Bank Negara opens Beijing office to help increase trade and investment

20 Nov 2013

BEIJING: Bank Negara opened its representative office in Beijing yesterday, its first in Asia and third one overseas after London and New York, in a bid to increase bilateral trade and investment between Malaysia and China.

The office will serve as an important liaison point with China’s regulators and market players and facilitate the conduct of market research on China’s economic and financial developments.

In a ceremony attended by International Trade and Industry Minister Datuk Seri Mustapa Mohamed, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said the central bank’s presence in China’s capital reflected the significant and longstanding financial and economic ties between both countries. In her speech, Zeti also announced three measures to further promote bilateral trade and investment.

A Renminbi Liquidity Facility has been introduced to licensed Malaysian onshore banks to enhance the liquidity of the Chinese currency in the domestic market by providing an additional avenue for banks to obtain or invest in renminbi (or yuan) with Bank Negara.

Secondly, banks in China will be allowed to provide ringgit trade financing in China.

“Thirdly, Bank Negara and the People’s Bank of China (central bank) have signed a memorandum of understanding to establish a cross-border collateral arrangement (CBCA) that would enable financial institutions access to the central bank’s liquidity facilities.

“This is in recognition of the growing significance of regionally-active financial institutions and the increased financial inter-linkages between our two economies as well as in mutual recognition and acceptance of each other’s securities,” said Zeti.

China is the third country Bank Negara has signed a CBCA with, after the Monetary Authority of Singapore in 2011 and the Bank of Thailand in 2012.

At the moment, two of China’s banks, namely Bank of China Ltd and Industrial & Commercial Bank of China Ltd, have established their presence in Malaysia, while Malaysia’s Malayan Banking Bhd and CIMB Group Holdings Bhd are operating in China.

Speaking to reporters later, Zeti said the economic reforms unveiled by the Chinese leaders recently would allow China to have greater connectivity with the region and the rest of the world.

“This is a positive development,” she said.

Mustapa said he looked forward to greater Chinese investment in Malaysia as there was currently an imbalance in bilateral investment cross-flow.

“Malaysia has invested US$6bil (RM19.11bil) in China’s non-financial sector up to 2011, while China has invested US$800mil,” he said.

SOURCE: The Star,  19 November 2013.