Friday, June 11, 2010

They are traders, not traitors!

It is an irony and certainly an injustice that those who publicly defend their vernacular educational system or fight for the legitimate right of their own racial groups are accused of not being patriotic.
And those who advocate open liberal policies and opposed protectionism are said to be treasonous
Now, even traders who made a principled stand against the implementation of what they perceived as an unfair and unjust ruling are labelled as traitors and betrayers of the nation.
However, those who have leaked national secrets, collaborated with foreign countries to undermine the country's reputation, sold their MyKads to foreigners or stole a RMAF fighter jet engines and sold it to foreigners, etc are not considered anti-national traitorous elements.
In Malaysia, the definition for “betrayer” or “unpatriotic” apparently depends on who is being referred to.
And the same goes for “national hero”, too.
Take for example, the recent Thomas Cup tournament. When the first single and first double of the Malaysian team earned two points for the country, they were not considered “heroes”. But, when the third single earned the third point that permitted the team to play in the semi-final, I heard a television host shouting excitingly: "Hero! He is the true hero of our country!"
Many people were worried about Malaysian volunteers, who were on board a humanitarian aid ship attacked by Israel while on its way to blockaded Gaza. The incidents were being extensively reported by the local media.
The hostages were finally released and, when they reurned home, they were personally greeted by the country's leaders. Also, they were called the "true heroes".
The country had spent a great amount of money to send our "astronaut" into space but eventually, he terminated the contract with the government and did not fulfil his obligation. But he was also called a national hero.
The popular definitions of national betrayer and national hero are actually quite reckless and unreasonable.
The traders, who decided not to sell sugar to safeguard the industry's interests and dignity after failing to ask for the cancellation of the unfavourable measures, were inexplicably labelled as "national betrayers".
It is simply mind-boggling to understand how an ordinary co-operative action by the small-time traders to stop selling sugar could be considered as “treason”!
The local groceries are hardly able to compete with powerful mega hypermarkets. The rulings requiring the traders to have a special licence to sell price-controlled items, and to limit the amount of sugar they are allowed to stock have caused them much inconvenience.
The government is only scratching the surface of the problem when it attempts to cut sugar subsidy indirectly by controlling the sales of it. But no matter how hard the traders try to explain to the government, their legitimate plea was unceremoniously dismissed.
Even though the government has claimed that it is practising the principles of upholding business interests and cultivating people friendliness, the discourteous way the Domestic Trade and Consumer Affairs Ministry rejected the traders’ request to review the matter is shocking, to say the least.
Moreover, the ministry’s decision to issue licences to petrol stations to trade in the price-controlled items is surely contemptuous of the significant economic role that the traders and groceries have been playing in the country for a long, long time.
The small-time traders and grocers could not and should not compromise on this matter. The only way for them to defend their dignity is to stand firm together and stop selling sugar, until the status quo is restored.
This is not treasonous or unpatriotic! The traders are simply exercising their right to have a level playing field, with just rules and a fair deal to make an honest living.

10MP injecting cash for KL 'ghost towns'

By Syed Jaymal Zahiid KUALA LUMPUR

The DAP's chief economist Tony Pua said the plan to develop the Kuala Lumpur financial district as well as other grand construction projects within the area as outlined in the 10th Malaysia Plan (10MP) is a waste of taxpayers' money.

Pua, the Petaling Jaya Utara MP, said this in support of a report by OSK Research which was published in an online news portal that said such investment was likely to create a commercial property glut.

The report said that the redevelopment of Kampung Baru could destabilise the property market around the KLCC area which is already suffering from a high vacancy rate of 17%.

“The temptation to rush into developments without any regard to the supply-demand dynamics can be very hard to resist in economic boom times.

"It will destabilise the entire market and can be calamitous to all market players in the long run,” said the report.

It stated further that the area would suffer from an overabundance of empty office spaces amid an influx of existing but yet-to-come spaces in the coming few years.

"It is very possible that the area would suffer from a property glut... this is typical of the economic framework where the 10MP is relying on the construction factor to push the economy," Pua told FMT.

The "construction factor", meaning injecting money into the economy through infrastructure developments, cannot generate income on its own, said Pua.

