KUALA LUMPUR, Sept 27 Growing trade between
China, the world's second largest economy, and Malaysia will
encourage more yuan-denominated fundraising through the issuance
of conventional and Islamic bonds, Malaysia's central bank chief
said on Thursday.
China has become Malaysia's largest trading partner in
recent years, importing products that range from palm oil to
"The progress made thus far, while modest, has significant
potential given the significant volume of the bilateral trade
and foreign direct investment between our economies," central
bank governor Zeti Akhtar Aziz said at a seminar on renminbi
Zeti said Malaysia is well-positioned to capitalize on the
growing popularity of fundraising in renminbi, given the
Southeast Asian country's market size and infrastructure.
Malaysia's sovereign fund Khazanah Nasional Bhd
and telco Axiata Group Bhd have concluded offshore
issuance of renminbi-denominated Islamic bonds, or sukuk.
"(With) China's greater prominence in the global economy, a
dynamic response is required in this new operating environment,"
"One of the changes that will shape the international
financial system in the years to come is the wider role of
renminbi in trade and finance," she added.
Malaysia's trade volume with China has expanded at 20
percent annually in the past two decades but only 1 percent of
this total is settled in renminbi, said Zeti.
The volume of renminbi transactions is expected to grow as
traders operating in China would be able to eliminate hedging
and conversion costs by transacting in the local currency, she
In 2011 alone, China accounted 14 percent, or 167 billion
ringgit of Malaysia's total trade.
(Reporting By Al-Zaquan Amer Hamzah; Editing by Niluksi