In switching to renminbi, corporations should review on the internal changes required, such as invoicing and trade documentation in renminbi, accounting and any other operational procedures, including engaging banks which are able to provide advice and facilitate trade financing in renminbi. Banks need to be ready in this area, to develop the system to support the trade financing and to be familiar and current with the rules and regulations of the Chinese authorities. Further improvement should be looked into to entice more participation, and efficient ways should be explored to ease trade facilitation in renminbi. In another aspect, this space can also capitalise on another work area of the Financial Market Committee in looking at the introduction of a more standardised documentation requirement across industry. Coupled with the broader and more flexible trade financing facilities and hedging tools, this will create a more business-friendly market which will in turn amplify participation. 5. Last but not least, is to develop investment products in renminbi. In the past, the efforts in promoting the use of renminbi has primarily emphasised transactions or trades in goods and services between the two countries. With the transformation and internationalisation of renminbi, we should accelerate our understanding of the renminbi financial markets and to see the renminbi as a viable choice of currency for financial investments. In November 2015, China granted RQFII country quota of RMB50 billion to Malaysia to enable financial institutions here to invest in China’s onshore financial markets. The renminbi financial market in Malaysia remains incomplete with limited investment avenues.

Developing the renminbi market – Preparing for the future That said, with the transformation of RMB to become international reserves currency, coupled with China’s strong FDI presence and push for financing infrastructure in Asian countries as part of One Belt One Road plan, it is timely to enhance the strategies moving forward. I would suggest to look at a few key aspects: 1. The first is to increase the stock of renminbi liquidity onshore. With a stable and larger renminbi liquidity pool, banks will be able to offer renminbi loans and financing. Currently, the RMB deposit balance with the banking system is relatively low, hovering around 3% of total foreign currency deposits. Malaysia is a net receiver of FDI from China and with substantial exports to China – banks should be proactive in approaching clients to facilitate these flows in renminbi. Banks with regional presence should also expand its renminbi business through its branches overseas, using Malaysia as a launch pad and leveraging on the renminbi liquidity infrastructure available in Malaysia. The offshore CNH renminbi market is well developed, and the gap between CNH and CNY markets has narrowed significantly. As such, banks should be able to offer competitive pricing for clients to manage and hedge renminbi exposures. With the various liquidity facilities in place, we can expect the renminbi market here to be able to meet their requirements. 2. Second, is to further develop the renminbi foreign exchange onshore market to increase the depth and liquidity.