"It must coincide with other initiatives or you will end up creating more office spaces but having no one picking them up," he added.

Crony economics ala Mahathir

The redevelopment of Kampung Baru (right), the KL Financial District and the Sungai Besi Airport were unveiled under the 10MP by Prime Minister Najib Tun Razak in Parliament yesterday.

Pua said the projects reflected Barisan Nasional's bankrupt economic ideas where economic stimulation heavily depended on pump-priming activities.

"This is like what happened under the administration of (then premier) Dr Mahathir Mohamad. It is a simple way of fishing out projects to crony companies."

The first-term MP said much of the promised transparency under Najib's New Economic Model was invalidated by the lack of government assurance that all mega-projects in the plan will be sourced via an open tender process.

Pua argued that the cash should be invested in improving the deplorable education system and industries that ensures healthy competition and economic progress.

As much as RM230 billion will be injected into privatisation-driven activities under the new five-year plan, Najib's first as prime minister.

The sixth premier is facing a stiff test to revive the ailing economy amid opposition to his mass liberalisation efforts by internal and external political foes.

Saturday, June 5, 2010

Malaysia Forex Regulations


Malaysia in recent years has relaxed or abolished several foreign-exchange
policies in line with the Capital Markets Masterplan launched in February
2001. Of the exchange controls introduced by the government in September 1998,
the ban on offshore trading of the ringgit was the last substantial measure
remaining in April 2010. Many analysts had expected this ban to be lifted in
2007 or in 2008, but Bank Negara Malaysia (BNM), the central bank, said on
several occasions in the past few years that the ban will end only when
Malaysia’s foreign-exchange markets are “very developed” and more “robust and
vibrant”. Although BNM has noted that the instabilities the global financial
system during 2008–09 did not augur well for further liberalisation in
foreign-exchange rules, it also has stated in early 2010 that it does not plan
to re-introduce capital controls. The 1998 controls, established following the
Asian financial crisis, never affected the operations of long-term investors
in manufacturing and related services.

Offshore entities in the Labuan International Offshore Business and Financial
Centre are considered non-residents for foreign-exchange administration
purposes. As a non-resident, the offshore entity may undertake, among other
actions, the following: obtain any amount of foreign-currency credit
facilities; invest any amount in foreign-currency assets; enter
foreign-exchange contracts involving foreign currencies with licensed onshore
banks, licensed offshore banks in Labuan and any overseas counterparty; and
buy or sell foreign currency (other than the currency of Israel) against
ringgit with licensed onshore banks for permitted purposes.

A company with Multimedia Super Corridor Malaysia status is exempt from
foreign-exchange administration requirements for transactions undertaken on
its own account. An operational headquarters (OHQ), regional distribution
centre or international procurement centre is subject to policies applicable
to a resident. In addition, an OHQ is allowed to obtain any amount of
foreign-currency credit facilities from licensed onshore banks in Malaysia,
and from any non-resident, as long as the OHQ does not on-lend to, or raise
the funds on behalf of, any resident; invest any amount in foreign-currency
assets to be funded with foreign-currency funds or borrowing; and use proceeds
of any amount from the issuance of ordinary shares through an initial public
offering on the Main Board of Bursa Malaysia for investment in
foreign-currency assets.

Resident corporations approved under the Iskandar Malaysia framework and
biotechnology companies approved under the National Biotechnology Policy (for
both, see National incentives) are allowed to do the following: pay and
receive payments in foreign currency, other than the currency of Israel, with
residents; borrow any amount of foreign currency from licensed onshore banks
and non-residents; invest any amount in foreign-currency assets onshore and
offshore; and retain export proceeds offshore.

Travellers may import or export up to M$1,000 in ringgit per person, and any
amount of foreign exchange, subject to declaration rules.

In recent years, BNM has simplified and streamlined its foreign-exchange
registration requirements. Forms for the few remaining such requirements can
be completed online at

The Anti-Money-Laundering Act 2001, Malaysia’s first legislation to combat the
movement of illegal funds, came into force on January 15th 2002.

No controls exist for repatriating invested capital, including reinvested
profits, other than nominal transfer approval by Bank Negara Malaysia, the
central bank. Transfers may be in any currency except for the ringgit and the
New Israeli shekel.

