What is the Foreign Exchange Policy?

It is a set of rules administered by Bank Negara Malaysia (BNM) based on the provisions set forth under the Financial Services Act 2013 and the Islamic Financial Services Act 2013 to safeguard the balance of payments position or value of ringgit.

It comprises of the following:

1) Interpretation

2) DECLARATION ON ENTITIES CREATED, INCORPORATED, etc. IN LABUAN

3) Notice 1  :  DEALINGS IN CURRENCY, GOLD AND OTHER PRECIOUS METALS;

4) Notice 2  :  BORROWING, LENDING AND GUARANTEE;

5) Notice 3  :  INVESTMENT IN FOREIGN CURRENCY ASSET;

6) Notice 4  :  PAYMENT AND RECEIPT;

7) Notice 5  :  SECURITIES AND FINANCIAL INSTRUMENTS;

8) Notice 6  :  IMPORT AND EXPORT OF CURRENCY;

9) Notice 7  :  EXPORT OF GOODS; and

10) DIRECTION ON DEALINGS WITH SPECIFIED PERSON AND IN RESTRICTED CURRENCY.


Minimum Due Diligence (MDD) Guide for Foreign Exchange Rules

The Association of Banks in Malaysia (ABM) and Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) have prepared the following MDD Guides to outline the industry standard practice to be adopted by a licensed onshore bank (LOB), and by extension its Appointed Overseas Office (AOO), when dealing with their clients in relation to the Foreign Exchange rules, either directly with the LOB or via the AOO:

1) MDD Guide for Notice 1;

2) MDD Guide for Notice 2;

3) MDD Guide for Notice 3;

4) MDD Guide for Notice 4; and

5) MDD Guide for Notice 7.
 
This MDD guide shall be read together with prevailing the Foreign Exchange Policy Notices issued by Bank Negara Malaysia.

  • The Foreign Exchange Policy and MDD Guides can be viewed at Bank Negara Malaysia’s website i.e. https://www.bnm.gov.my/fep.
  • It would be encouraged to occasionally visit the above mentioned website as Bank Negara Malaysia or ABM/AIBIM may revise/update the Foreign Exchange Policy or MDD Guide(s) respectively from time to time.
When is the Foreign Exchange Policy applicable?
  1. Transaction between a Resident and a Non-Resident in ringgit (RM);
  2. Transaction between a Non-Resident and another Non-Resident in RM;
  3. Transaction between a Resident and a Non-Resident in foreign currency (FCY); and
  4. Transaction between a Resident and another Resident in FCY.
When is the Foreign Exchange Policy NOT applicable?
  1. Transaction between a Resident and another Resident in Ringgit; and
  2. Transaction between a Non-Resident and another Non-Resident in Foreign Currency.
How to Classify/Determine the Residency Status of an Individual/Non-individual According to the Foreign Exchange Policy

Resident

 a citizen of Malaysia;
a non-citizen of Malaysia who has obtained permanent resident (PR) status* in Malaysia and is ordinarily residing in Malaysia;
a body corporate incorporated or established, or registered with or approved by any authority, in Malaysia;
an unincorporated body registered with or approved by any authority in Malaysia; or

The Government or any State Government.

Non-Resident

 any person other than a resident;
an overseas branch, a subsidiary, regional office, sales office or representative office of a resident company;
Embassies, Consulates, High Commissions, supranational or international organizations;
a Malaysian citizen who has obtained PR status* of a country or territory outside Malaysia and is residing outside Malaysia; or

Malaysian Embassies, Consulates and High Commissions.

*For individuals with PR status, determination of their residency status shall be guided by the existing tax ruling in Malaysia which is 182 non-consecutive days in Malaysia as illustrated in the tables below:

Citizen of Malaysia

Obtained PR status of a country outside Malaysia? Residing outside Malaysia 182 non-consecutive days or more in a calendar year? Residency status
Yes No Yes No
✓   ✓   Non-Resident
✓     ✓ Resident
  ✓ ✓  
  ✓   ✓

 Not a citizen of Malaysia

Obtained PR status in Malaysia? Residing in Malaysia 182 non-consecutive days or more in a calendar year? Residency status
Yes No Yes No
✓   ✓   Resident
✓     ✓ Non-Resident
  ✓ ✓  
  ✓   ✓

Note: When there is a change in your residency status, please head to your nearest branch to update your personal information so that we are able to assist you with the changes accordingly.

