Malaysia, Thailand expand use of local currencies for trade, investments

KUALA LUMPUR, Oct 26 – Bank Negara Malaysia (BNM) and the Bank of Thailand (BOT) today announced the further expansion of the ringgit – baht settlement framework effective Dec 1 this year.

Part of the continuous effort to facilitate wider use of  local currencies for settlement of trade and direct investment between the two countries, the latest framework includes an expansion of eligible users to include Malaysians and Thais who reside in either country.

It also includes additional foreign exchange policy flexibilities such as simplified documentation requirements, Bank Negara said in a statement today. 

“This expansion  would provide greater accessibility to ringgit- or baht-denominated financial  services for individuals as well as businesses in both countries. The framework  also now allows Thai individuals residing in Malaysia to avail themselves to  these services. The expansion will boost future economic activities between our  two countries,” said Datuk Abdul Rasheed Ghaffour, Deputy Governor of BNM. 

Deputy Governor of BOT, Mathee Supapongse said the move will benefit people and businesses in Malaysia and Thailand.

“It will further facilitate cross-border financial  transactions including through the recently launched cross-border QR payment  linkage between our two countries. We believe this will pave way for wider use  of local currencies and greater financial integration within the ASEAN region.” 

The Local Currency Settlement Framework between Malaysia and Thailand was last expanded in January 2018, after its initial launch in March 2016 in  accordance with the Memorandum of Understanding signed between BNM and  the BOT on Aug 27, 2015. 

Following the latest expansion, BNM and the BOT have also appointed additional qualified commercial banks in both countries to participate in and  further support the expanded ringgit-baht settlement framework. In general, the  appointed banks are resilient and healthy, experienced in facilitating settlement  of trade and direct investment between the two countries and have established strong business relationships with banks in the counterparty country. 

The Malaysian banks involved are HSBC Bank Malaysia Berhad, Standard Chartered Bank Malaysia Berhad, Bangkok Bank Berhad, CIMB Bank Berhad – Malayan Banking Berhad, MUFG Bank (Malaysia) Berhad – Public Bank Berhad,- RHB Bank Berhad and United Overseas Bank (Malaysia) Berhad.

— WE