KUCHING: Hong Leong Bank recently closed three Chinese renminbi trade transactions with the Industrial and Commercial Bank of China Ltd (Malaysia) Bhd.
These transactions were also the first renminbi trade settlements by a Malaysian local bank with China.
“At present, Hong Leong Bank has completed three renminbi transactions and although the amount may be modest, we are excited with the potential of more transactions to come,” said Yvonne Chia, group managing director of Hong Leong Bank.
China is currently the world’s largest exporting county and the second largest economy in the world.
With the rise of China in the global economy, the Chinese government had issued a series of economic policies to promote international use of the renminbi.
One of these policies is the pilot programme for renminbi cross-border trade settlements which allowed mainland Chinese exporters and importers to settle trade in renminbi with all of China’s trading partners.
In August 2010, China began to allow the renminbi to trade against the ringgit on the inter-bank foreign exchange market to allow cross-border trade settlements in the renminbi to expand and reduce costs of remittances.
“With the increasing significance of renminbi in the global economy and with Malaysia being the largest among the Asean nations and China’s top eight trading partner in 2009, the bank can no longer ignore the importance of the renminbi in terms of its share of world trade,” added Chia.
“As momentum gains, our trade customers will inevitably be more interested to invoice in renminbi,” she highlighted.
However, despite the series of policy changes to increase the uses of renminbi outside China, restrictions still remain for the use of renminbi for non-trade cross-border transactions with China.
“This means that customers (either retail or corporate customers) will have to be mindful of the purposes of renminbi transactions with counter-parties in China and are advised to consult with their bankers before they plan to pay or receive payments in renminbi.
“At Hong Leong Bank, we understand these requirements better and have the expertise to guide our customers,” she concluded.
Hong Leong Bank offers a complete suite of renminbi payments to mainland China, renminbi accounts and trade services.