What type of borrowing transactions can I perform with The Bank under the Foreign Exchange Policy?
1. Borrowing by a Resident Individual, Sole Proprietor or General Partnership
Borrower              Lender  Loan Currency  Loan Amount  Purpose/ Usage
RI Non-Resident (NR) Immediate Family Member (IFM)1

Ringgit

(RM)		 Any amount Any purpose
NR employer in Malaysia

RM

 Subject to Terms & Conditions of employment contract For use in Malaysia
RI,SP or GP NR excluding NR Financial Institution

RM

 Up to RM1 Million in aggregate2
RI IFM1

Foreign Currency
(FCY)

 Any amount Any purpose
RI,SP or GP Licensed Onshore Bank or NR Up to RM10 Million equivalent in aggregate3
1 a legal spouse, parent, legitimate child (including legally adopted) or legitimate sibling of an individual
2 Computed based on an aggregate borrowing in RM by the RI and a SP and a GP owned by the RI
3 Computed based on an aggregate borrowing in FCY by the RI and a SP and a GP owned by the RI
2. Borrowing by a Resident Entity
Lender Loan Currency Loan Amount Purpose/ Usage
Non-Resident (NR) entity within the RE’s group of entities (other than NR Financial Institution (NRFI) or NR Special Purpose Vehicle (SPV)1)

Ringgit

(RM)

Any amount

 To finance a Real Sector Activity2 in Malaysia
NR direct shareholder (except NRFI)

RM

Any amount

Any purpose
NR through the issuance of RM Sovereign Bond or Sukuk (issued by the Federal Government)
NR through the issuance of RM Corporate Bond or Sukuk (excluding non-tradable Ringgit Corporate Bond or Sukuk issued to a NR Entity outside the RE’s Group or a NRFI)
NR through the issuance of redeemable preference shares in Ringgit RM Any amount

For use in Malaysia
Multilateral Development Bank4and Qualified Development Financial Institution5
NR excluding a NRFI

RM

 Up to RM1 Million in aggregate3
Licensed Onshore Bank

Foreign Currency

(FCY)

Any amount

Any purpose
Entity within the RE’s group or RE’s DS excluding a NRFI or a NR SPV1
Through issuance of FCY Corporate Bond or Sukuk to another Resident
NR outside the RE’s Group

FCY

Up to RM100 Million equivalent in aggregate6
A NRFI
A NR SPV1
1 an entity set up solely to obtain borrowing from a person outside the RE’s group
2

an activity relating to:

  1. 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
  2. production or consumption of goods or services, excluding-
    • activity in financial services sector, whether Islamic or otherwise;
    • purchase of securities or Islamic securities; or
    • purchase of Financial Instrument or Islamic Financial Instrument.
3 Computed based on an aggregate borrowing in RM by the RE and other RE with parent-subsidiary relationship
4 a NRFI, established in or outside Malaysia, whose membership consists of sovereign states, that fosters economic and social development in member countries by financing projects, supporting investments or generating capital.
5

a NRFI:

  1. that fosters economic and social development by financing projects, supporting investments or generating capital; and
  2. approved by BNM to be a Qualified Development Financial Institution.
6 Computed based on an aggregate borrowing in FCY by the RE and other RE with parent-subsidiary relationship.
3. Borrowing by a Non-Resident
Borrower Lender Loan Currency Loan Amount Purpose/Usage
NR Individual

Immediate Family Member (IFM)1

Ringgit

(RM)

 Any amount Any purpose

A licensed insurer or a licensed takaful operator

RM

Up to the attained cash surrender value of any life insurance policy or Family Takaful Certificate purchased

For purchase of any life insurance policy or Family Takaful Certificate

Employer in Malaysia

RM

 

Any amount

For use in Malaysia
NR excluding a NR Financial Institution (NRFI)

Resident

Any amount

To finance Real Sector Activity (RSA)2 in Malaysia

Resident with a stockbroking license under the Capital Markets and Services Act 2007

RM

Any amount in the form of margin financing

For products traded on Bursa Malaysia
Multilateral Development Bank3 or Qualified Development Financial Institution4

Resident and NR

RM

Any amount through the issuance of a debt security denominated in RM

For use in Malaysia

NR

Licensed Onshore Bank (LOB)

 

 

RM

Any amount of trade financing

For settlement of trade in goods or services with a Resident

Up to the amount of an overdraft facility

To avoid settlement failure for purchase of shares or Ringgit instrument traded on Bursa Malaysia

Up to RM10 Million in aggregate via a repurchase agreement or sale buy back agreement

