KUALA LUMPUR, Sept 26 Malaysia's central bank is streamlining rules on trade in the local

KUALA LUMPUR, Sept 26 (Reuters) Malaysia's central bank is streamlining rules on trade in the local currency to cut the cost of doing business in the country, the central bank said in a statement posted on its Web site.

Malaysia has been gradually liberalising its foreign exchange administration rules to woo more foreign investors, and some market players expect the process to eventually lead to a lifting of a decade-old ban on offshore trade in the ringgit .

But analysts said the latest measures, due to come into force on Oct.1, may help lower local transaction costs, but should not be seen as a prelude to the opening up of the currency market.

''This is more of an easing from an administrative point of view rather than actually priming the market for internationalisation of the ringgit,'' said Vishnu Varathan, an economist with Forecast Pte Ltd.

The central bank said in a circular to chief executives of licensed onshore banks that five types of transactions would no longer have to be registered, though they would still require authorities' approval.

''Please note that while the registration requirements ... are abolished, the approval requirements on these rules remain unchanged,'' the central bank said.

It listed the five main changes as: - Residents need no longer register for forward foreign exchange contracts exceeding 50 million ringgit ($14.6 million) - Residents can lend non-residents more than 50 million ringgit for property investment without the need for registration - Residents need not register to be able to invest in the equivalent of more than 50 million ringgit in foreign-currency assets where there is no domestic ringgit borrowing - Residents need not register to be able to borrow foreign currency from licensed onshore banks or non-residents between the equivalent of 50 million ringgit and 100 million ringgit - Residents need not register to be able to make prepayments on foreign-currency borrowings from non-resident lenders where the loan exceeds the equivalent of 50 million ringgit.

Malaysia keeps tight rules on the ringgit to protect the currency from speculative attack, but it is under pressure to make the ringgit more attractive to investors.

In the circular, the central bank also said it had abolished the threshold on investments of Islamic funds in foreign currency assets as part of efforts to make Malaysia a global hub for Islamic finance.

The threshold was for 50 percent of the net asset value for unit trust companies and for 50 percent of total funds attributable to residents with domestic ringgit borrowing for fund management companies.

Investment in foreign currency assets by conventional funds managed by unit trusts and fund management firms are still subject to that threshold, it said.

The central bank also aborted a prerequisite for non-residents to reinvest within seven working days proceeds from the sale of ringgit assets before the maturity of a forward foreign exchange contract in order to continue with the existing forward foreign exchange contract.

This would give non-resident investors greater flexibility in managing their ringgit exposure, it said.

($1=3.426 Malaysian Ringgit) REUTERS MP BD1148