It has become increasingly difficult to move money anywhere around the world, and it is set to get tougher. Fraud, cyber security, tax and compliance procedures, amongst other rising trends, are creating obstacles. Traditional banks are being marginalised by digital transformation in banking and non-banking sectors, with the ease of moving money around with crypto wallets, in Malaysia, and worldwide being a prime example.
So, if you are an expatriate in Malaysia, or thinking of moving to Malaysia, you may be left wondering what’s the best option for banking.
Let’s check out banking for expats in Malaysia.
1. Setting Up A Bank Account
Opening a bank account as an expatriate in Malaysia is straightforward and fast, if you have the relevant paperwork. If you do not then it is not possible. If you are employed in Malaysia, then you will be able to open a bank account at a local Malaysian, or international, bank.
If you are not employed in Malaysia but own a residential property, then you should also be able to open a bank account. If you are considering starting up your own company in Malaysia then it is best to check that it will be possible to open a corporate bank account in Malaysia before you take the time and expense to establish a legal identity.
Due diligence on several aspects of opening a company should be done in Malaysia, and in any other Asian countries, before you decide to proceed. You may find that it is possible to open a company but not possible to open a corporate bank account in Malaysia, or elsewhere. Check before you get started on the incorporation to avoid wasted effort and expenses.
2. Banking For Expats: Multi-Currencies
Caution should be exercised when you open a multi-currency account in Malaysia, or anywhere in the world. You may find that, despite having a choice of accounts to keep your hard-earned currencies in, when you transfer foreign currency from abroad your bank in Malaysia will convert all currencies into Malaysian Ringgit initially.
This is fine if you intend to spend most of your money in Malaysia, but if you want to hedge against currency volatility then you may lose out on any initial transfer on the exchange rate and on currency risk.
3. Digital Wallets
Digital wallets are hot. They are useful too. If you have not already tried using one, or more, digital wallets, then what is stopping you exploring? There are currently over 40 similar providers but this space is likely to reduce to a few niche players in the future.
The Covid-19 pandemic has accelerated the adoption of e-money payments in Malaysia, and globally, with transaction value crossing RM30 billion (between January and September so far in 2021, according to data from Bank Negara Malaysia.*
Points earned from spending through your e-wallet may be going to waste and if you look at the amount of money you, and your family, will save in a whole year using e-wallets then this may be a good motivator. E-wallets also mean you do not have to handle cash for shopping and small purchases.
4. Fraud And Cyber Attacks
The two major security issues a local or an expatriate faces with their bank account in Malaysia, or anywhere in the world, are fraud and cyber risks. Malaysia is reportedly a leader in cyber security amongst Asian countries. Does this really mean your bank account is safer in Malaysia than somewhere else?
Reportedly, Malaysia leverages policy capacity with a broad network of international intelligence alliances to rate highly in the cyber-power rankings. Malaysia came in fifth out of 194 states in the 2020 Global Cybersecurity Index constructed by the International Telecoms Union, a United Nations agency.
With 98.06 out of a possible 100 points, Malaysia was only fractionally behind Singapore and South Korea, and equal with Russia and the United Arab Emirates. It has been in the top 10 since the first report was released in 2014. However, the best way for you, and your family to prevent losses through cyber attacks is to be vigilant when banking online.
5. Benefits Of Domestic And Overseas Credit Cards
Cashback is one benefit of shopping with a local Malaysian credit card. If you are an expatriate and want to make the most of your earnings in Malaysian Ringgit then it is probably a good idea to spend most of what you earn in Malaysia. From time to time, a few countries may not allow you to exchange your hard-earned Malaysian Ringgit for foreign currency when you travel overseas, or the exchange rate may be unfavourable.
If you are sending Malaysian Ringgit savings back home, or to an overseas investment, then you may also be caught by a dip in the value of the Malaysian Ringgit. Remember, it is usually best to have more than one credit card just in case there are simultaneous cyber and fraud attacks on both your credit cards at the same time, leaving you stranded overseas without means to pay for a night out or accommodation.
Some international credit cards offer no international currency charges, as well as favourable exchange rates, so take a look around at what is on offer. You may find that using an overseas credit card in Malaysia is low on cost and favourable on exchange rates.
6. Money Transfers
Most banks around the world now require that you give a reason for any money transfer from your own bank account to a third party. Any bank transfers of a substantial sum must be investigated by the bank and a report made to the central bank, Bank Negara.
You can save yourself time, money and stress by making money transfers of small amounts, less than US$10,000 or foreign currency equivalent, if you want to avoid unnecessary hassle. Some crypto currency wallets do not require you to state a reason for your money transfer and, if you have not already tried, you may be interested to transfer funds around the world using cryptocurrencies.
It is not as difficult as you may think with many transfers simply requiring you to cut and paste an ‘address’ into their portal, then press send.
A lot of wasted time and money is not down to banks, it is down to you. Becoming more aware of the benefits of non-bank and digital banking options, and their associated risks, could save you pennies or earn you pounds.
So there you have it, the available options on banking for expats in Malaysia.
About the Author
Dr. Jonathan Di Rollo (PhD Econ) has been actively and passively investing in Asian markets for more than 20 years.