KUALA LUMPUR: Bank Negara Malaysia (BNM) is allowing certain foreign financial institutions issue ringgit bonds and finance local entities, in a bid for Malaysia to attract more international capital into high growth areas.
The central bank today announced a liberalisation of foreign exchange policy (FEP) for multilateral development banks (MDBs) such as the World Bank, and qualified non-resident development financial institutions (DFIs).
The MDBs and qualified non-resident DFIs will now be able to issue ringgit-denominated debt securities for use in Malaysia; and provide ringgit financing to resident entities.
Interested DFIs may submit the application form to be a qualified DFI to the BNM FEP department.
The liberalisation aims to facilitate their investment in key growth areas in Malaysia.
This includes the electrical and electronics (E&E) industry, technology adoption, sustainability and data centres.
BNM said the move will allow both financiers and businesses to structure financing in ringgit for domestic projects while reducing the risk of currency mismatch.
'The liberalisation would better facilitate greater participation from global
investors in key growth areas in Malaysia. This is in line with greater demand and interest by international financial institutions to finance high-value investment projects in Malaysia that we have observed in the recent period,' BNM governor Datuk Seri Abdul Rasheed Ghaffour said in a statement.
BNM said the MDBs and qualified non-resident DFIs can share their technical expertise, particularly in blended finance, that would complement existing domestic players in meeting financing demand to support strategic investments and climate transition efforts in Malaysia.