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BOCM named the renminbi settlement bank
Published on: Friday, August 17, 2018

Labuan: The Labuan Financial Services Authority (LFSA) has appointed the Bank Of China Malaysia Berhad (BOCM) as the official Renminbi settlement bank in the duty-free island.

LFSA Director-General Danial Mah Abdullah said the appointment marks a significant milestone in efforts to enhance the Labuan IBFC's financial infrastructure and is in line with the increasing role of Labuan IBFC in facilitating financial and trade investments as well as trade flows in the Asia and Asean regions.

Danial said with BOCM in the picture, this will facilitate a lot of banks here while approximately 14,000 over companies, some of which are involved in trading, can use this facility to expedite their settlements or transactions with BOCM as their working platform.

"The appointment is an extension of the RMB Settlement Service in the Real-time Electronic Transfer of Funds and Securities (Rentas) system offered in Malaysia since 2012 by BOCM in collaboration with their operator, Payments Network (PayNet) Malaysia.

"The extension of the services to Labuan would bring efficient, seamless and cost-effective real-time settlement of Renminbi-denominated transactions to the financial institutions and entities here," he explained.

Danial claimed that the Renminbi settlement facility will add more depth to the many value propositions that Labuan IBFC offers that will attract more Asian and Asean corporations to establish business and use Labuan as the jurisdiction of domicile.

"Fittingly, Labuan IBFC had recently won the best Asian Domicile Award at the Asia Capital Review Awards earlier this month," he told reporters here after the launching ceremony on Thursday.

Meanwhile, PayNet Group CEO Peter Schiesser disclosed that the number of Renminbi-based transactions worldwide had rapidly grown twofold over the last few years.

"Based on our findings, the total value for these transactions last year had accumulated up to 38 billion Renminbi (RMB) and currently we have already reached that number by July, this year.

"From there we can notice that the number had doubled in the past year which is very encouraging and proves that Renminbi is an important currency that Malaysia needs to support cost-effectively," he reiterated.

Peter added that this particular extension would make Malaysia, specifically Labuan, more international in terms of offshore currency settlement leading to paint an image for Malaysia as an ideal and attractive business destination.

"With access to RMB settlements in Rentas, banks and market participants here will have a strong foundation that they can build upon to create a critical mass of foreign currency market activities.

"I trust the RMB settlement capabilities in Rentas will allow the Malaysian financial system and banks in Labuan to play a larger role in facilitating international economic activity and intermediate international capital flows," he said.

Additionally, BOCM Deputy CEO Alvin Tay said that Renminbi had since become one of the major global currencies in terms of investment and reserve management.

"The Renminbi is also gaining wide recognition by international investors, and the capital markets of China are steadily opening up, broadening investment opportunities among international investors who are looking into expanding in potential emerging markets," he established.

Alvin highlighted that the Swift data as of June 2018, Renminbi held the fifth place in the currency rankings for global payments, with a market share of 1.81 per cent, overtaking 14 other currencies in the past five years.

BOCM as Renminbi market leader in Malaysia had contributed in building the backbone of Renminbi clearing and settlement model in the country with strong support from Bank Negara Malaysia (BNM) and PayNet since 2009.

"This settlement mechanism will further strengthen and complement BOCM's existing Renminbi business model for the country, and also cross-border coverage to the ASEAN region," he cited.

Alvin emphasised there are two pilot participating Labuan banks, namely CIMB Bank Berhad, Labuan offshor Branch and Public Bank (L) Ltd under the Renminbi Settlement arrengement in the island.

Also present were CEO Wang Hong Wei, PayNet COO Tay Gim Soon and LFSA Senior Director (Business and Legal Department) Iskandar Mohd Nuli. - Iffah Dilaney

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