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Malaysia

B2B export from Malaysia to Europe

By | Money transfer

Malaysia as one of the top 20 Exporting nations worldwide (Source: WTO) has export earnings of around Malaysian Ringgit (MYR) 72.84 Billion in its trade with Europe for 2014. This was an increase of 11.6% from 2013. The main items exported by Malaysia to EU were Electronic and Electrical Equipment especially IC (Integrated Circuit) Boards. The top five major destinations for Malaysian exports to the EU were the Netherlands, Germany, the United Kingdom, France and Belgium. Other items which saw an increase in value were palm oil, chemicals, optical and scientific equipment, machinery, appliances and parts, transport equipment, textiles, clothing, and footwear (Source: MITI).

Legal Requirements to export goods into EU

The following procedures/regulations need to be complied with before a Malaysian exporter can start sending their goods into the European Union.

  • The first time a Malaysian company makes any customs declaration to export a product into the EU, the company will be given an EORI (Economic Operator Registration and Identification). This is a unique identifier for use by Customs Authorities in the EU for anyone wishing to export or import goods into the EU. The EORI must be used in all communications with any EU Customs Authority for the purpose of exporting or importing from and to the EU.
  • The next requirement is the Entry Summary Declaration (ENS). This will contain information about the consignments entering the EU. This must be done in advance (of the goods arriving) at the first port in the EU where the vessel transporting the goods crosses into EU territory.

There are different deadlines for submitting the ENS to Customs. The deadlines is based upon the type of vessel transporting the goods into the EU (source).

There are strict rules on the export of goods into the EU and Malaysian exporters need to be aware of these rules prior to shipment of their goods into the EU (see this document).

There are more tips on EU import requirements at the European Commission website.

When does an exporter of goods into the EU expect payment?

A Malaysian exporter can specify what the payment terms are upon signing of the contract for the supply of goods with the recipient EU based company. The EU has enacted legislation that specifies what the terms of payment are for B2B transactions. This was done to protect EU based business especially SME’s from having cash flow issues which affect their business. The directive also provides for protection for non EU based exporters provided the contract specifies that the payment terms are as per the Late Payment Directive. This is usually 60 days unless mutually agreed by both parties.

More information can be found at the European Commission website.

Sending money to Malaysia

Sending Money to Malaysia

By | Banking, Money transfer

Remitting or sending money to Malaysia is a fairly easy process these days. The Malaysia currency is known as Ringgit (pronounced as Ring gait) Malaysian with its usually known symbol being RM or MYR.

Sending money to Malaysia

There are two methods to sending money to Malaysia. The first is the traditional method using conventional banks and financial institutions operating in Malaysia. These financial institutions are regulated by the Malaysian Central Bank or Bank Negara Malaysia. The remittance of funds is covered by the Exchange Control Act 1953 and the Payment Systems Act 2003. The other method which only recently has become more popular due to the convenience of the Internet is online transfers such as Western Union, PayPal which are the more popular remittance service providers.

Regulation

There are various rules regulating the transfer of funds into Malaysia from overseas. The rules applies differently to residents and non-residents. The rules are also different for companies and individuals. Different rules also apply to remittance of foreign currency to Malaysia and the remittance of foreign currency to be converted into ringgit.

B2B transfers

Exporting companies which would receive payment for product or services rendered and to be paid by the foreign company in any foreign currency must show proof of that the product or services was purchased and invoiced to the foreign company. The funds sent must correspond to the value of the product and services invoiced by the Malaysian resident company. The company remitting the money would also have to provide correct details about the invoicing company and its bank account – ie Name of the account, Bank Name and address and SWIFT or BIC (Bank Identification Code) which is the bank’s unique identification code.

See also our article B2B money transfer

Individuals receiving money

Individuals (residents or non-residents) can receive funds from overseas via normal money transfers into their bank account. These funds will normally be converted from the foreign currency into Ringgit before being deposited into the local bank account. Individual residents or non-residents can also receive foreign currency in the specific foreign currency i.e. not converted into Ringgit if they have a Foreign Currency Account Bank Account. However, the currency being remitted must be the same as the type of currency the Foreign Currency Account was opened with – a remittance of USD$ can be deposited into a USD$ Foreign Currency Account but a remittance of Euro € may not be remitted into the USD$ Foreign Currency Account. The other issue with transfers via bank accounts is the time taken for the funds to be cleared and available to the recipient is based on the individual bank’s operating hours and clearance guidelines which can sometimes be up to five days.

For a faster more convenient method, online transfers are used to remit funds to residents and nonresidents. These transactions can be completed in minutes and to any location in Malaysia which is affiliated to the particular remittance company.

The overseas sender may be requested to provide information about the recipient who is based in Malaysia such as name, passport number or date of birth and other personal information. The recipient would only need to show some form of identification or some information corresponding to whatever condition set by the sender to receive the funds.

Further reading