Pamela Kung July 5 2022 Revised foreign exchange policy notices Shearn Delamore & Co | Banking & Financial Services - Malaysia Pamela Kung Banking & Financial Services Notice 1: Dealings in Currency, Gold and other Precious MetalsNotice 2: Borrowing, Lending and GuaranteeNotice 4: Payment and ReceiptNotice 7: Export of GoodsOn 1 June 2022, Bank Negara Malaysia (BNM) issued revised foreign exchange policy notices (FEP notices), which came into effect on the same date. The FEP notices that had been in effect since 15 April 2021 have been revoked and superseded. This article discusses the key amendments that BNM introduced under the new FEP notices.Notice 1: Dealings in Currency, Gold and Other Precious MetalsA non-resident is allowed to buy or sell foreign currency against the ringgit on spot basis and forward basis with an appointed overseas office (AOO) of the licensed onshore bank's banking group for the purpose as set out in paragraph 6(1)(b) of Notice 1. Previously, a non-resident could only buy and sell foreign currency against ringgit on forward basis with AOO for:the settlement of international trade of goods or services with a resident on a firm commitment or anticipatory basis; orother purposes of a firm commitment basis.Notice 2: Borrowing, Lending and GuaranteeNotice 2 contains the following three key elements:A non-bank resident guarantor is permitted to provide financial guarantee in any amount to secure a borrowing obtained by a non-resident from a non-resident financial institution.A non-bank resident guarantor cannot give financial guarantee to secure foreign currency borrowing obtained by a non-resident borrower from a non-resident financial institution if the underlying borrowing is or will be utilised by the resident guarantor.A non-bank resident guarantor cannot give financial guarantee to secure foreign currency borrowing obtained by a non-resident borrower where the resident guarantor has entered a formal or informal arrangement to make a repayment of the foreign currency borrowing other than under a "call-upon"(1) by the lender in the event of a default.(2)Notice 4: Payment and ReceiptNotice 4 contains the following three key elements:A resident is free to pay or receive foreign currency to or from another resident for the settlement of a miscellaneous expense (this must be a current account transaction of a reasonable amount of an infrequent nature, including holiday or medical expenses incurred abroad and payments for purchase of goods and services abroad) incurred outside Malaysia between a resident individual residing in Malaysia and a resident individual residing outside Malaysia.A resident individual is allowed to open a foreign currency account jointly with a non-resident individual. Previously, this permission was limited to cases where the non-resident individual was an immediate family member.A non-resident is allowed to open a foreign currency account jointly with a resident individual. Previously, this permission was limited to cases where the resident individual was an immediate family member.Notice 7: Export of GoodsNotice 7 contains the following two key elements:A resident exporter with annual gross export of goods that exceeds 250 million ringgit is now only required to submit a report as and when BNM requires. Previously, the requirement was to submit a quarterly report to BNM.A resident exporter under paragraph 5 of Notice 7 that does not receive any proceeds from the export of goods (as referred to under paragraph 1(c) of Part A) within 24 months from the date of shipment shall notify BNM of the outstanding export of goods proceeds within 21 days after the end of each calendar year.For further information on this topic please contact Pamela Kung at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email ([email protected]). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.Endnotes(1) A "call-upon" of financial guarantee must be initiated by the lender in writing to the resident guarantor. The resident guarantor may not initiate a "call-upon" of a financial guarantee.(2) The event of default prior to a "call-upon" of a financial guarantee by the lender must be treated by the lender in accordance with the requirements under the International Financial Reporting Standards or any equivalent, accounting standards adopted by the lender.