resident subsidiary of a Non-Resident Holding/Parent Entity with the Resident subsidiary's ultimate Resident Holding/Parent Entity.
Real Sector Activity an activity relating to—
(a) construction or purchase of a residential or commercial property, excluding purchase of land which will not be utilised for construction or production of goods or services; or (b) production or consumption of goods or services, excluding— –
(i) activity in financial services sector, whether Islamic or otherwise;
(ii) purchase of securities or Islamic securities; or
(iii) purchase of Financial Instrument or Islamic Financial Instrument.
Resident (i) a citizen of Malaysia, excluding a citizen who has obtained permanent resident status in a country or a territory outside Malaysia and is residing outside Malaysia; (ii) a non-citizen of Malaysia who has obtained permanent resident status in Malaysia and is ordinarily residing in Malaysia; (iii) a body corporate incorporated or established, or registered with or approved by any authority, in Malaysia; (iv) an unincorporated body registered with or approved by any authority in Malaysia; or (v) the Government or any State Government.
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.
Ringgit Asset (a) Ringgit-denominated security or Islamic security issued in Malaysia by a Resident; (b) Ringgit-denominated security or Islamic security issued by a Non-Resident as approved by BNM; (c) Ringgit-denominated Financial Instrument or Islamic Financial Instrument as approved by BNM; (d) Ringgit deposits with a Financial Institution in Malaysia; including deposit-like instrument with only Ringgit delivery at the inception and maturity; or (e) Any property in Malaysia.
Version Aug 2022