Kota Kinabalu: Anti-corruption measures by the US and China presidents have resulted in an increase in Malaysia and China trade using the renminbi (Chinese yuan) and ringgit instead of the greenback in international trade.Since US President Donald Trump took office on Jan 20, the US dollar has appreciated much against the ringgit as US stock market performance rises. Traders here now find it cheaper to use the renminbi to pay for imports from China and trading parties in China are now more agreeable to such arrangements.
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This is due to China President Xi Jinping's crackdown on corruption by targeting China companies and individuals having US dollar accounts and deposits overseas, as illicit flow of money out of China put the country and Malaysia among the top 10 in the world with illicit fund outflow.Hence, using renminbi somehow diffuses the China authorities' attention to check on such irregularities.
As a result, RHB Bank has emerged as Malaysia's top financial institution to provide its customers renminbi transaction facilities from telegraphic transfer (TT) to others.For example, a Malaysian importer purchases machinery from an exporter in China. The price of the machine quoted by the exporter is one million US dollar or 6.1 million renminbi.
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If the importer in Malaysia pays in one million US dollar in six months, it's RM4,495,000.If the importer in Malaysia pays in renminbi in six months, it's RM3,955,240.
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The cost saving for choosing renminbi (RM4,495,000-RM3,955,240) is RM539,760.RHB vice president for corporate sales in group transaction banking, Hasnita Mahayudin, inferred this scenario at a Bank Negara Malaysia (BNM) seminar for some 100 SME members of the Malaysia China Chamber of Commerce (MCCC) and guests, at its premises, here.Speaking on "Renminbi Cross Border Trade Settlement", Hasnita enlightened the business community dealing with China and Chinese companies there to ensure that their trading partners have their CNAPS number – 12 or 14 digits of numbers to distinguish companies or individual business establishment from confusion with similar sounding names when remitting payments in renminbi to China."What's CNAPS? CNAPS stands for China National Advanced Payment System or 'Hang Hao' in Mandarin. A remitter in Malaysia needs to approach the beneficiary in China to obtain the CNAPS number from the paying bank in Mainland China. Using the CNAPS number, renminbi payment can reach the beneficiary in a shortest period of time," Hasnita explained.She said businesses dealing with China using the RHB renminbi settlement for trade facility enjoy savings in banking charges and forex in relation to the US dollar, and the same can be used for trade with the Philippines, Thailand and Europe as well."RHB Bank is now offering trade settlement services in remminbi in line with the Government of China's programme for cross-border trade transactions."Malaysian companies can have another option to settle trade transactions with counterparts in China besides other currencies such as US dollar," Hasnita said.
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She said by eliminating the forex concern of the exports in China, Malaysian importers may save the currency fluctuation premium in the RMB quotation of up to 5 to 7 per cent.Hasnita said transaction volume in the bank's renminbi facility has reached beyond 300 million per annum, as she urged businesses in Sabah dealing with China to consult banks on renminbi transactions. - David Thien