1. For the purposes of this ECM Notice -
1.1 credit facilities includes credit terms exceeding 12 months extended by a non-resident supplier for capital goods.
1.2 trade financing includes facilities to guarantee payment for the purchase of goods.
2. The Controller hereby gives permission, subject to the conditions in paragraph 6, to a resident to do one or more of the following -
2.1 Obtain credit facilities in foreign currency up to the equivalent of RM5 million in the aggregate from licensed banks, licensed merchant banks and non-residents, provided -
2.1.1 Where the aggregate amount exceeds the equivalent of RM1 million, the resident provides the Controller information on the foreign currency credit facilities as per Appendix I within two weeks of obtaining the credit facilities; and
2.1.2 The resident informs the Controller when the credit facility has been repaid in full within two weeks of the repayment.
2.2 Obtain financial guarantees of any amount -
2.2.1 In foreign currency from licensed banks and licensed merchant banks;
2.2.2 In Ringgit or foreign currency from the Licensed Offshore Banks, provided all payments related to the guarantee are made in foreign currency; or
2.2.3 In Ringgit or foreign currency from non-resident individuals or non-residents which are shareholders, subsidiaries, related or associate companies and are not financial institutions, provided all payments related to the guarantee are made in foreign currency.
2.3 Obtain non-financial guarantees of any amount -
2.3.1 In foreign currency from licensed banks and licensed merchant banks; or
2.3.2 In Ringgit or foreign currency from any non-resident, provided all payments related to the guarantee are made in foreign currency.
2.4 Obtain trade financing of any amount in foreign currency from licensed banks and licensed merchant banks, provided the tenure of the credit is less than 12 months.
2.5 Obtain credit facilities in Ringgit up to an aggregate amount of RM50,000 from any non-resident individual.
3. For purposes of computing the limit equivalent to RM5 million -
3.1 The following credit facilities are excluded -
3.1.1 Guarantees referred to in paragraphs 2.2 and 2.3;
3.1.2 Trade financing referred to in paragraph 2.4; and
3.1.3 Guarantees from non-resident financial institutions to secure credit facilities from non-residents.
3.2 The limit is calculated on a corporate group basis where the borrower is part of a corporate group(holding companies and subsidiaries in Malaysia).
4. The prior permission of the Controller is required for a resident to obtain credit facilities which do not comply with the provisions in paragraph 2.
5. Where the approval of the Controller is required, inter-alia, the following criteria will be considered -
5.1 Whether the credit facility will be used for productive purposes, such as to finance the build-up of productive capacity in activities which generate foreign exchange earnings for Malaysia or save on the future outflow of foreign exchange from Malaysia through the production of import substitution goods.
However, the Controller may exercise discretion in the application of the above criterion, in cases of -
5.1.1 Credit facilities for large infrastructure projects in Malaysia which are unable to source all their funding requirements from domestic sources or projects which serve the broader national interest, including investments abroad approved by the Controller; and
5.1.2 Concessional credit facilities from shareholders.
5.2 Where the purpose is for working capital, credit facilities in foreign currency are kept to a minimum.
5.3 Where the credit facility is obtained through the issuance of convertible bonds, the total amount of bonds issued by a resident shall not result on conversion(assuming that full conversion will be made) in the issue of new shares to the bondholders that will exceed the limit imposed by the Securities Commission.
5.4 Arrangements for all credit facilities exceeding an amount equivalent to RM25 million in each case from non-residents shall, at all levels, be made jointly with a licensed bank, a licensed merchant bank or a Licensed Offshore Bank.
5.5 Where credit facilities, including financial guarantees, are to be obtained from a non-resident financial institution which is not an inter-governmental entity where Malaysia is a member or shareholder, residents are required to accord the right of first refusal to the Licensed Offshore Banks.
5.6 The requirements of paragraphs 5.4 and 5.5 shall not apply to concessional credit facilities obtained from -
5.6.1 Non-resident shareholders, subsidiaries, related or associate entities which are not financial institutions; or
5.6.2 Non-resident individuals.
6. Unless permitted otherwise by the Controller, all credit facilities in foreign currency -
6.1 Must be drawn down in the currency approved; and
6.2 Must be repaid (principal and interest) in the currency approved.
7. An authorised dealer is required to -
7.1 Ensure that the drawdown, repayment of principal and interest payment related to the credit facilities reported in Form R and Form P are in accordance with the permission given by the Controller.
7.2 Advise residents which have obtained credit facilities in Ringgit from non- residents without the prior permission of the Controller, to seek the permission of the Controller for such credit facilities. Such advice should be made in writing and a copy of the letter forwarded to the Controller.
8. Where prior permission of the Controller is required, the resident shall apply to the Controller, submitting information as per Appendix II.
INFORMATION REQUIRED WHERE CREDIT FACILITIES FROM NON-RESIDENTS EXCEED THE EQUIVALENT OF RM1 MILLION UP TO RM5 MILLION
1. Name and nature of business of borrower.
2. Business registration(nombor tempatan)/identity card number of the borrower/s.
3. Residential status of borrower (provide Form 49 and residential status of directors and position held by them).
4. Name and country of lender.
5. Relationship between lender and borrower.
6. Amount(limit) and currency.
7. Purpose of credit facility.
8. Type of facility.
9. Period of facility.
10. Rate of interest and other charge (such as management fee, commitment fee, withholding tax and bearer of Malaysian withholding tax, if applicable).
11. Security for facility.
12. Approval date of credit facility.
13. Repayment schedule.
14. Whether the proceeds of the credit facility would be -
14.1 Sold for Ringgit to an authorised dealer;
14.2 Paid directly to a non-resident; or
14.3 Credited into the borrowerﾕs foreign currency account as permitted in ECM7.