Page 24 - AMMI Annual Report 2016

AMMI’S COLLECTIVE FEEDBACK
Subject : Bank Negara Malaysia Foreign Exchange Rulings
Compiled 26 December 2016

Issue No.1 Reten on of 25% export proceeds in Foreign Currency Account
AMMI Collec ve The new measures have made Malaysia a harder place to operate export-oriented
Feedback manufacturing business and more costly with exposure to forex risk, hedging
services and double foreign exchange costs. The medical device industry is part of
the global supply chain, hence natural hedge is the most effec ve way.

AMMI Request Ÿ We strongly request BNM considera on to exempt all AMMI member companies
from this new BNM ruling.
Ÿ Alterna vely, we would like to request reten on of up to 50% export proceeds in
FCA.
Ÿ We also would like BNM to provide re-assurance that re-conversion can be done
at the same spot rate.

Issue No. 2 Payment in Malaysian Ringgit between residents
AMMI Collec ve Currently there are local resident suppliers that our member companies deal with in
Feedback USD as their major material components are affected by movements of USD. All
these are supported with signed supply agreements which are not possible to
change immediately. Due to the vola lity of MYR versus USD, it is always at our
member companies’ disadvantage where suppliers are highly likely to factor that
into the pricing in MYR, resul ng in addi onal costs for our member companies.

AMMI Request We strongly request BNM considera on to allow all sales and payments between
companies opera ng in FTZ, FIZ, LMW and Bonded warehouses to be in foreign
currency to facilitate and support export for Malaysia.

Hedging not exceeding 6 months; Hedging without documentary evidence
Issue No. 3 limited to RM6 million per client, per bank

AMMI Collec ve Based on the analysis of our survey, majority of our member companies’ annual
Feedback export sales and annual payables are in foreign currency with amount exceeding
RM6 million. For longer term contracts, a longer hedging should be possible in
general (not as an excep on) without addi onal approval as there is risk of delay of
projects if approval is required to procced.
AMMI Request We strongly request BNM considera on to allow a longer me-frame for hedging
especially for longer term contracts without any approval.
We also request that hedging limit for companies opera ng in FTZ, FIZ and LMW to be
equal to value of annual sales without the need for further documenta on. Dynamic
hedging should be equal to annual sales.

Issue No. 4 Approval for foreign current assets (FCA) with value more than RM50 million
AMMI Collec ve For foreign currency that is available on our member companies’ FCA, addi onal
Feedback approval should not be required. This would slow down business transac ons and
would require a lot of documenta on and administra ve efforts. If foreign currency
is available in FCA, any limita on of business transac ons is not acceptable.

AMMI Request We strongly request BNM considera on to waive BNM approval requirement on this
issue.
22 AMMI Annual Report 2016