China's RMB Internationalisation Provides Confidence, Reduce Business Cost

By Samantha Tan BEIJING, Dec 5 (Bernama) -- The internationalisation of the Chinese Renminbi (RMB) has not only boosted Malaysian investors' confidence but has eventually help reduce business cost and exposure to currency volatility. The Prime Minister's Special Envoy to China Ong Ka Ting said the International Monetary Fund (IMF) acceptance of the RMB into its Special Drawing Right Basket alongside the US dollar, Euro, British pound and Japanese yen, was a welcome move. "Yuan is now the world's third largest currency and it will give confidence to Malaysian businesses to use yuan instead of other currencies in trade settlement. "This will eventually help to cut business cost and avoid exposing the volatility of their currency," Ong said in an email interview with Bernama. He said the RMB internationalisation coupled with the establishment of a RMB clearing house with Bank of China's Malaysia branch would definitely boost trade between the two nations. "It will facilitate traders and investors from both nations in view of the great trade volume between Malaysia and China which stood at US$102 billion as of 2014," he added. Furthermore, Ong said economic activities were likely to increase especially in massive infrastructure developments, involving heavy engagement between entrepreneurs from both nations following the introduction of China's One Belt, One Road initiative and the Asian Infrastructure Investment Bank (AIIB) fund. Initiated by China, AIIB was proposed as an international financial institution focused on supporting infrastructure construction projects in the Asia Pacific region. Commenting on China's move in granting 50 billion yuan under the RMB Qualified Foreign Institutional Investors (RQFII) programme, Ong said this scheme would provide more opportunities for Malaysian investors to mobilise their offshore yuan funds. "They can tap into China's financial markets, which has great potential to grow in view of the strong Chinese economy. "It also provides a wider choice for Malaysian institutional investors to select the right foreign investment given the current global volatile economic environment. It will also further enhance bilateral trade between Malaysia and China," he added. Ong said Malaysia is among a small group of selected countries to be granted the RQFII quota of 50 billion yuan by Chinese Premier Li Keqiang during the Malaysia-China Economic Forum, held last month. -- BERNAMA