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:
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- 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:
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- 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.
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1
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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
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2
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(a)
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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
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(b)
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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
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(c)
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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:
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(i)
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contributes capital of at least 10% of the cost of the project;
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(ii)
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is entitled to at least 10% of profits from the unincorporated Entity or project; or
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(iii)
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has management control of the unincorporated Entity or project
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3
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computed in aggregate based on the RE and other RE with parent-subsidiary relationship’s investment in FCY Asset
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(a)
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the RE is deemed to have DRB when another RE with parent-subsidiary relationship has a DRB; and
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(b)
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the following shall not be considered as DRB:
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(i)
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a borrowing obtained by a RE from another RE within its group of entities with Parent-Subsidiary relationship;
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(ii)
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a borrowing obtained from its Direct Shareholder; or
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(iii)
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· 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.
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