FOREIGN EXCHANGE POLICY (FEP)

Dear Valued Customers,

Pursuant to the FEP Notices issued by Bank Negara Malaysia (BNM),

(A) Residents

Foreign Currency (FC) Borrowing (Notice 2)

A resident individual, sole proprietor or general partnership may obtain up to a limit of RM10 million equivalent in aggregate (computed based on an aggregate of Borrowing in FC by the resident individual and a sole proprietor and a general partnership owned by the resident individual) from  Licensed Onshore Banks (LOB) and non-residents other than Immediate Family Members.

A resident entity is free to borrow any amount in FC from LOB, resident or non-resident entities within its Group of entities, resident or non-resident Direct Shareholders, or another resident through issuance of FC debt securities.

A resident entity may borrow in FC up to a prudential limit of RM100 million equivalent in aggregate (computed based on an aggregate Borrowing in FC by the resident entity and other resident entity with Parent-Subsidiary Relationship) from non-resident financial institutions and other unrelated non-residents, including through issuance of securities or Islamic securities denominated in FC.

Ringgit Borrowing (Notice 2)

Resident individual is free to borrow:
a) any amount of Ringgit from non-resident Immediate Family Member; and
b) up to RM1 million in aggregate (computed based on an aggregate of Borrowing in Ringgit by the resident individual and a sole proprietor and a general partnership owned by the resident individual) from other non-resident, other than a non-resident Financial Institution, for use in Malaysia.

Resident entity is free to borrow:
a) any amount of Ringgit to finance Real Sector Activities in Malaysia from either non-resident entity within its Group or non-resident Direct Shareholder;
b) up to RM1 million in aggregate (computed based on an aggregate Borrowing in Ringgit by the resident entity and other resident entity with Parent-Subsidiary Relationship) from any other non-resident, other than a non-resident Financial Institution, for use in Malaysia; and
c) any amount through issuance of tradable securities or redeemable preference shares denominated in Ringgit to non-resident for use in Malaysia.

Investing in Foreign Currency Assets (Notice 3)

A resident individual, sole proprietorship or general partnership with Domestic Ringgit Borrowing is allowed to invest in Foreign Currency Asset* up to:

1. any amount using FC funds sourced from:
   1. outside Malaysia except proceeds of Export of Goods; or
   2. an approved Borrowing in FC in accordance with Part A of Notice 2;
2. any amount where the investment is in real estate (for the resident individual’s own accommodation or the resident individual’s Immediate Family Member’s accommodation only) outside Malaysia for the purpose of education, employment or migration; or
3. RM1 million equivalent (computed in aggregate based on the resident individual, sole proprietorship and general partnership’s investment in FC Asset) per calendar year using funds sourced from the aggregate of:
1. Conversion of Ringgit into FC; 
2. Trade Foreign Currency Account (FCA); and 
3. Swapping of a Ringgit-denominated financial asset in Malaysia for a financial asset in Labuan Entity or outside Malaysia.

Note - For purposes of foreign currency investment for the joint-account, a resident individual without domestic ringgit borrowing who has a joint account with another resident individual who has domestic ringgit borrowing is deemed to have domestic ringgit borrowing and subjected to prudential limit of RM 2million.

A resident entity with Domestic Ringgit Borrowing is allowed to invest in FC Asset up to:

1. Any amount using FC funds sourced from:
   1. outside Malaysia except proceeds of Export of Goods; or
   2. approved Borrowing in FC in accordance with Part B of Notice 2; 
2. Any amount using FC funds sourced from a Borrowing in FC from a LOB for Direct Investment Abroad; or 
3. RM50 million equivalent (computed in aggregate based on the resident entity and other resident entity with Parent-Subsidiary Relationship’s investment in FC Asset) per calendar year using funds sourced from the aggregate of:
   1. conversion of Ringgit into FC; 
   2. Trade FCA;
   3. a Borrowing in FC from a LOB for purposes other than Direct Investment Abroad; and
   4. swapping of a Ringgit-denominated financial asset in Malaysia for a financial asset in Labuan Entity or outside Malaysia.

Payment and Receipt in Foreign Currency (Notice 4)

A resident is allowed to make or receive payment in FC to or from another resident for the following:

1. any purpose between Immediate Family Members;
2. education, employment or migration outside Malaysia;
3. a transaction between the resident and a LOB, a licensed international takaful operator, or an international currency business unit of a licensed takaful operator, in the conduct of the latter’s business involving FC;
4. settlement of:
   1. a FC-denominated derivative, excluding exchange rate derivatives, transacted on a Specified Exchange under the Capital Market and Services Act 2007 through a resident futures broker;
   2. a commodity murabahah transaction undertaken through a commodity trading service provider;
   3. a miscellaneous expense (a current account transaction that is of reasonable amount and infrequent in nature, such as holiday expenses abroad, medical expenses abroad, advance or reimbursement for purchase of goods and services abroad) incurred outside Malaysia between a resident individual residing in Malaysia and a resident individual residing outside Malaysia;
   4. a domestic trade in goods or services between a resident exporter and a resident entity involved in Global Supply Chain operations in Malaysia, provided that the payment:
      1. Is sourced from Trade FCA of the resident payor or proceeds from a FC trade financing facility obtained by the resident payor in accordance with Part B of Notice 2;
      2. Shall not be sourced from conversion of Ringgit into FC by the resident payor; and
      3. Is credited into Trade FCA of the resident payee.

Export of Goods (Notice 7)

A resident exporter of goods can receive proceeds from its export of goods in Ringgit or FC. The exporter shall repatriate the export proceeds to Malaysia in full value within 6 months from the date of shipment. Repatriation up to 24 months is only allowed for reasons beyond the exporter's control and other permitted reasons (Appendix C of Notice 7).

An exporter can undertake offsetting, netting-off and writing-off arrangement of export proceeds subject to permitted reasons only (Appendix A and Appendix B of Notice 7).

(B) Non-Residents

Borrowing in Ringgit (Notice 2)

A non-resident other than financial institution is free to borrow in Ringgit:

1. any amount from Immediate Family Members for any purpose;
2. up to attained cash surrender value of any life insurance policy or family takaful certificate purchased from licensed insurer or a licensed takaful operator;
3. any amount from employer in Malaysia under the employment terms and conditions for use in Malaysia;
4. any amount from any resident (including a LOB) to finance or refinance Real Sector Activities in Malaysia; or
5. any amount of margin financing from resident stock-broking corporation, or LOB with stockbroking license, to purchase securities or financial instruments traded on Bursa Malaysia.

A non-resident custodian bank, stock broking corporation, trust bank or international central securities depository acting on behalf of non-resident investor or a non-resident investor purchasing shares or Ringgit instrument traded on Bursa Malaysia or RENTAS for its own account is allowed to obtain overdraft facilities (maximum tenure of 2 business days) from LOBs solely for the purpose of mitigating settlement failure for Ringgit securities and instruments due to inadvertent delay of payment by the non-resident.

Opening and Maintaining of Ringgit Account (Notice 4)

A non-resident is allowed to open and maintain an External Account with a Financial Institution in Malaysia. The verification process is exempted for payment up to RM10,000 per transaction, transfer between external accounts of the same account holder, transaction to/from an exempted external account holder and any amount of cash withdrawal over the counter.

For more information on FEP, kindly read and understand the FEP from BNM’s website at https://www.bnm.gov.my/fep to ensure all activities performed for your accounts maintained with RHB Banking Group comply with FEP at all times.