Asia Times: Malaysia eases repatriation rules



	September 22, 1999	atimes.com

Southeast Asia

Malaysia eases repatriation rules

KUALA LUMPUR - A flat 10 percent levy on repatriation of profits on portfolio investments will replace the existing two-tier levy system with immediate effect, Bank Negara governor Ali Abul Hassan said.

In what is a major boon to foreign fund managers, he said the effect of this change is that there will no longer be any levy imposed on the principal amount. Besides this, the levy on profits made and repatriated within one year will be reduced from 30 percent to 10 percent. ''All profits from funds brought in on or after February 15, 1999, are subject to a levy of 10 percent, irrespective of when the profits are repatriated,'' he said in a statement on Tuesday.

While reducing the rate of levy, it will also make the levy system more efficient to administer, he said. Ali said that foreign fund managers, particularly unit trust managers, have appealed to the government that the present system of two-tier levies has created some problems for them in computing prices and determining the amount of levy applicable to their investment. ''This is particularly so for fund managers who make continuous investments in Malaysia and repatriate their profits regularly,'' he said.

He said that at present, the exchange control levy system introduced on February 15, 1999, for funds that came in on or after February 15, 1999, was subject to a 30 percent levy on profit made and repatriated within one year and 10 percent on profits repatriated after one year.

This change will also facilitate the merger of the two external accounts - normal external accounts and special external accounts - into one. To facilitate the merger of the accounts, foreign funds that were brought in between September 1, 1998 and February 14, 1999 will be deemed as funds that have been brought into the country since September 1 1998 and will, therefore, not be subject to any levy on the principal amount.

With the implementation of this change in the levy system, the government has now addressed all the administrative issues raised by the foreign fund managers with respect to the levy system, he said.

(Asia Pulse/BERNAMA)

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