KUALA LUMPUR (Aug 16): Bank Negara Malaysia (BNM) is expanding its pilot programme for the Qualified Resident Investor (QRI) to accept applications from eligible resident corporations who have outstanding direct investment abroad (DIA) assets of RM1 billion and above.
“From now until Dec 31, this pilot QRI programme will be expanded,” central bank governor Abdul Rasheed Ghaffour told reporters after the release of the 2Q2024 gross domestic product (GDP) data on Friday. A total of about 30 companies are expected to apply for the extended pilot programme from 10 companies currently.
The central bank launched the pilot fast-track, pre-approval framework for the QRI in April, to ease the process for corporations repatriating and converting foreign currency from overseas investments. The framework also facilitates reinvestments abroad when needed, ensuring smoother two-way flows in the foreign exchange (FX) market, Abdul Rasheed said.
The expansion of the pilot programme was prompted by its encouraging results, which saw over US$1 billion in additional inflows into the domestic FX market, he said, noting, “These additional flows helped provide support to the ringgit’s performance, contributing to the recovery of the ringgit that we have observed in recent months”.
He pointed out that the ringgit had been appreciating of late, partly due to expectations of imminent policy rate-cuts by the US Federal Reserve, which has resulted in a softer US dollar and reduced pressure on regional currencies, including the ringgit.
Since July 1, 2024, the ringgit has appreciated against the greenback by 5.70%, notching its strongest gains over ten consecutive days from July 25 to Aug 8, when it gained as much as 4%.
At the time of writing on Friday, the ringgit was trading 0.13% lower at RM4.4383 against the US dollar. Nonetheless, the ringgit has appreciated 3.28% year-to-date.
“Globally, the monetary policy path is shifting towards central bank easing, but it is important to acknowledge that financial markets remain susceptible to economic developments, including growth prospects and any divergence between market participants’ expectations and central bank’s actions,” Abdul Rasheed said, noting that other sources of volatility remain, “including the undercurrent of geopolitical tensions which continues to weigh on investor sentiments”.
“Nevertheless, the domestic landscape remains positive, despite this shifting external outlook. A narrowing of interest rate differentials with the US would be conducive to inflows, especially given Malaysia’s positive economic prospects,” he added.
He reiterated that initiatives by the government and BNM with government-linked companies and government-linked investment companies, alongside engagements with corporates, exporters and investors, continue to provide support to the ringgit. These efforts have resulted in greater and more consistent flows into the foreign exchange market. “The daily average FX trading volume has risen to US$18 billion during the period of Feb 26 to Aug 13, 2024, from US$15 billion in the period of Jan 2 to Feb 23. The bid-ask spread is also narrower, indicating improved liquidity in the domestic FX market,” he said.
Co-payment feature helps to rein in medical cost inflation
When asked for updates on the co-payment requirement for medical and health insurance and takaful (MHIT) products, the governor noted that the system could empower consumers by offering them more choices to meet their health and budgetary needs.
“We have observed that the co-payment feature can be more cost-effective for consumers. In fact, existing co-payment products are 19% to 68% cheaper than those without this feature,” Abdul Rasheed asserted.
In 2023, Malaysia's medical inflation jumped a shocking 12.6%, significantly higher than the global average of 5.6% and 6.2% in the Asia-Pacific region.
Starting from Sept 1, insurers and takaful operators (ITOs) are required to offer consumers the option to purchase MHIT products with a co-payment feature. This feature refers to a specified amount or percentage that a policyholder or takaful participant must pay when incurring a medical expense covered under an MHIT policy or takaful certificate.
The remaining medical expense will be covered by the licensed ITO based on the coverage provided by the MHIT policy or takaful certificate.
The central bank said consumers who have already purchased MHIT products without a co-payment feature can continue with their existing products upon renewal. Additionally, ITOs may continue to offer MHIT products without a co-payment feature to new consumers.