Any purpose

LOB, Resident IFM1 or a NR in Malaysia

Foreign Currency

Any amount

Resident

Up to the investment limit of the resident lender as stated in Parts A and B of Foreign Exchange Policy Notice 3
1 a legal spouse, parent, legitimate child (including legally adopted) or legitimate sibling of an Individual
2

an activity relating to:

  1. 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
  2. production or consumption of goods or services, excluding-
    • activity in financial services sector, whether Islamic or otherwise;
    • purchase of securities or Islamic securities; or
    • purchase of Financial Instrument or Islamic Financial Instrument.

includes refinancing of existing RM Borrowing that was used for RSA in Malaysia and on-lending to REs within the same Group of Entities or an IFM that will be ultimately used for RSA in Malaysia.
3 a NRFI, established in or outside Malaysia, whose membership consists of sovereign states, that fosters economic and social development in member countries by financing projects, supporting investments or generating capital.
4

a NRFI:

  1. that fosters economic and social development by financing projects, supporting investments or generating capital; and
  2. approved by BNM to be a Qualified Development Financial Institution.
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What type of investment transactions can I perform with The Bank under the Foreign Exchange Policy?
1. Investment by Resident Individual, Sole-proprietorship or General Partnership in Foreign Currency Asset

Investment by Resident Individual (RI), Sole-proprietorship (SP) or General Partnership (GP)

[under the Foreign Exchange Policy, the total investment amount in foreign currency (FCY) asset will be collectively calculated in aggregate based on the RI, SP and GP owned by the same RI]

  • A RI, SP and GP without Domestic Ringgit Borrowing (DRB)1 is allowed to invest in foreign currency (FCY) asset up to any amount.

  • A RI, GP or GP with DRB1 is allowed to invest in FCY asset;

    1. up to any amount:

      • For investment in real estate2 outside Malaysia for the purpose of education, employment or migration;

      • Using FCY funds from outside Malaysia except proceeds of Export of Goods; or

      • Using FCY funds from an approved borrowing in FCY in accordance with Part A of FEP Notice 2.

    2. up to RM1 million equivalent3 in aggregate per calendar year using funds sourced from:

      • Conversion of ringgit (RM) into FCY;

      • Trade Foreign Currency Account; and

      • Swapping of a RM-denominated financial asset in Malaysia for a financial asset in Labuan Entity or outside Malaysia.

   
1 any borrowing in RM obtained by a resident from another resident or any obligation considered or deemed as DRB under the Foreign Exchange Policy
Kindly visit Bank Negara Malaysia’s website at https://www.bnm.gov.my/fep > Preamble & Interpretation to view the detailed definition of BORROWING and DRB
2 for the RI’s own accommodation or the Rl’s Immediate Family Member’s accommodation only.
3 computed in aggregate based on the RI, SP and GP’s investment in FCY Asset.

 

2. Investment by Resident Entity in Foreign Currency Asset

Investment by Resident Entity (RE)

  • A RE without Domestic Ringgit Borrowing (DRB)1 is allowed to invest in foreign currency (FCY) asset up to any amount.
  • A RE with DRB1 is allowed to invest in FCY asset:
    1. up to any amount using FCY funds from:

      • outside Malaysia except proceeds of Export of Goods (PEG);

      • an approved borrowing in FCY in accordance with Part B of Foreign Exchange Policy (FEP) Notice 2; and

      • a borrowing in FCY from a Licensed Onshore Bank (LOB) for Direct Investment Abroad (DIA)2.

    2. up to RM50 million equivalent3 in aggregate per calendar year using FCY funds sourced from:

      •  Conversion of ringgit (RM) into FCY;

      • Trade Foreign Currency Account;

      • A borrowing in FCY from a LOB for purposes other than DIA; and

      • Swapping of a RM-denominated financial asset in Malaysia for a financial asset in Labuan Entity or outside Malaysia.

   
1 any borrowing in RM obtained by a resident from another resident or any obligation considered or deemed as DRB under the FEP
Kindly visit Bank Negara Malaysia’s website at https://www.bnm.gov.my/fep > Preamble & Interpretation to view the detailed definition of BORROWING and DRB
2
  1. an investment in FCY Asset Offshore by a Resident resulting in at least 10% equity ownership or control of a Non-Resident (NR) Entity outside Malaysia or a Labuan Entity.
  2. an inter-company lending by a RE to a NR Entity within the RE’s Group where the NR Entity is outside Malaysia or a Labuan Entity; or
  3. 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:
    • contributes capital of at least 10% of the cost of the project;
    • is entitled to at least 10% of profits from the unincorporated Entity or project; or
    • has management control of the unincorporated Entity or project
3

computed in aggregate based on the RE and other RE with parent-subsidiary relationship’s investment in FCY Asset

