MALAYSIA Law and Practice Contributed by: Will Fung, Penelope Gan and Kee Shao Yee, Richard Wee Chambers
scale recurring revenue lending segment within the domestic market. Private credit providers are active but selective. Ven - ture debt and regional private credit funds occasion - ally finance technology and digital businesses with recurring income profiles, typically on a bespoke basis rather than through standardised products. Overall, private credit remains complementary to bank financ - ing, with recurring revenue structures emerging gradu - ally alongside the broader digital economy. 1.7 Deal Sizes, Fund Sizes and Fundraising Malaysia does not impose statutory size limits on private credit transactions. In practice, deal sizes are commercially driven and concentrated in the SME and mid-market segments, with indicative ranges of approximately MYR5 million to MYR50 million for SMEs and MYR50 million to RM200 million for mid- sized corporates. Larger transactions are less com - mon and are often structured as club deals or along - side bank financing. Private credit fund sizes remain relatively modest. Malaysia-focused funds generally range between MYR200 million and MYR500 million, with larger regional mandates reaching up to approximately MYR1 billion. Fundraising conditions are selective, shaped by strong competition from domestic banks and the established bond and sukuk markets. Insti - tutional capital tends to favour managers with proven track records and disciplined underwriting. 1.8 Impending Regulation and Reform In Malaysia, private credit lenders are not subject to a dedicated regulatory regime. Oversight is activity- based, and purely bilateral or private lending arrange - ments generally operate outside direct prudential supervision, subject to contract, insolvency, foreign exchange, and anti-money laundering laws. There are no publicly announced proposals for bespoke regula - tion of private credit funds. Cross-border lending in Malaysia is feasible but remains bank-centric, with foreign lenders needing to navigate licensing, foreign exchange, and borrower restrictions. They typically participate via co-lending, bilateral deals, or selective capital deployment, while
large-scale sponsor-backed financing continues to be dominated by banks and public debt markets. Separately, Malaysia has historically lacked a unified regulatory framework for consumer credit. The Con - sumer Credit Act 2025, gazetted on 31 December 2025 and effective from 1 March 2026, consolidates licensing, registration, and conduct requirements for consumer-focused lenders. While the Act introduces new compliance obligations that may capture some non-bank or foreign lenders in consumer-facing seg - ments, it is not intended to restrict foreign participa - tion, and private credit providers focused on corpo - rate lending are generally unaffected unless they offer consumer loans. 2. Regulatory Environment 2.1 Licensing and Regulatory Approval In Malaysia, lenders (including foreign lenders), are generally not required to obtain a banking licence or regulatory approval to provide cross-border loans to Malaysian borrowers, provided they are not carrying on regulated “banking business” in Malaysia within the meaning of the FSA and do not undertake activi - ties that would trigger licensing requirements under the Moneylenders Act 1951. This position typically applies where the lending is conducted on a purely offshore basis without establishing a business pres - ence or otherwise being regarded as carrying on a business in Malaysia. From a foreign exchange control perspective, the prin - cipal regulatory framework is set out in the FEP Notic - es. In general, borrowing by Malaysian residents from non-residents in foreign currency is permitted without prior approval, subject to compliance with applica - ble prudential limits, purpose-based restrictions, and reporting requirements under the FEP Notices. The commonly referenced thresholds (eg, up to MYR10 million equivalent for individuals and up to MYR100 million equivalent for corporate groups) are not blan - ket limits on external borrowings, but rather apply in specific contexts under the FEP Notices, and should therefore be assessed on a case-by-case basis, while ringgit-denominated lending by non-residents is more restricted and may require approval.
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