These corporate transactions do not require permission from Bank Negara
Malaysia, the central bank. Commercial banks may approve and handle overseas
payments of any amount.

For portfolio investments, exchange controls allow the repatriation of funds
by non-residents arising from the receipt of dividends, interest, rental,
fees, commissions or profits.

Since April 1st 2007 resident corporations (on a per-corporate-group basis)
have been able to obtain foreign-currency credit facilities up to the
aggregate of the equivalent of M$100m (up from M$50m). The company may use the
foreign-currency borrowing to finance overseas investment up to the equivalent
of M$10m. The aggregate limit for foreign-currency borrowing by individuals
was doubled from the equivalent of M$5m to the equivalent of M$10m; the funds
may be used for any purpose, including financing overseas investments.

There is no restriction on a resident to repay or prepay permitted credit
facilities. Any prepayment exceeding the equivalent of US$10m has to be
registered with Bank Negara Malaysia (BNM; the central bank) prior to the

Residents may obtain any amount of foreign-currency trade financing with an
original tenor of 12 months or less from Malaysian banks. Residents may also
receive any amount of financial guarantees from Malaysian banks or licensed
offshore banks in the Labuan International Offshore Business and Financial
Centre, and from non-residents that are not financial institutions and are
shareholders, subsidiaries, or related or associated companies.

BNM stipulates that any transfer of funds from Malaysia to or from
foreign-currency accounts maintained with a licensed offshore or overseas bank
must be in the foreign currency in which the account is maintained, not in

Residents must seek prior permission from the central bank to obtain any
amount of credit facility in ringgit from non-residents, including from
non-resident shareholders or directors. Residents can obtain foreign-currency
credit facilities from non-residents up to an aggregate of M$10m (equivalent)
per individual or M$100m (equivalent) on a corporate-group basis. Since
April 1st 2007 residents may use foreign currency to purchase financial
products denominated in foreign currencies but offered onshore.

Credit facilities to non-residents. Since April 1st 2004 all ringgit lending
by banking institutions to non-residents (excluding stockbroking companies,
custodian banks and correspondent banks) has had an aggregate limit of M$10m.
The non-resident may use the ringgit credit facilities for any purpose in
Malaysia, excluding financing or refinancing the purchase or construction of
immovable properties. Residents (banks and non-banks) may extend ringgit
credit facilities in aggregate up to three property loans to non-residents to
finance or refinance the purchase or construction of immovable properties in
Malaysia, excluding only the purchase of land. (Before April 1st 2004 only
financial institutions and employers were allowed to extend property loans
to non-residents.)

Since April 1st 2007 onshore licensed banks can extend an overnight overdraft
facility of any amount to non-resident stockbroking firms or custodian banks
for settling or purchasing shares listed on Bursa Malaysia (the previous limit
was M$200m). Resident stockbroking companies may extend margin-financing
facilities to non-resident clients for buying shares listed on Bursa Malaysia.
Non-bank residents may extend credit facilities in ringgit to a non-resident
up to an aggregate of M$10,000.

Licensed onshore banks may extend credit facilities in foreign currency to
non-residents for any purpose. Since April 1st 2007 non-residents can obtain
any number of residential or commercial property loans (previously, only

Hedging. Residents may enter hedging arrangements with licensed onshore banks
for payments and receipts for import and export of goods and services either
based on a company’s underlying commitment or on an anticipatory basis if the
amount entered does not exceed the total amount paid or received in the
preceding 12 months. Residents may hedge capital-account transactions with
licensed onshore banks based on committed capital inflows or outflows and are
also allowed to hedge their existing holdings of foreign-currency assets.
Non-residents are allowed to hedge any inflow or outflow of funds for firmly
committed transactions.

BNM stipulates that the maturity date of the forward foreign-exchange contract
should be the expected date of receipt or payment of the underlying
transaction. If the foreign-currency receivables are received earlier, the
resident can sell the foreign-currency receipts for ringgit on a spot basis or
temporarily retain the receipts in an onshore foreign-currency account,
pending maturity of the forward foreign-exchange contract. For forward sale of
export proceeds, the maturity date of the forward foreign-exchange contract
should not be later than six months after the intended date of export. For a
forward foreign-exchange contract involving two foreign currencies, the use or
retention of the foreign currency purchased by the resident must be for
permitted purposes.

