The Investment Company Institute (ICI) is asking the central bank of Malaysia to exempt mutual funds from a freeze which prohibits converting the Malaysian ringgit to dollars and transferring those proceeds out of Malaysia until Sept. 1, 1999. The ICI warned that failure to grant the exemption would discourage mutual funds from investing in Malaysia in the future.

Fund industry officials said the immediate financial stakes are not that great. Funds have less than $1 billion in assets in Malaysia, fund tracking firms estimate. Nevertheless, the inability to cash out stakes in Malaysian investments and convert the proceeds into U.S. dollars has reminded investors of the political risk factor in overseas investing, said Gregg Wolper, international funds editor at Morningstar.

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