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Thursday March 24, 2005

Bank Negara relaxes rules for overseas investment

BY IZATUN SHARI

KUALA LUMPUR: Malaysian individuals and corporations who are debt-free can now take any amount of their money abroad effective April 1.

Previously, individuals could only repatriate up to RM10,000 overseas without obtaining permission from Bank Negara.

Credit card debt and housing and car loans are not considered as debt or credit facilities.

This relaxation for investment abroad, announced by Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz yesterday, is part of the central bank's continuous effort to reduce the regulatory cost of doing business and enhance efficiency of the delivery system.

She also said that unit trust companies would be allowed to invest up to 30% of the net asset value overseas from the current 10%, and fund managers could invest any amount of money overseas belonging to Malaysians and foreigners that did not have domestic credit facilities.

Speaking during the release of the Bank Negara 2004 annual report, Zeti said individuals with debts could invest any amount of their foreign currency funds or convert ringgit up to RM100,000 per annum for overseas investment.

Analysts see the move as a way of utilising the vast amount of money that is circulating throughout the economy or sitting as deposits in banks.

They said that present foreign exchange reserves, which amounted to US$73.2bil (RM278bil), had enabled Bank Negara to make these changes.

Among the other measures announced by Bank Negara are:

  • FOR education or overseas employment purposes, individuals can covert up to US$150,000 (RM570,000) for credit into foreign currency accounts (FCA) onshore or offshore in Labuan and up to US$50,000 (RM190,000) into overseas FCA;

  • INDIVIDUALS are free to open FCA onshore and offshore without getting Bank Negara’s permission;

  • INDIVIDUALS without any domestic debts are free to convert unlimited amount of their ringgit funds for credit into their FCA while corporations with debt are allowed to convert up to RM10mil in a calendar year into their FCA;

  • THE aggregate limit for foreign currency borrowing by individuals is increased to RM10mil while corporations may now obtain foreign currency credit facilities up to RM50mil; and

  • THE foreign currency borrowing may be used to finance overseas investment up to RM10mil.

    For the purpose of compiling data on the inflow and outflow of funds, transactions involving investments abroad and foreign currency credit facilities would continue to be reported to Bank Negara through a registration process.

    Transactions that need to be registered include remittance of funds from Malaysia that exceeds RM50,000 and the procurement of foreign currency credit facilities exceeding RM1mil.

    Bank Negara Annual Report 2004

    More reports from StarBiz

    Go to www.bnm.gov.my to get The 2004 Bank Negara Malaysia Annual Report (in pdf format).

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