Pursuant to Directive No. 7/2022 issued by the Central Bank of Myanmar (“CBM“), relaxing the application of Notification 12/2022 (“De-dollarization Notification“), inter alia, for the Myanmar Investment Commission (“MIC“) and Special Economic Zone companies, exporters and importers conducting activities under Myanmar-China and Myanmar-Thailand border trade, international organizations, INGOs, etc.; the CBM, and with Foreign Exchange Supervisory Committee’s (“FESC“) consent for the logistics sector, the Ministry of Transport and Communication (“MOTC“) has further relaxed the application of the De-dollarization Notification under two separate instructions:
1) The MOTC, with internal approval and consultation with the FESC under the aegis of the Myanmar State Administrative Council (“SAC“), issued a letter in June 2022, approving certain limits of foreign exchange reserves permissible for the logistic sector:
The above-mentioned foreign exchange limits are collectively called “Logistics Forex Limits“. The letter issued by MOTC further states that any amount in foreign currency above the Logistics Forex Limits would have to be compulsorily converted into Myanmar Kyat; and
2) After the letter issued by MOTC prescribing the Logistics Forex Limits, in a recent meeting in June 2022, between the CBM and Authorized Dealer Licensed Banks (“AD Banks“), the CBM clarified the following regarding the application of the FE Notification:
a) Companies registered with the Directorate of Investment and Company Administration (“DICA“) with at least 10% foreign investment shall be exempted from the requirements under the De-dollarization Notification issued by the CBM.
b) The balances obtained by deducting the total amount of foreign currency purchased until 10 June 2022 (the amount already disclosed to the CBM) from the total amount of foreign currency held in the foreign currency account before 4 April 2022 will be divided into two parts: the balances of exempted enterprise or companies and the balances of non-exempted enterprise or companies. By 10 June 2022, AD Banks must deliver this information to the CBM.
c) The payments for the shipment before 4 April 2022, by which the cargoes were already unloaded, shall be allowed, provided the AD Banks submit the following to the CBM:
i. Confirmation that the customer has enough funds in their foreign currency account (describing such expressions as “balance amount” or “sufficient balance” or “margin already deducted”);
ii. The details of the import license; and
iii. Import declaration date if it is a non-licensed item.
d) Banks must ensure that additional sales of foreign currencies reserved in the account as per the decision of the Foreign Exchange Supervisory Committee must not be carried out through account transfers.
e) As the Foreign Exchange Supervisory Committee permitted, foreign currencies must be sold to fuel companies promptly.
f) For businesses, organizations, and companies exempt under the FE Notification, same account transfers between AD Banks are permitted. In this regard, AD Banks must scrutinize the transactions to ascertain if such transactions are made from one account to another owned by the same customer and are in charge of preventing any errors.
g) Local employees of exempt organizations like the United Nations are not required to have their salaries converted into Myanmar kyat (MMK) within one business day. If they wish to withdraw, they must do so exclusively in MMK.
h) Account transfers from one foreign currency account to another, including those of exempted enterprises, were previously prohibited. However, account transfers from a foreign currency account held by one of these exempted enterprises to a ministry account are allowed.
i) A request for purchasing foreign currency for items for which an import license was issued before 4 April 2022 or an import declaration was issued for non-licensed items must be submitted to the Foreign Exchange Supervisory Committee via the Ministry of Commerce.
j) Each bank must ensure that all its operational officers and management department staff know the letters of instruction issued by the CBM.
This is a positive development, especially in light of the most recent CBM notifications and the uproar among foreign investors in Myanmar. Foreign companies can hold foreign currency in their foreign currency accounts in Myanmar.
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.