4th September 1998 Source : Bank Negara Malaysia
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Issues |
Clarification - Part I |
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| 1. | Definition of RM assets | Securities:
Ringgit denominated securities issued by residents including bills of exchange, private debt securities, Cagamas bonds, Malaysian Government Securities, Treasury Bills, shares and warrants listed on the KLSE, etc. Derivatives traded on Malaysian exchanges (KLOFFE, MME and KLCE), and over-the-counter derivatives. Deposits: Fixed deposits and negotiable instruments of deposits. Fixed assets. |
| 2. | Conversion of investment in ringgit assets by non-residents into foreign currency |
If RM assets are held for less than 12 months, proceeds from the sale must be credited to the external account. For external account balances held in the form of fixed deposits, funds in such external account cannot be converted into foreign currency if the deposits were placed for less than 12 months. The one-year requirement applies to holdings of Malaysian assets in any form. If RM assets are held for more than 12 months, the proceeds from the disposal of the assets can be converted into foreign currency. Short-term fixed deposits with maturity periods of less than one year, if rolled over up to a year, may be converted into foreign currency. Effective date For securities purchased or deposits placed before 1 September 1998, the one year holding period starts from 1 September 1998. For securities purchased or deposits placed on or after 1 September 1998, the one year period starts from the date of purchase/placement of deposit. |
| 3. | External Accounts held by non-resident individuals working in Malaysia and students studying in Malaysia, including accounts held by their spouses, children and parents. Spouses, children and parents must reside in Malaysia. | Individuals
should provide evidence so that banks can be satisfied that they are genuinely
employed in Malaysia, or studying in Malaysia, or residing in Malaysia.
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| 4. |
External Account of nonresidents residing outside Malaysia (Malaysians with Permanent Resident status and residing outside Malaysia and foreigners not residing in Malaysia)
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Transitional arrangement for period up to 30 September 1998
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If RM assets are held for less than 12 months, proceeds from the sale must be credited to the external account. For external account balances held in the form of fixed deposits, funds in such external account cannot be converted into foreign currency if the deposits were placed for less than 12 months. The one-year requirement applies to holdings of Malaysian assets in any form. If RM assets are held for more than 12 months, then the proceeds from their disposal can be converted into foreign currency. Short-term fixed deposits with maturity periods of less than one year, if rolled over up to a year, may be converted into foreign currency. Effective date For securities purchased or deposits placed before 1 September 1998, the one-year holding period starts from 1 September 1998. For securities purchased or deposits placed on or after 1 September 1998, the one-year period starts from the date of purchase/placement of deposit. |
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| 5. |
Transfers between external accounts for the purchase of ringgit securities |
No restrictions. Transactions have to be effected through authorized depositories. Rules on conversion into foreign currency apply. |
| 6. |
MSC Status Companies |
MSC status companies will continue to be exempted from all exchange control rules to meet their own requirements. |
| 7. | Settlement for outstanding transactions entered into prior to 1300 hour on 1 September 1998. |
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| 8. |
Exchange Rate Quotation – US dollar/RM |
For retail transactions, the ringgit exchange rate against US dollar would not be more than 3.7700/3.8300 for telegraphic transfers and 3.7600 for overdrafts. |
| 9. |
Buying and selling rates for the purchase/sale of foreign currencies against ringgit from money changers. |
The maximum spread between buying and selling for the US dollar, the Deutchemark, the pound sterling, the Japanese yen, the Hong Kong dollar and the Singapore dollar is 2% (± 1% from the middle rate). For all other currencies, the spread between the buying and selling rate will be 3% (± 1.5% from the middle rate). The middle rate for US dollar is the exchange rate quoted by Bank Negara Malaysia. The middle rate for all other currencies against the ringgit would be the cross-rates determined based on the US dollar exchange rate against all the other currencies. |
| 10. |
Remittance of funds abroad for education purposes by residents. |
Residents are allowed to remit funds abroad for education purposes upon presentation of the necessary documentary evidence (eg. enrollment letter, student card) to the commercial banks. For remittances equivalent to more than RM10,000 residents are required to fill in the Form P. |
| 11. |
Outstanding trade contracts denominated in ringgit entered into prior 1300 hours 1 September 1998. |
These contracts can still be settled in ringgit subject to the importers/exporters’ banks approval. |