A non-resident is free to enter into a foreign-exchange contract on a spot or
forward basis with a licensed onshore bank to buy ringgit to make payment to a
resident or to sell ringgit funds arising from a committed transaction in
Malaysia. The maturity date of the foreign-exchange contracts should be the
expected date of payment or receipt of the underlying committed transactions,
and the total amount of the foreign-exchange contracts should not exceed the
expected sum of payments/receipts of the underlying committed transactions.

Swaps. A resident with a firm underlying commitment may enter into
interest-rate swaps with licensed onshore banks and licensed offshore banks in

The procedure for remitting royalties and technical-assistance fees is similar
to that for repatriating capital, profits, dividends and interest. Such
transfers are freely permitted, and licensees have reported no problems as
long as the original arrangement had received the required official approval.

Withholding tax on royalties and technical fees is 10%, though it may be lower
under bilateral double-taxation treaties. Tax deductions are available for
expenditures incurred in acquiring patents, designs, models, plans, trademarks
or brands and other similar rights from foreigners.

Export proceeds may be received in foreign currencies, except the New Israeli
shekel, or in ringgit from an external account. Payment must be received
within six months of the date of export. Export proceeds can be retained in
foreign-currency accounts with banks in Malaysia or at overseas branches of
Malaysian-owned banks. Since November 28th 2007, a resident corporation with
export earnings has been free to pay another resident corporation in foreign
currency for settlement of goods and services. Residents may enter a forward
foreign-exchange contract with an onshore licensed bank to sell
foreign-currency export proceeds for ringgit if the maturity of the forward
contract is less than six months after the intended date of export.

Bank Negara Malaysia (BNM; the central bank) signed a three-year currency-swap
agreement on February 8th 2009 with its Chinese counterpart, the People’s Bank
of China, amounting to Rmb80bn and M$40bn. The swap permits BNM to sell
renminbi to Malaysian importers who want to buy Chinese goods. Conversely,
Chinese importers can more easily obtain ringgit to finance their imports from
Malaysia. The facility is aimed particularly at importers struggling to obtain
trade finance as a result of the global financial crisis.

The limits on the amount of foreign currency that exporters may maintain
overnight were abolished as from April 1st 2005. Only exporters with annual
gross exports exceeding M$50m need to submit quarterly export reports.

Malaysia does not impose restrictions on import leads and lags, or on export
leads. But payments for exports must be received within six months of the
shipment date.

Investments abroad. Since April 1st 2005 residents without domestic credit
facilities can invest abroad in a foreign currency, funded either from their
own foreign-currency holdings or from conversion of ringgit funds. Since
April 1st 2007 corporations with domestic credit facilities may use their
foreign-currency funds or convert ringgit, up to M$50m per year, for
investment in foreign-currency assets (up from M$10m). To qualify, such
companies must have shareholders funds of at least M$100,000 and must have
been operating for at least one year. Individuals with domestic credit
facilities may invest abroad any amount of their foreign-currency funds or
convert up to M$100,000 per year for such purposes.

Resident unit-trust management companies may invest abroad up to the full
amount of their net asset value (NAV) subscribed by non-residents and up to
50% of their NAV per fund subscribed by residents (up from 30% prior to
April 1st 2007); since October 1st 2007 they may also invest the total amount
of Islamic funds under their management in foreign-currency assets. Resident
insurance companies may invest abroad up to 5% of their margin of solvency.
Takaful (insurance based on Islamic principles) companies may invest abroad up
to 5% of their total assets. Both resident insurance companies and takaful
companies may also invest abroad up to 50% of the NAV of investment-linked
funds that they market (up from 30% prior to April 1st 2007). Fund and asset
managers may invest abroad up to the full amount of their investments by
non-resident clients, and up to 50% of their investments by resident clients
with domestic credit facilities (up from 30% prior to April 1st 2007).

Since April 1st 2007 resident and non-resident corporations listing shares
through initial public offerings on the Main Board of Bursa Malaysia (the
national bourse) may use any amount of the proceeds abroad.

-0- Jun/04/2010 22:16 GMT