  1. the RE is deemed to have DRB when another RE with parent-subsidiary relationship has a DRB; and
  2. the following shall not be considered as DRB:
    • a borrowing obtained by a RE from another RE within its group of entities with Parent-Subsidiary relationship;
    • a borrowing obtained from its Direct Shareholder; or
    • any facility including credit facility or refinancing facility which is used for Sundry Expense 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.
3. Investment by Non-Resident in Ringgit Asset

Investment by Non-Resident in Ringgit Asset1 in Malaysia

  • Free to invest in any form of ringgit assets in Malaysia; and
  • Free to repatriate divestment proceeds, profits, dividends or any income arising from investments in Malaysia, provided it is in foreign currency.
   
1

Ringgit Asset refers to:

  1. Ringgit-denominated securities or Islamic securities issued in Malaysia by a Resident;
  2. Ringgit-denominated securities or Islamic securities issued by a Non-Resident as approved in writing by Bank Negara Malaysia;
  3. Ringgit-denominated Financial Instrument or Islamic Financial Instrument as approved in writing by Bank Negara Malaysia;
  4. Ringgit deposit with a Financial Institution in Malaysia including deposit-like instrument with only Ringgit delivery at the inception and maturity; or
  5. any property in Malaysia 
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What type of payment transactions can I perform with The Bank under the Foreign Exchange Policy?
1. Payment in Foreign Currency between Residents

Payment in Foreign Currency between Residents

A Resident is allowed to make or receive payment in foreign currency, to or from another Resident for:
1 any purpose between Immediate Family Members (IFM)1
2 education, employment or migration outside Malaysia
3 a transaction between the Resident and a Licensed Onshore Bank in the conduct of the latter’s business involving foreign currency (FCY)
4 a transaction between the Resident and a licensed international Takaful operator in the conduct of the latter’s business involving FCY
5 a transaction between the Resident and an international currency business unit of a licensed Takaful operator in the conduct of the latter’s business involving FCY
6 settlement of a FCY-denominated derivative (excluding an Exchange Rate Derivative) transacted on a Specified Exchange under the Capital Markets and Services Act 2007 [Act 671] between a Resident and a Resident futures broker
7 settlement of a commodity murabahah transaction between Residents undertaken through a Resident or a Non-Resident commodity trading service provider
8 settlement of a miscellaneous expense2 incurred outside Malaysia between a Resident Individual residing in Malaysia and a Resident Individual residing outside Malaysia
9

settlement of a domestic trade in goods or services between a Resident exporter and a Resident Entity involved in Global Supply Chain3 operations in Malaysia, provided that the payment:

  1. is sourced from Trade Foreign Currency Account (TFCA) of the Resident payor or proceeds from a FCY trade financing facility obtained by the Resident payor in accordance with Part B of Foreign Exchange Policy Notice 2;
  2. shall not be sourced from conversion of ringgit into FCY by the Resident payor; and
  3. is credited into TFCA of the Resident payee.
   
1 a legal spouse, parent, legitimate child (including legally adopted) or legitimate sibling of an Individual.
2 a Current Account Transaction that is of reasonable amount and infrequent in nature, including but not limited to holiday expenses abroad, medical expenses abroad and advance or reimbursement for purchase of goods and services abroad on behalf of a Resident Individual residing in Malaysia.
3 a business activity where a Resident imports goods or services to support production or distribution of goods or services by a Resident exporter for the Resident exporter’s export activities. This includes domestic trade in goods or services between the Resident importer and the Resident exporter undertaken through a Resident intermediate Entity.

 

2. Payment in Ringgit between Non-Resident and Resident

Payment in Ringgit between Non-Resident and Resident

A Non-Resident is allowed to make or receive payment in ringgit, in Malaysia, to or from another Resident for:
1 any purpose between Immediate Family Members1
2 income earned or expense incurred in Malaysia
3 settlement of a trade in goods or services, excluding payment between Non-Residents (NR)s for settlement of a trade in goods or services outside Malaysia
4 settlement of a ringgit (RM) asset2 including any income and profit due from the RM asset
5 settlement of a commodity murabahah transaction undertaken through a commodity trading service provider, excluding payment between NRs for settlement of a commodity murabahah transaction undertaken through a NR commodity trading service provider
6 a court judgement where the transaction under litigation is undertaken in compliance with the Foreign Exchange Policy Notices
7 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 or Labuan Islamic Financial Services and Securities Act 2010.
   
