ACCCIM: Bank Negara forex rules add to cost of doing business

KUALA LUMPUR: The Chinese business community, which is slightly more optimistic on the economic outlook for 2017 and 2018, has raised concerns over the rising costs of doing business due to Bank Negara’s new forex rules, according to the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).
Niney-one per cent of its members said the new forex initiatives by Bank Negara are expected to add to the cost of doing business, in the form of currency conversion transactions, hedging services and administrative expenses.
Bank Negara has compelled businesses to convert 75% of their export proceeds into ringgit, in order to support the local currency. There are, however, exemptions for cases where a bigger buffer is required.
Despite that, ACCCIM president Datuk Ter Leong Yap said, its members have been and will continue to request for some form of flexibility.
Forty-four per cent of the respondents fear that the ringgit will depreciate further against other major currencies.
A total of 359 respondents across different sectors participated in the survey.
National Council member and member of Economic Survey Unit of Commerce Committee Peck Boon Soon said the more optimistic outlook is underpinned by pick-up in sales and production, which eventually will lead to increased investments by businesses.
He said the recovery in exports is positive for the economic outlook on the back of rising demand from the US, Europe and China.
“This round we’re seeing broad-based recovery in exports, not only in Malaysia, but also in Singapore, Thailand, Indonesia, the Philippines and some North Asian countries,” Peck said at a media briefing on the results of ACCCIM’s survey on the economic situation of Malaysia for the second half of 2016.
Only 56% of respondents opined that the economy has deteriorated in the second half of 2016, compared with 64% in the first half of 2016.
Commenting on capital controls imposed by the Chinese government, Socio-Economic Research Centre executive director Lee Heng Guie said he does not foresee any significant impact on Malaysia as the restrictions are mainly on the acquisitions of non-core assets by the Chinese firms.
Ter also noted that the state-owned enterprises in China are still very active in overseas investments.