Knowledge Highlights 31 August 2022
On 5 August 2022, the Central Bank of Myanmar (“CBM”) issued Notification No. 36/2022 (“Notification 36”) relating to the application of its previously announced mandatory foreign currency conversion requirements as set out in Notification No. 12/2022 (“Notification 12”).
Notification 12, issued on 3 April 2022, provides that all foreign currency earned by Myanmar residents must be deposited in banks with licences to exchange foreign currency (known as authorised dealer (“AD”) banks) and converted into Myanmar Kyat within one working day of receipt.
Notification 36 revises this requirement for exporters, stipulating that they are required to convert 65% of their export earnings into Myanmar Kyat, rather than 100% as provided for in Notification 12. CBM issued Letter FE-1/PaKa/1956 on 16 August 2022 (“Letter”) providing further information on the requirements set out in Notification 36 including an instruction to AD banks that the purchase of the 65% required to be converted to Myanmar Kyat must be done within one business day.
The Letter also provides that the remaining 35% of export earnings may be used by the exporter for itself, transferred to non-AD entities or sold to AD banks, noting that the requirement to obtain the approval of the Foreign Exchange Supervisory Committee for any cross-border transactions still applies.
The Letter stipulates that any unused portion of the remaining 35% of export earnings must be sold to AD banks for Myanmar Kyat at the 30-day mark from receipt of the earnings.
The variation in Notification 36 follows on from the entire exemption from Notification 12 given to exporters and importers trading under the China-Myanmar and the Thai-Myanmar border trade programmes. Our article titled “Central Bank of Myanmar exempts exporters and importers under the Thai-Myanmar Border Trade and China-Myanmar Border Trade programs from foreign currency conversion requirements” discusses this exemption.
Change in foreign exchange rate
CBM announced on 5 August 2022 that its official reference exchange rate has been changed from US$1 to MMK1,850 to the new rate of US$1 to MMK2,100. Authorised dealer banks were to begin using the updated rates on 5 August 2022, in accordance with Myanmar’s requirement to convert foreign currency transfers and balances to local currency using the official CBM rates.
To read our articles on the foreign currency developments in Myanmar that were issued soon after each was announced, please click on the titles below:
- Banks in Myanmar to suspend companies’ repayment of offshore loans and convert foreign currency held by companies with up to 35% foreign ownership (25 July 2022)
- Myanmar revokes exemption for foreign-owned companies from currency conversion rule (21 July 2022)
- Central Bank of Myanmar stipulates only Myanmar Kyat to be used in domestic payments (13 June 2022)
- Myanmar establishes Foreign Exchange Supervisory Committee to oversee use of foreign currency (1 June 2022)
- Central Bank of Myanmar exempts exporters and importers under the Thai-Myanmar Border Trade and China-Myanmar Border Trade programs from foreign currency conversion requirements (10 May 2022)
- Central Bank of Myanmar announces exemptions to foreign currency conversion mandate (22 April 2022)
- Central Bank of Myanmar clarifies obligations relating to foreign currency conversion (8 April 2022)
- Central Bank of Myanmar requires foreign currency to be converted into Myanmar Kyat (5 April 2022)