1 a legal spouse, parent, legitimate child (including legally adopted) or legitimate sibling of an Individual.
2

Ringgit Asset refers to:

  1. Ringgit-denominated securities or Islamic securities issued in Malaysia by a Resident;
  2. Ringgit-denominated securities or Islamic securities issued by a Non-Resident as approved in writing by Bank Negara Malaysia;
  3. Ringgit-denominated Financial Instrument or Islamic Financial Instrument as approved in writing by Bank Negara Malaysia;
  4. Ringgit deposit with a Financial Institution in Malaysia including deposit-like instrument with only Ringgit delivery at the inception and maturity; or
  5. any property in Malaysia

 

3. Payment in Foreign Currency between Resident and Non-Resident

Payment in foreign currency between Resident and Non-Resident is permitted for any purpose1 subject to compliance with the following Foreign Exchange Policy (FEP) Notices which are not exhaustive:

  1. Investment limits under FEP Notice 3; or
  2. Borrowing limits/purposes under FEP Notice 2.
However, the following payments between Resident and Non-Resident are NOT PERMITTED:
a. a foreign currency-denominated derivative or Islamic derivative offered by a Resident unless approved by Bank Negara Malaysia (BNM) under Part B2 of Foreign Exchange Policy (FEP) Notice 5 or otherwise approved in writing by Bank Negara Malaysia (BNM);
b. a derivative or Islamic derivative which is referenced to ringgit unless approved by BNM under Part B2 of FEP Notice 5 or otherwise approved in writing by BNM; or
c. an Exchange Rate Derivative offered by a Non-Resident unless approved by BNM under FEP Notice 1 or otherwise approved in writing by BNM.
   
1 subject to compliance with other FEP Notices such as Permitted Investment Limit under FEP Notice 3, Permitted Payments under FEP Notice 4, etc.
2

issuance of Financial Instrument and Islamic Financial Instrument by Licensed Financial Institution and Bursa Malaysia.

 

4. Payment in Ringgit/Foreign Currency between Non-Residents

Payment between Non-Residents

Currency A Non-Resident is allowed to make or receive payment in Malaysia, to or from another Non-Resident for:

RM

 1 any purpose between Immediate Family Members1
2 income earned or expense incurred in Malaysia
3 settlement of a trade in goods or services, excluding payment between Non-Residents (NR)s for settlement of a trade in goods or services outside Malaysia
4 settlement of a ringgit (RM) asset2 including any income and profit due from the RM asset
5 settlement of a commodity murabahah transaction undertaken through a commodity trading service provider, excluding payment between NRs for settlement of a commodity murabahah transaction undertaken through a NR commodity trading service provider.

FCY

 Any purpose.
   
1 a legal spouse, parent, legitimate child (including legally adopted) or legitimate sibling of an Individual.
2

Ringgit Asset refers to:

  1. Ringgit-denominated securities or Islamic securities issued in Malaysia by a Resident;
  2. Ringgit-denominated securities or Islamic securities issued by a Non-Resident as approved in writing by Bank Negara Malaysia;
  3. Ringgit-denominated Financial Instrument or Islamic Financial Instrument as approved in writing by Bank Negara Malaysia;
  4. Ringgit deposit with a Financial Institution in Malaysia including deposit-like instrument with only Ringgit delivery at the inception and maturity; or
  5. any property in Malaysia

 

Expand All
Treatment of Proceeds of Export of Goods under the Foreign Exchange Policy
1. What is my obligation as a Resident Exporter when receiving Proceeds of Export of Goods?

