More liberal rules on investing abroad

Bank Negara will liberalise direct investments abroad, inter-company loans and trade financing for Malaysian companies and individuals from June 1 to allow more foreign currency use in investments abroad and in borrowings.

Governor Tan Sri Dr Zeti Akhtar Aziz said those moves were separate from the internationalisation of the ringgit where foundations of which would be laid out when the Financial Services Masterplan would be revealed in June.

She said one of the pre-requisites for the internationalisation of the ringgit was the development of a more vibrant foreign exchange market in Malaysia.

In its announcement, Bank Negara said to support private sector expansion of its operations and direct investment abroad, resident companies that meet the prudential requirements would be permitted to undertake any amount of direct investment abroad.

“Therefore, direct investment abroad will be excluded from the prevailing RM50mil limit on investment in foreign currency assets,” said the statement.

To further enhance the efficient management of financial resources within a corporate group and to provide greater flexibility on sources of competitive financing, Bank Negara said resident companies might borrow any amount in ringgit or foreign currency from their resident and non-resident non-bank-related companies.

“The RM5mil limit currently imposed on foreign currency trade financing obtained by residents from non-residents will no longer be applicable. In this regard, residents may obtain foreign currency borrowing, including foreign currency trade financing, up to the prevailing aggregate limit of RM100mil for companies on a corporate group basis and RM10mil for individuals,” it said.

Source: http://biz.thestar.com.my/news/story.asp?file=/2011/5/19/business/8712032