The Department of Trade (“DOT“) under the Ministry of Commerce (“MOC“) of the State Administration Council (“SAC“) has released a series of newsletters related to export and import activities. These newsletters cover topics such as the issuance of import licenses, the banking system requirements for making trade payments at China’s border, and the streamlined approval process for Advance Telegraphic Transfer (TT) at the border trade area. The Myanmar Customs Department has also issued an order to implement the One ID One Shipment and the One ED One Shipment at the borders for exports and imports. To support these new trading systems, the Central Bank of Myanmar (“CBM“) has also issued a letter guiding how to align with them. These updates aim to enhance efficiency and simplify operations in border trade, and the details of these updates are explained further below.
Import Licenses through both “Automatic Licensing” and “Non-Automatic Licensing” Systems
According to the newsletter issued by the DOT on 21 June 2023, 1525 sea-imported goods will be eligible for permits under the Automatic Licensing system. For certain sea imports, which did not require an import license in the past, importers must now obtain licenses through the Non-Automatic Licensing system after 60 days from the publication of this newsletter. Similarly, for border area imports that previously did not require an import license, the Non-Automatic Licensing system must be used from the 30th day from the newsletter’s publication, during which a review of export earnings and other supporting documentation is required. The implementation of import licenses under both systems began on 22 June 2023.
Myanmar-China Border Trade Payment with the New Banking System
Since 1 November 2022, a banking system was established to facilitate cross-border trade between Myanmar and Thailand. Starting 1 August 2023, the second phase will expand this system to enable trade between Myanmar and China. Under this arrangement, importers can use their export-import revenues, other revenues and Yuan balances acquired from local banks to finance their imports. Compliance with payment requirements through designated banks is crucial, as stated in the DOT’s newsletter issued on 23 June 2023.
The newsletter further states that for Myanmar-China border trade, the following steps are necessary for importing goods: Companies must apply for an import license to the DOT. They must apply along with the original credit advice and bank statement issued by the relevant bank. These documents demonstrate that their export revenues or other funds have been deposited into their bank accounts or acquired from a local bank.
The DOT reviews submitted documents to ensure compliance with revenue and fund requirements. Based on this evaluation, import licenses will be issued, with the total sum not exceeding the bank balance. Import license applications submitted before 30 August 2023 are invalid, and imports with licenses issued before this date must be completed by 31 August 2023. Failure to meet the import completion deadline will lead to import license cancellation. Valid revenues for import approval are those received after 1 January 2023. Companies can either use their export revenues for self-importation or transfer them to another company for importation on their behalf. Funds can be transferred between Myanmar-China cross-border stations to facilitate imports.
Easement of the Advanced Telegraphic Transfer (TT) System for Cross-border Export
The DOT’s newsletter on 28 June 2023 introduced new export procedures for Myanmar-China border trade. This update includes the decision of the Foreign Exchange Supervisory Committee Meeting No. (32/2022) permitting the export of beans, maize, sesame, and peanuts through the Advance Telegraphic Transfer (TT) system starting from July 2022. As of 1 July 2023, exporters are no longer required to prepay export revenue to facilitate the export process.
Companies operating for over three years on 1 July 2023 must deposit 20% of their total export earnings, while companies with less than three years of existence must deposit 35% of their total export earnings as a deposit when applying for export licenses at the DOT. Once the export declaration form is received, the company must transfer the export earnings into its designated bank account within seven working days. However, another newsletter released on 6 July 2023 subsequently extended this time frame to fifteen business days. The deposit will be refunded upon receipt of the export revenues.
Additionally, exporters must provide the relevant border trade zone or trading post with specified proof of the Purchase Order (PO) cheque and deposit to demonstrate compliance when applying for the export license—failure to credit earnings within the specified timeframe results in deposit confiscation and closure of the exporter/importer registration. Exporters can initially use US dollars, Yuan, Baht, or Kyat for the deposit based on prevailing market rates in the respective border region. However, according to the revised newsletter issued on 6 July 2023, exporters may now use Kyat for their deposits.
The One ID One Shipment and the One ED One Shipment at the Border Area
The Myanmar Customs Department issued an order dated 21 June 2023 to strengthen customs control, prevent illegal exports/imports, and expedite cargo vehicle inspections. This order has introduced two systems to be implemented at the border trade area: One ID One Shipment for imports, and One ED One Shipment for exports. Compliance with these systems involves three permissible methods as follows:
- The order allows for the submission of a single export/import declaration form if different types of commodities are carried in a cargo vehicle to fulfil customs duties payment requirements.
- Multiple export/import declaration forms can be filed for a single cargo vehicle for customs duties payment. Still, goods cannot be loaded if the quantity stated in the declaration form remains in stock.
- If an import declaration form specifies only one type of commodity, it can be used for up to five vehicles, while a single export declaration form can be used for up to ten vehicles. These measures aim to expedite customs processes within one day, emphasizing that goods cannot be loaded if the quantity stated in the declaration form remains in stock.
These initiatives have been implemented to ensure compliance with the newly introduced systems and promote efficient and secure trade operations at the border trade area.
CBM’s Letter Outlines Requirements for Aligning with New Trading Systems
On 3 July 2023, the CBM issued a letter containing the resolution of the Foreign Exchange Management Committee (“FESC“). This resolution introduced updated requirements for transactions between banks and customers, as well as among customers, in the foreign currency market using the online trading system as of 22 June 2023. Authorized Dealer (AD) banks have been informed about the obligation to submit bids/offers within this online trading system. The requirements for AD banks and customers are outlined below.
- Verification of Company Details for Payment Transfers Related to Imports:
Companies involved in payment transfers for imports must undergo a verification process to ensure their legitimacy. The approval date of the license, shipping date, and identification (ID) date of the companies must be verified. Trade activities will only be permitted if a valid license has been obtained. Any payment transfers made for imports before obtaining the license will not be allowed. AD Banks should not submit cases where the license date is later than the ID date.
- Prohibition of Advanced Payment Telegraphic Transfer (TT) for Imports:
The mentioned newsletter issued by the DOT permits Advanced Telegraphic Transfer (TT) use for all export transactions. However, as specified in this CBM letter, using advanced payment Telegraphic Transfer (TT) for imports is prohibited. In exceptional circumstances where advanced payment is necessary for imports, each case must be individually presented for approval. AD Banks should carefully evaluate the necessity of utilizing advanced payment Telegraphic Transfer (TT) for imports. If deemed necessary, each case must be presented individually for approval on a case-by-case basis.
- Outbound Money Transfers for Imported Goods with ID Period Exceeding Six Months:
Outbound money transfers for licensed and non-licensed imported goods are not allowed if their identification (ID) period exceeds six months. AD Banks must thoroughly examine whether the identification (ID) period falls within three months after obtaining the license. If the ID period exceeds three months, it is necessary to extend the license.
To ensure smooth workflow and uninterrupted business operations, it is imperative to adhere to all the newly introduced updates and fulfil the stated requirements. DFDL is committed to providing expert advice and comprehensive services concerning these latest developments, ensuring that we are readily available to assist you.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.