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Malaysia: Staff Report for the 2013 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. Asia and Pacific Dept
Published Date:
March 2014
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Fund Relations

(As of January 31, 2014)

Membership Status: Joined March 7, 1958; Article VIII

General Resources Account

SDR MillionsPercent of Quota
Quota1,773.90100.00
Fund holdings of currency (exchange rate)1,186.9766.91
Reserve tranche position586.9333.09
Lending to the Fund New Arrangement to Borrow42.52

SDR Department

SDR MillionsPercent of Allocation
Net cumulative allocation1,346.14100.00
Holdings1,286.1695.54

Outstanding Purchases and Loans: None

Latest Financial Arrangements: None

Projected Payments to the Fund: None.

Exchange Arrangement:

On July 21, 2005, Bank Negara Malaysia announced the adoption of a managed float with the exchange rate of the ringgit to be monitored against an undisclosed trade-weighted basket of currencies. Based on information on the exchange rate behavior, the de facto exchange rate regime is classified as “other managed.”

Malaysia maintains bilateral payments arrangements with 23 countries. The authorities have indicated that these arrangements do not have restrictive features.

Capital control measures imposed in early 1994 and in 1998 in the wake of the Asian crisis have mostly been lifted, except for the internationalization of the ringgit. In particular, since May 2001, nonresident portfolio investors are freely allowed to repatriate their principal sums and profits out of the country at any time. Malaysia further liberalized exchange control regulations during 2002–10. The main measures were a relaxation of regulations on investment abroad by domestic institutions, an easing of regulations on domestic credit facilities extended to nonresidents, abolition of overnight limits on all foreign currency accounts maintained by residents and of the net open position limit imposed on licensed onshore banks, allowing residents to open and maintain foreign currency accounts for any purpose, easing requirements on foreign currency and ringgit credit facilities from nonresidents, relaxation of rules on the provision of financial guarantees, abolition of several reporting requirements, and a relaxation of the conditions on residents and nonresidents to enter into foreign exchange forward contracts to hedge capital account transactions with licensed onshore banks. Further measures were also taken to ease rules on residents’ borrowing in foreign currency, and borrowing in ringgit by residents from nonresidents as well as lending in ringgit by residents to nonresidents for use in Malaysia.

The Malaysian authorities view remaining exchange control regulations as prudential in nature and necessary to ensure the availability of adequate information on the settlement of payments and receipts as part of the monitoring mechanism on capital flows. These controls do not contravene Malaysia’s obligations under Article VIII.

Malaysia, in accordance with the UN Security Council resolutions, maintains restrictions on payments and transfers for current international transactions with respect to some designated individuals and entities. These measures are maintained for the reasons of national and international security and have been notified to the Fund pursuant to the IMF Executive Board Decision No. 144 (52/51). Malaysia also restricts current international transactions between Malaysian residents and Israeli companies and individuals; however, since these restrictions affect the underlying transactions themselves, they are not subject to Fund jurisdiction under Article VIII, Section 2(b).

Article IV Consultation:

Malaysia is on the standard 12-month consultation cycle. Discussions for the 2012 Article IV consultation took place during November 29-December 12, 2012 (IMF Country Report No. 13/51). Staff discussions for the 2013 Article IV consultation were conducted on a mission to Kuala Lumpur during December 5–16, 2013. In addition, a staff visit took place during July 9–12, 2013.

FSAP Participation:

Malaysia conducted its first FSAP in 2012 (IMF Country Report Nos. 13/52, 13/53, and 13/56-13/60).

Technical Assistance:

FAD: Mission in October 2008 to analyze the distributional impact of social safety net programs. A fiscal ROSC mission was fielded in May-June 2011. A mission on debt management was fielded in June 2012 to look at the institutional, legal, organizational and operational aspects of debt management, monitoring of fiscal risks, and reporting of debt operations. A mission on fiscal risks took place in January 2013.

LEG: Missions were fielded in May and September 2011 to help draft a Centralized Asset Management Corporations Bill, in the context of a three-year project to assist Malaysia in implementing an asset forfeiture regime.

MCM: Workshop in November 2008 on stress testing. Workshop in October 2009 on assessing the systemic implications of financial linkages and developing early warning indicators for the insurance and corporate sectors at BNM. Mission in October 2009 on macrofinancial risk analysis and vulnerability analysis for corporate and financial institutions. Workshop in May 2010 on monitoring financial risks. A technical assistance mission on stress testing is scheduled for April 2013.

STA: A mission to assist with the migration to the Government Finance Statistics Manual (GFSM) 2001 was conducted during October-November 2012.

