KUALA LUMPUR – Bank Negara Malaysia (BNM) today announced the removal of the export conversion rule, along with other liberalisation measures, starting April 15 as part of moves to enhance the country’s position as a foreign direct investment (FDI) destination and global supply chain hub.
Axing the export conversion rule will enable exporters to manage the conversion of export proceeds according to their foreign currency cash-flow needs.
Also, exporters will be allowed to settle domestic trade in foreign currency with other residents operating in the global supply chain.
“This move is expected to facilitate a natural hedge for exporters and their business partners along the global supply chain to better manage foreign exchange risks,” BNM Governor Datuk Nor Shamsiah Mohd Yunus told an editorial briefing yesterday.
She said exporters are also allowed to net-off export proceeds against permitted currency obligations to enhance business efficiency and cash-flow management.
“Exporters can extend the period of export repatriation beyond six months under exceptional circumstances. It exempts exporters from seeking the bank’s approval to extend export proceeds beyond six months for reasons beyond their control.
“This may include situations where the buyers are in financial difficulty.”
Lastly, corporates are free to undertake commodity derivatives hedging directly with non-resident counterparties, which broadens the avenues and options for corporates to hedge their commodity price risks.
“These measures are expected to lift investor sentiment and enhance Malaysia’s position as an FDI destination,” said Nor Shamsiah. – Bernama, March 31, 2021
