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Other Financial and Investment Information

Foreign Exchange
The country's regulation requires all travellers to declare the amount of local and foreign currency they hold when entering the country. The Travellers Declaration Form (TDF) for this purpose can be obtained from any Malaysian Embassies/High Commission, Malaysia Tourism Promotion Board Office and all entry/exit points in Malaysia. Money can be exchanged at commercial banks, at currency exchange services of these banks and at authorised money changers. Rates may vary slightly from bank to bank.

Money Changing And Remittance Services (Bureau De Change) - The offices called kiosks are named "Bureau De Change" as European tourists are more familiar with this name than "money changers".

Securities/Investments
Securities Commission: This body was established on 1 March 1993 under the Securities Commission Act 1993, is a self-funding statutory body with investigative and enforcement powers. It reports to the Minister of Finance and its accounts are tabled in Parliament annually. The SC's many regulatory functions include, but are not limited, to the following:

• supervising and monitoring the activities of any exchange, clearing house and central depository
• registering authority for prospectuses of corporations other than unlisted recreational clubs
• approving authority for corporate bond issues
• regulating all matters relating to securities and futures contracts
• regulating the take-over and mergers of companies
• regulating all matters relating to unit trust schemes
• licensing and supervising all licensed persons encouraging self-regulation
• ensuring proper conduct amongst members of the exchanges, clearing houses, central depository and licensed persons

The Securities Industries Act 1983 in turn regulates, inter alia, the licensing of the securities industry and the licencing of fund managers, investment advisers and dealers. No person may act or carry on business as fund manager, investment or dealer unless licensed.

Derivatives are financial instruments used to manage one's exposure to today's volatile markets. A derivative product's value depends upon and is derived from an underlying instrument, such as commodity prices, interest rates, indices, and share prices.

Derivative instruments can be traded in an organised exchange or over-the-counter (OTC). Futures and options are essentially elementary derivative products mostly traded on exchanges. A futures contract is an agreement between two parties to buy or sell the underlying instrument at a specific time in the future for a specific price determined today.

An option however, provides the holder/buyer the right, but not the obligation, to purchase or sell a certain quantity of the underlying instrument at a stipulated price within a specific time period by paying a premium.

Unit Trusts
All of us have dreams. Dreams of a better life, a good education, material wealth - things we believe will make us happier and more fulfilled. The reality is, dreams can be costly. But they can also be achievable, if you have the right investments working for you.

For medium to long term goals, unit trusts are a viable investment option as they utilise time and the power of compounding interest to your advantage. The earlier you start, the better your chances of reaping potentially high rewards.

Unit trusts also take the middle ground between high-risk-high-return investment vehicles such as the stock market, and low-risk-low-return vehicles such as fixed deposits. Many people find unit trusts a very palatable way to invest.

There's a reduction in risk because the portfolio is spread over several types of investment categories, such as equities, bonds, and the money market. And through unit trusts, you have the luxury of leaving your money to be professionally managed by fund managers while you concentrate on other matters.

Equities offer considerable potential for capital growth and are long-term risk investments. It involves company shares which represents part ownership by the investor in a particular company. Ownership of equities will often entitle the investor to a portion of the company's profits through dividends.

Tax
Income tax is imposed on a territorial basis in Malaysia. Thus, an individual is subject to Malaysian income tax on income accruing in or derived from Malaysia. Foreign-sourced income received within Malaysia by a resident is also subject to Malaysian tax.

Individuals are classified into two categories for tax purposes: resident and non-resident. The residence of an individual depends on his physical presence in Malaysia. Generally, an individual is a resident if he is physically within Malaysia for 182 days or more in a tax year (which runs from 1 January through 31 December).

Under certain circumstances, an individual may be treated as a resident even if he is physically within Malaysia for less than 182 days in a tax year. For example, if an individual is in Malaysia for less than 182 days in 1998, he can still be treated as a resident for 1998 if he is physically present in Malaysia for 182 or more consecutive days in 1999.

Establishing residence in a calendar year when the individual stayed in Malaysia for less than 182 days is relevant to an individual who first arrives in Malaysia on an assignment or returns to Malaysia after an extended stay overseas. Planning in this respect will reduce significantly the individual's tax liability since the differential in resident and non-resident tax rates is significant.

An individual is considered as a non-resident if he does not meet the physical presence test for residents.

Property Investment
What you need to know
Investing in Malaysia is subject to certain restrictions on the type of real estate one can purchase. It is therefore important to engage a good and recommended local lawyer to assist you with the decision.

If you engage an estate agent to help you find properties for sale, an agency fee of up to 3% of the property’s underlying purchase price is expected to be paid by the buyer/investor. Some agents may collect this fee when an offer to purchase has been accepted but it would be wiser to pay upon the completion of the whole property purchase transaction.

For non-resident purchases, prior permission and approval must be obtained from the Foreign Investment Committee of the Economic Planning Unit of the Prime Minister’s department and from the State Authority respectively. Overseas foreign investors are not allowed to own Malay reserved lands.

Once you are satisfied with the real estate/property, a letter of offer will be signed by you, and this is to be submitted to the vendor for acceptance. After which a Sale and Purchase Agreement will be signed between you and the vendor with a 10% deposit placement.

Other Issues
There are other fees that you as a buyer is required to pay, namely the stamp duty and lawyer’s fees. Also, if you are not a citizen or a permanent resident of Malaysia and if you sell the property within five years from the date of purchase and obtain a gain from the sale, you will have to pay a flat tax of 30% of the gain to the Malaysian government. Otherwise, gains made on the disposal of property after the fifth year will only be taxed at a flat rate of 5%.

Non-residents are SUBJECTED to registration with the Controller of Foreign Exchange, Central Bank of Malaysia at least seven (7) working days before the credit facilities are drawn down where the aggregate foreign currency credit facilities exceeds RM1 million and up to RM10 million equivalent.

Prior permission of the Controller is also required for obtaining Ringgit credit facilities from overseas banks irrespective of amount.