AML/CFT:

Malaysia (including the Labuan International Offshore Financial Center) underwent its second Mutual Evaluation in February 2007 that was conducted by the Asia/Pacific Group on Money Laundering (APG). The full report was adopted by APG members in July 2007 (http://www.apgml.org/documents/docs/17/Malaysian%20MER%20%20FINAL%20August%202007.pdf).

Resident Representative/Advisor: None.

Statistical Issues

(As of January 10, 2014)

I. Assessment of Data Adequacy for Surveillance
General: Data provision is broadly adequate for surveillance. However, further efforts to improve statistics for the consolidated general government and public sector are necessary.
National accounts: Currently, the Department of Statistics Malaysia (DOSM) compiles and publishes annual and quarterly estimates of GDP by activity and by expenditure at current and constant prices, and annual estimates for gross disposable income, saving, and net lending for the economy based on the 1993 SNA. The quarterly data are released about two months after the reference quarter.



Price statistics: The CPI and the PPI are available on a timely and comprehensive basis. A revised CPI was introduced in January 2011; it covers all 14 states and features a more disaggregated measure of the consumption basket and updated expenditure weights based on a 2009/10 comprehensive household income and expenditure survey.
Government finance statistics: There is a need to improve the timeliness, detail, and availability of data on NFPEs and the state and local governments. Dissemination of more detailed data on nonlisted NFPEs’ assets and liabilities and domestic and foreign financing by type of debt instrument and holder would be desirable; efforts in this direction will require continued close collaboration among the Economic Planning Unit (EPU), the Treasury, and Bank Negara Malaysia (BNM). There is also a need to disseminate more information on public private partnerships.
Monetary statistics: The monetary and financial statistics (MFS) are reported on a timely and regular basis and are broadly in conformity with the Fund’s data needs. There is a need to improve the institutional coverage of the financial corporations, sectorization of the domestic economy, and classification and valuation of financial instruments to ensure full adherence to the IMF’s Monetary and Financial Statistics Manual. In addition, due to the growing importance of insurance corporations, pension funds, and other financial intermediaries in Malaysia, coverage of MFS should be expanded to include these institutions. The MFS missions of January 2004 and 2005 developed an integrated monetary database to be used for publication and operational needs of the BNM, STA, and APD. The Bank Negara Malaysia reports data in STA’s standardized report forms (SRFs) which provide more detailed classification of certain items, fuller sectoral and instrument breakdown, and currency aggregation. MFS based on the SRFs are published in the quarterly IFS Supplement on Monetary and Financial Statistics.
Balance of payments: Department of Statistics Malaysia compiles and publishes quarterly balance of payments estimates in accordance with the fifth edition of the Balance of Payments Manual and the SDDS. The quarterly data are released three months after the reference quarter. No data are shown for the capital transfers or acquisition/sale of nonproduced nonfinancial assets, and transactions in reserve assets are computed as differences in amounts outstanding and thus include valuation changes. The international investment position data on other investment—assets and liabilities—are reported only in an aggregate form.
II. Data Standards and Quality
Malaysia subscribes to the Special Data Dissemination Standard (SDDS). It is using a timeliness flexibility option for general government operations (within six quarter lags after the end of reference year).
Malaysia: Table of Common Indicators Required for Surveillance(As of January 3, 2014)
Date of Latest ObservationDate ReceivedFrequency of Data6Frequency of Reporting6Frequency of Publication6
Exchange rates1/3/20141/3/2014DDD
International reserve assets and reserve liabilities of the monetary authorities112/13/201312/20/2013Bi WBi WBi W
Reserve/base money12/13/201312/20/2013Bi WBi WBi W
Broad money11/1312/31/2013MMM
Central bank balance sheet12/13/201312/20/2013Bi WBi WBi W
Consolidated balance sheet of the banking system11/1312/31/2013MMM
Interest rates21/3/20141/3/2014DDD
Consumer price index11/1312/13MMM
Revenue, expenditure, balance and composition of financing3—general government420122013AAA
Revenue, expenditure, balance and composition of financing3—federal government2013:Q312/13QQQ
Stocks of central government and central government guaranteed debt52013:Q312/13QQQ
External current account balance2013:Q312/13QQQ
Exports and imports of goods and services10/1301/14MMM
GDP/GNP2013:Q312/13QQQ
Gross external debt2013:Q312/13QQQ
International Investment Position201201/14AAA

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing is only available on an annual basis.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market based and officially determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing is only available on an annual basis.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A).

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