Receipt of Proceeds of Export of Goods by Resident

A Resident Exporter (REx) shall receive the proceeds of its Export of Goods (PEG) in Malaysia:
(a) in ringgit (RM) or foreign currency (FCY) which shall be placed in a RM account or Trade Foreign Currency Account, as the case may be, maintained with a Licensed Onshore Bank (LOB)
(b) in full value excluding any:
(i) approved deductions related to the Export of Goods as listed below (refers to any one or more): (ii) amount spent for approved offsetting or writing-off arrangements as listed below where it enters into:
1. agency commission including advertising or promotion expenses; (A) an offsetting arrangement with any Non-Resident (NR) to offset the REX’s PEG with:
2. handling charge including freight and insurance or Takaful costs; 1. import of goods and services by the REx;
3. administrative error; 2. warranty claim by the buyer;
4. discount by the REx; 3. dividend payment by the REx;
5. quality and/or quantity claim; 4. other Current Account Transactions; or
6. short-shipment; 5. repayment of FCY borrowing obtained by the REx in accordance with Foreign Exchange Policy Notice 2.
7. shut-out (B) a writing-off arrangement with a NR buyer of the exported goods to write-off the REx’s outstanding PEG due to: 
8. write-off arising from fraud; 1. liquidation of the NR buyer; or
9. goods that the REx does not own but is receiving payment for value added input; or 2. REx is unable to receive the PEG from the NR buyer after at least twenty four (24) months from date of shipment despite following up with the NR buyer.
10. buyer is under liquidation.
(c) earlier than or in accordance with the payment date of the export contract which shall not exceed six (6) months from the date of shipment. However, where any of the circumstances stated below applies, the REx may receive the PEG up to 24 months from the date of shipment:
1. The REx has no control over the delay in receiving the PEG due to unexpected circumstances, including but not limited to:
(i) buyer in financial difficulties;
(ii) buyer cancels, delays, disputes or does not respond to request for payment;
(iii) restriction on foreign exchange transactions in the buyer’s country;
(iv) quality and/or quantity claims; or
(v) incidence of fraud.
2. The REx has exported goods on credit terms of up to 24 months from the date of shipment to the buyer for:
(i) consignment sale; or
(ii) goods that involve testing and commissioning.
Non-receipt of PEG is allowed for goods exported ……
(d) under a border trade agreement entered into by the government of Malaysia with any foreign government; or
(e) where the goods are not for sale, as follows:
(i) gift, donation, personal effects or business sample;
(ii) goods that are exported for further processing, testing, repairing, exchange or exhibition, and subsequently will be imported back to Malaysia; or
(iii) goods belonging to a NR that are exported after an exhibition in Malaysia or upon expiry of a lease or rental.
Reporting Requirement
(f) Where a REx’s annual gross Export of Goods exceeds RM250 million equivalent in the preceding year, the REx shall submit a report on Export of Goods to Bank Negara Malaysia (BNM) via https://bnm.my/fep as and when required by BNM.
(g) Where any PEG as referred to under item (c) above is not received by the REx within 24 months from the date of shipment, the REx shall notify BNM on the outstanding PEG within twenty-one (21) days after the end of each calendar year via https://bnm.my/fep.

 

2. What is my obligation as a Non-Resident when making payment for goods purchased in Ringgit to a Resident Exporter?

Payment of Proceeds of Export of Goods in Ringgit by Non-Resident

Where a Non-Resident (NR) undertakes settlement for an Export of Goods in ringgit (RM) in Malaysia, the RM shall be sourced from:
(a) buying of RM against foreign currency in accordance with Part B of Foreign Exchange Policy (FEP) Notice 1;
(b)

an External Account (EA) of the NR;
(c)

an EA of a NR Financial Institution acting on behalf of the NR, where it shall involve the buying of RM in accordance with Part B of FEP Notice 1; or
(d)

a RM trade financing facility from a Licensed Onshore Bank in accordance with Part D of FEP Notice 2.

 

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Types of External Accounts and Permitted Sources & Uses of Funds

A ringgit account maintained by a non-resident

Type of External Account
(EA)
 EA maintained ………. Limits/restrictions on the sources and uses of funds
Exempted
  • Personally by a foreign individual that is working or studying in Malaysia or participating in the Malaysia: My Second Home Programme (MM2HP);
  • Jointly between foreign individual(s) that are working or studying in Malaysia or participating in the MM2HP; or
  • Jointly between a foreign individual employed/studying in Malaysia with his/her spouse, child or parent who are staying in Malaysia.
 No limitation/restriction
Non-Exempted
  • Personally by a foreign individual that are not working or studying in Malaysia or not participating in the MM2HP;
  • Jointly between foreign individual(s) that are not working or studying in Malaysia or not participating in the MM2HP; or
  • Jointly between foreign individual(s) employed/studying in Malaysia or participating in the MM2HP with one (1) or more foreign individual(s) that are not working or studying in Malaysia or not participating in the MM2HP.
 Refer to Table 1 below
By foreign entities


