VIII. Trade and Project Financing

Malaysia has a dynamic and sound banking sector.  It comprises the
Bank Negara (central bank), 24 locally-incorporated commercial
banks, sixteen foreign-incorporated commercial banks (all foreign-
incorporated banks are required to incorporate locally by
September, 1994), twelve merchant banks, seven discount houses, and
forty-one finance companies.  The top five commercial banks held
assets worth some US $45 billion as of June, 1993.  Three U.S.
banks have operations in Malaysia:  The Bank of America, Citibank
and Chase Manhattan Bank have branches in Kuala Lumpur; Citibank
also has a branch in Penang.  Most Malaysian banks have
correspondent relationships with banks in the United States.  A
list of Malaysian commercial banks are included in Appendix C.

Exports to Malaysia may be financed through letters of credit
issued to importers by banks in Malaysia.  Finance is readily
available on the domestic market to Malaysian importers.  There are
no foreign exchange controls which would impede trade.  The
Malaysian Ringgit is freely convertible.  All payments to non-
residents for any purpose are freely permitted, subject only to the
completion of a simple form for remittances of more than RM 10,000
(US$4000).  No permission is required from the Controller of the
Currency for a company to maintain inter-company accounts with
associate companies, branches, or other companies outside Malaysia.

In addition to the Malaysian banking sector, exports to Malaysia
can be supported by the U.S. Export-Import Bank (EXIMBANK), which
can provide direct or intermediary loans, loan guarantees to enable
a foreign buyer to secure private credit, loan guarantees to a
private creditor to provide working capital to an exporter, and
insurance policies for exporters to eliminate both political and
commercial risk of repayment by foreign purchasers.  Most recently,
for example, EXIM has been involved in financing the sale of Boeing
aircraft to the Malaysian national airline, MAS.

Export financing is also available through the U.S. Small Business
Administration, which provides regular business loans, a revolving
export line of credit, joint guarantees with the EXIMBANK,
investment company financing, long-term asset financing, and
international trade loans to compete, export, and develop export
markets.  For exporters of agricultural products, the U.S.
Department of Agriculture Market Promotion Program has been used to
promote export market development efforts in Malaysia.

Major infrastructure projects have been funded by a variety of
means, including Malaysian government funds, the domestic capital
markets, international consortia, loans from the Asian Development
Bank (ADB), and supplier credits.  In the case of the new Kuala
Lumpur International Airport (KLIA), for example, the Japanese
Government has indicated an intention to make available a long term
soft loan of $600 million through the Overseas Economic Cooperation
Fund.  This will, however, only cover a portion of the costs, the
bulk of which will have to be raised on the capital markets.