Introduction to MALAYSIA

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3 Introduction to MALAYSIA Malaysia is an upper-middle income, highly open economy with a record of strong economic performance and poverty reduction since independence from Great Britain in Malaysia enjoys significant natural resources, as the second largest oil and natural gas producer in south East Asia, and the second largest exporter of liquefied natural gas globally. It is strategically located to take advantage of important routes for seaborne energy trade. The Malaysian economy has been resilient to a series of shocks since mid-2014, including declining commodity prices, the impact of China s slowdown, volatility of capital flows and domestic political unrest. Although economic growth slowed in 2016 to its lowest rate of 4.2%, its performance was satisfactory in an international context and economic activity should accelerate slightly in the next couple of years. Economic expansion continues to be sustained by strong domestic demand, a diversified and competitive export base and a sound financial system. In the medium-to-long term view, the government has to manage the decrease in the labour force and the deterioration in the business environment while reducing dependence on energy sector (23.3% of exports) and exports to China (12.5% of exports). Summary BNP Paribas presence BNP Paribas has been present in Malaysia since 1973 and is one of only a few international banks to hold a full commercial license, which it obtained in The bank caters for the domestic and international cash management and trade finance requirements of both foreign companies doing business in Malaysia and Malaysian entities seeking to expand their international focus. BNP Paribas Malaysia is also the bank's Islamic banking hub for Asia Pacific. BNP Paribas is a major player in trade finance throughout Asia, offering a full suite of traditional trade (letters of credit, bankers guarantee, trade financing, standby letters of credit, etc.) and supply chain financing solutions (receivables purchase programmes, supplier financing etc.) products, including a unique inventory solution offered through its trade centres in Australia, China, Japan and Singapore, specifically for companies engaged in international trade, as part of a wider network of more than 100 trade centres globally. BNP Paribas has experienced trade finance advisors and personnel who deliver a range of customised trade solutions and advise on local market practices. These solutions are supported by the bank's ISO-certified trade services support team. Working with BNP Paribas BNP Paribas is a member of the local clearing house and provides a comprehensive offering for cash management, payments and collections, including innovative virtual accounts solutions to facilitate receivables management. In addition, the bank has partnered with leading local banks and vendors to provide both comprehensive cash and cheque deposit services, and bulk cash and cheque collection services. BNP Paribas is committed to providing clients with the most innovative solutions available in the market, and makes significant investments to ensure that the bank remains at the forefront of technology and new product development. The bank is one of only a few globally to have processed a live Bank Payment Obligation ('BPO') transaction, and was the first bank worldwide to transmit information via SWIFTNet Trade for Corporates. Currency

4 Currency Malaysian ringgit (MYR) Bank accounts Resident / non-resident status A company is considered resident in Malaysia if it is incorporated in Malaysia, registered in the country or if its place of management and control is in Malaysia. Bank accounts for resident entities Within Malaysia Outside Malaysia Local Currency Permitted without restriction, with BNM approval for certain transactions Not permitted Foreign Currency Permitted without restriction, convertible Permitted without restriction, convertible Bank accounts for non-resident entities Within Malaysia Outside Malaysia Local Currency Permitted without restriction, convertible with restrictions Not permitted Foreign Currency Permitted without restriction, convertible with restrictions Not applicable Payments & Collections Credit transfers Credit transfers are used by large companies to pay salaries and suppliers, and to make tax and treasury payments. High-value and urgent credit transfers can be settled in real time via the IFTS component of RENTAS. Low-value (below MYR 500,000) and non-urgent credit transfers can be settled on a same-day basis via the IBG. Credit transfers can also be made in real-time via MEPS Instant Transfer (IBFT). Payments can be made via ATM, online or by mobile and are processed directly between the 16 banks that currently offer the service.

5 Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad. Direct debits Direct debits are used for regular payments, such as utility bills, but are also available for one-off retail transactions. MyClear Direct Debits (previously called MEPS Direct Debits) are available from 19 banks. Financial Process Exchange (FPX) online direct debits are available from 22 banks. Direct debits are cleared via MyClear. Final settlement is via RENTAS on a same-day basis. Liquidity management Domestic: notional pooling Domestic notional cash pools are permitted in Malaysia, although the associated reserve requirements for banks offering the service mean they are not widely available. Domestic: cash concentration Domestic cash concentration structures are widely available. Approval from the BNM Controller of Foreign Exchange (COFE) is required for structures involving residents and non-residents. Zero balancing is the most commonly used structure. Cross-border notional pooling Cross-border notional cash pools between resident and non-resident accounts are available but not widely used. Cross-border cash concentration Cross-border cash concentration structures are available, subject to approval from COFE. International trade General trade rules As a member of the Association of Southeast Asian Nations (ASEAN), Malaysia has entered into the ASEAN Trade in Goods Agreement (ATIGA) between member states (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam). Malaysia is also a member of the ASEAN Free Trade Area (AFTA) and is committed to reducing and eliminating tariffs between members. As a member of the Asia-Pacific Economic Cooperation (APEC) forum, Malaysia has agreed to liberalise trade and investment rules between members. As a signatory to the D-8 Preferential Tariff Agreement, Malaysia has agreed to reduce tariffs on trade between member states (Bangladesh, Indonesia, Iran, Malaysia, Egypt, Nigeria, Pakistan and Turkey).

6 Imports / exports Imports Electronics Machinery Petroleum products Plastics Vehicles Iron and steel products Chemicals Primary Import sources China (19.4%) Singapore (9.8%) Japan (8.1%) USA (7.6%) Thailand (5.7%) South Korea (5.0%) Indonesia (4.0%) Exports Semiconductors and electronic equipment Palm oil Petroleum and liquefied natural gas Wood and wood products Rubber Textiles Chemicals Export markets Singapore (14.7%) China (12.6%) USA (10.3%) Japan (8.1%) Thailand (5.7%) Hong Kong (4.8%) India (4.1%) goods 202, , , ,324 - services 42,100 42,056 34,937 35,292 - goods 171, , , ,948 - services 45,137 45,320 40,169 39, Import / export volumes Exports Imports Current account as % GDP Sources: IMF, International Financial Statistics, June Market data updated as of Solar panels

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