HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

Malaysia is Southeast Asia’s third-largest economy (after Indonesia and Thailand). The country has a diversified free-market economy and is a leading exporter of electronic equipment, palm oil and natural gas. Exports in September 2017 rose 14.8 per cent year-on-year, the 11th consecutive month of growth. Imports increased by 15.2 per cent. Private consumption has been buoyed by low unemployment (3.4 per cent as of September 2017) and wage increases (wage growth is expected to reach 6.5 per cent in 2017, according to MIDF research). In October 2017, the World Bank revised the country’s 2017 GDP growth forecast upwards to 5.2 per cent, citing a recovery in world trade as a factor. The country’s economic future, as laid out in the 11th Malaysia Plan (2016-20), is focused on increasing productivity through digitalisation and automation; implementing the reforms as outlined by the Plan will be fundamental if Malaysia hopes to achieve its goal of being a high-income country by 2020. Malaysia is one of the highest recipients of FDI in the region – it received FDI inflows of USD9.9 billion in 2016. The majority of FDI flowed from China (investments from China represented nearly 2 per cent of total FDI), according to the Malaysian Investment Development Authority.

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Legal and regulatory

  • Foreign exchange accounts can be held by residents both domestically and abroad. Resident domestic currency (MYR) accounts are freely convertible into foreign currency
  • Non-resident bank accounts are permitted in foreign and domestic currency
  • Companies are selected by the BNM to submit monthly statements. These statements detail receipts from non-resident bank accounts, details of foreign bank accounts held with non-resident financial institutions, and payments to non-resident bank accounts
  • Restrictions are placed on foreign exchange dealings by residents and non-residents

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Taxation

  • Companies are taxed on Malaysian-sourced income. Foreign-source income is not taxable unless a company is conducting business in the banking, insurance, and air transport or shipping orders
  • The standard rate of corporation tax is 24 per cent
  • Malaysia is a signatory to the Multilateral Competent Authority Agreement, under which information will be exchanged between tax administrations, giving a single global picture on some key indicators of economic activity within multinational enterprises
  • It has been proposed that the law allowing for thin capitalisation rules be deleted and replaced with Earning Stripping Rules to be effective from 1 January 2019

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Payment instruments and systems

  • Electronic methods of payment are preferred by retail and corporate users alike. E-money cards are hugely popular; there were approximately 62 million e-money cards in circulation at the end of 2016. MEPS-CASH is an electronic purse built into the national Bankcard debit card, which is distributed by all domestic banks. A number of e-wallet payment services are available
  • Malaysia operates three national payment systems: RENTAS, an RTGS system; eSPICK, for paper-based payments; and the IBG, for low-value electronic payments

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Cash management

  • Notional pooling is permitted although it is not widely offered due to associated reserve requirements for banks
  • Domestic and cross-border cash concentration is permitted
  • A range of collection services are available, including lockbox services

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Electronic banking

  • Internet and mobile banking services are provided by a number of the country’s banks for both corporate and retail purposes. In 2016, 753,000 companies used online banking services, while individual users numbered 22.8 million. There were 8.9 million subscribers to mobile banking services at the end of 2016, a 22.9 per cent increase on the previous year
  • FPX, a multi-bank platform enabling users to make e-commerce payments via credit or debit transfers, has 25 bank participants. JomPAY, a national electronic bill payment platform, has 42 bank participants
  • A number of mobile payment services, such as MyMobile, are available and popular. The central bank has initiated three new mobile money applications: MyBNM, BNM MyLINK and MyTabung

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To read the full report on Malaysia and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.

Sources:

  • Malaysia International Trade and Industry Ministry
  • Malaysian Industrial Development Finance
  • Malaysian External Trade Development Corporation
  • United Nations Conference on Trade and Development

The materials contained on this page were assembled in May 2017 (unless otherwise dated).

 

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