Table 1 - Permitted Sources and Uses of Funds of a Non-Exempted External Account

Sources Uses
  • Proceeds from sale of foreign currency (FCY) on Spot Basis to:
    • a licensed onshore bank (LOB); or
    • a Licensed Money Changer
  • Drawdown or repayment of an approved Ringgit (RM) Borrowing in accordance with FEP Notice 2
  • Cash deposit of up to RM10,000 per transaction for any purpose1
  • Receipt or inward transfer of up to RM10,000 per transaction for any purpose1 via:
    • automated teller machine (ATM); or
    • other electronic means2
  • Inward crediting of up to RM10,000 per cheque for any purpose1
  • Receipt in RM for purposes in accordance with Foreign Exchange Policy (FEP) Notice 4
  • Transfer between same account holder
  • Transfer in RM between Non-Resident Financial Institutions (NRFIs) which are China Foreign Exchange Trade System (CFETS) members for settlement of trade in goods or services with a Resident
  • Purchase of FCY on Spot Basis from:
    • a LOB; or
    • a Licensed Money Changer
  • Lending of RM or repayment of any RM Borrowing in accordance with FEP Notice 2
  • Cash withdrawal over-the-counter of any amount
  • Payments or outward transfer of up to RM10,000 per transaction for any purpose1 via:
    • ATM; or
    • other electronic means2
  • Outward clearing of up to RM10,000 per cheque for any purpose1
  • Payment in RM for purposes in accordance with Part B: Payment in RM and Part F: Opening and Maintaining of Account of FEP Notice 4
  • Transfer between same account holder
  • Transfer in RM between NRFIs which are CFETS members for settlement of trade in goods or services with a Resident
   
1 any transaction beyond the prescribed threshold of RM10,000 must be supported with documentary proof of permitted purposes under FEP Notice 4.
2

including internet banking, mobile banking, mobile payments or electronic money.
Types of Foreign Currency Accounts and Permitted Sources & Uses of Funds
1. Trade Foreign Currency Account and Investment Foreign Currency Account maintained by Resident Individual, Sole Proprietor or General Partnership

Trade Foreign Currency Account and Investment Foreign Currency Account maintained by Resident Individual (RI), Sole Proprietor (SP) or General Partnership (GP)

  Trade Foreign Currency Account (TFCA) Investment Foreign Currency Account (IFCA)
Permissible
Sources
  • Proceeds of Export of Goods (PEG);
  • Settlement of domestic trade in goods or services from another resident within the Global Supply Chain (GSC) as permitted under Foreign Exchange Policy (FEP) Notice 4;
  • Any amount for same party transfers from TFCA or IFCA;
  • Other foreign currency (FCY) funds arising from transaction permitted under the FEP Notices.
  • Any FCY funds, other than:
    • PEG; and
    • Settlement of domestic trade in goods or services from another resident within the GSC as permitted under FEP Notice 4.
  • Up to RM1 million equivalent in aggregate per calendar year2 using funds sourced from:
    • Conversion of RM;
    • TFCA; and
    • Swapping of a RM-denominated financial asset in Malaysia for a financial asset outside Malaysia.
  • Any amount for same-party transfers from IFCA. 
Permissible Uses
  • Settlement of domestic trade in goods or services from another resident within the GSC as permitted under FEP Notice 4;
  • Investment in FCY asset (including transfers to own IFCA) up to the permitted aggregated investment limit of RM1 million equivalent per calendar year1 in FEP Notice 3;
  • Any amount for same party transfers into TFCA;
  • All other permissible purposes in the FEP Notices.
  • Any amount for same-party transfers into TFCA or IFCA;
  • All other permissible purposes in the FEP Notices.
   
1 Computed based on an aggregate borrowing in FCY by the RI and a SP and a GP owned by the RI
2 Computed in aggregate based on aggregate borrowing of the RI, SP and GP’s investment in FCY Asset.
2. Trade Foreign Currency Account and Investment Foreign Currency Account maintained by Resident Entity

Trade Foreign Currency Account and Investment Foreign Currency Account maintained by Resident Entity

  Trade Foreign Currency Account (TFCA) Investment Foreign Currency Account (IFCA)
Permissible
Sources
  • Proceeds of Export of Goods (PEG);
  • Settlement of domestic trade in goods or services from another resident within the Global Supply Chain (GSC) as permitted under Foreign Exchange Policy (FEP) Notice 4;
  • Any amount for same party transfers from TFCA or IFCA;
  • Other foreign currency (FCY) funds arising from transaction permitted under the FEP Notices.
  • Any FCY funds, other than:
    • PEG; and
    • Settlement of domestic trade in goods or services from another resident within the GSC as permitted under FEP Notice 4.
  • Up to RM50 million equivalent in aggregate per calendar year2 using funds sourced from:
    • Conversion of Ringgit (RM);
    • TFCA;
    • FCY borrowing obtained from a Licensed Onshore Bank for purposes other than Direct Investment Abroad; and
    • Swapping of a RM-denominated financial asset in Malaysia for a financial asset outside Malaysia.
  • Any amount for same-party transfers from IFCA.
Permissible Uses
  • Settlement of domestic trade in goods or services from another resident within the GSC as permitted under FEP Notice 4;
  • Investment in FCY asset (including transfers to own IFCA) up to the permitted aggregated investment limit of RM50 million equivalent per calendar year2 in FEP Notice 3;
  • Any amount for same-party transfers into TFCA;
  • All other permissible purposes in the FEP Notices.
  • Any amount for same-party transfers into TFCA or IFCA;
  • All other permissible purposes in the FEP Notices.
   
