In a statement, Bank Negara Malaysia (BNM) announced a liberalisation of foreign exchange policy for multilateral development banks (MDBs) and qualified non-resident development financial institutions (DFIs), Xinhua news agency reported.

The MDBs and qualified non-resident DFIs will now be able to issue ringgit-denominated debt securities for use in Malaysia, and provide ringgit financing to resident entities, it said.

This will allow both financiers and businesses to structure financing in ringgit for domestic projects while reducing the risk of currency mismatch.

In addition, the MDBs and qualified non-resident DFIs can share their technical expertise, particularly in blended finance, and that would complement existing domestic players in meeting financing demand to support strategic investments and climate transition efforts in Malaysia.

The bank said the liberalisation aims to facilitate their investment in key growth areas in Malaysia, including the electrical and electronics industry, technology adoption, sustainability and data centers.

By fostering a more facilitative investment environment, the liberalisation initiative can also increase issuances and participation from issuers and international investors, which would benefit the domestic bond and sukuk market in terms of greater depth and vibrancy.

"The liberalisation would better facilitate greater participation from global investors in key growth areas in Malaysia. This is in line with greater demand by interested international financial institutions to finance high-value investment projects in Malaysia that we have observed in the recent period," BNM governor Abdul Rasheed Ghaffour said.