1 Computed based on an aggregate borrowing in FCY by the RE and other RE with Parent-subsidiary Relationship
2

Computed in aggregate based on the RE and other RE with Parent-Subsidiary Relationship’s investment in FCY Asset

 

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What documents and/or information that is required to be provided in order to complete a transaction under the Foreign Exchange Policy?

The following table provides a guide on the type of documentary evidence that can be provided to the Bank in order to support the underlying purpose of the transaction performed under the Foreign Exchange Policy purview:

No. Nature of Transaction Type of Information/Document Required
1. Between immediate family Marriage certificate, birth certificate, identity cards, passports
2. Education overseas

For sponsoring entity
Letter of award/scholarship/sponsorship, letter of offer by overseas school/college/university for sponsored student, invoice for tuition/accommodation/other fees

For individual
Letter of offer by overseas school/college/university for student, valid student card/pass/ID, invoice for tuition/accommodation/ other fees, letter indicating estimated fees and/or living expenses for an academic year
3. Employment overseas Letter of offer from employer, letter from employer confirming employee identity and status of employment, work permit, payslip
4. Loan Letter of offer, loan agreement, written declaration from the lender or borrower
5. Loan repayment Letter of offer, loan agreement, loan repayment schedule, promissory note
6. Goods and services Invoice, bill of lading, purchase order, delivery order, supply contract, service/tenancy/rental agreement, payment advice
7. Export offsetting/writing-off arrangement Import invoices, Contract Agreement, Dividend declaration
8. Delay in repatriation of proceeds from export of goods Export invoices, Bill of Lading, Purchase order, Delivery order, Supply contract, payment advice, Customs K2 Form, correspondence with Non-resident entity on the reason for delay
9. Ringgit asset, including any income and profit due Sale and purchase agreement, receipt for purchase or sale, tenancy/rental agreement, dividend payment notice
10. Miscellaneous Expense

Holiday expenses abroad
Flight ticket, invoice on accommodation/travel related arrangement

Medical expenses abroad
Medical bill from overseas hospital/medical centre

Advance or reimbursement for purchase of goods and services abroad
Invoices/receipt on purchase of goods and services
11. Any transaction not permitted under the FEP The relevant supporting documents and Bank Negara Malaysia’s approval letter

Note: The nature of transaction and type of documents listed above are non-exhaustive

Dealings with Specified Person and in Restricted Currency

Direction on Dealings with Specified Person and in Restricted Currency

  • No person (Resident and Non-Resident) in Malaysia shall undertake or engage in any dealing or transaction with a Specified Person or in a Restricted Currency.
  • Such dealings include any forms of dealing not limited to account opening and inward/outward remittances payment transaction.

 

Specified Person State of Israel or its governmental organization, authority or agency, or a natural person who is a citizen or permanent resident of the State of Israel
Restricted Currency

Israel currency note or coin that is legal tender in the State of Israel

 

When is Bank Negara Malaysia’s prior approval required?

Bank Negara Malaysia (BNM)’s prior approval is required to be obtained if the transaction:

  1. does not meet the permissible purpose or uses/sources of funds;
  2. will exceed/has exceeded the permissible limit; or
  3. involves any dealing or transaction with the State of Israel or its governmental organization, authority or agency, or a natural person who is a citizen or permanent resident of the State of Israel or its currency

Any application for approval is to be submitted via BNM’s Foreign Exchange Policy submission system at https://fep.bnm.gov.my/fep-pub/login.

 

What is the channel for enquiries related to Foreign Exchange Policy Notices at Bank Negara Malaysia?

Any enquiries related to the Foreign Exchange Policy (FEP) may be directed to Bank Negara Malaysia by completing and submitting an online Enquiry Form via their FEP Public Portal i.e.

https://fep.bnm.gov.my/fep-pub/online-enquiry-form

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IMPORTANT

This document only covers the commonly applied aspects of the Foreign Exchange Policy performed in banking transactions at Public Bank and Public Islamic Bank (collectively referred hereinafter as ‘The Bank’)
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