Myanmar blocks car and luxury imports amid foreign currency crisis

BANGKOK – Myanmar has tightened import controls by banning imports of cars and other non-essential goods as the country grapples with a severe shortage of foreign currency caused by falling investment and aid from the stranger.

Burmese athletes who competed in the Southeast Asian Games in Vietnam in May were surprised by an unusual announcement last week from the Ministry of Transport and Communications: gold medalists would be rewarded with import permits of cars.

Permits have become all the more valuable after authorities stopped issuing them in October 2021. Under former military rulers, they were used to reward military-related figures. The new military government seems to be taking a page from the old playbook.

The Commerce Ministry said restrictions on imports of luxury items, such as cars, will be temporary, but the move hit the businesses affected. Foreign companies that entered Myanmar relying on domestic demand now face an uncertain outlook.

“We have heard that the authorities are ready to allow imports to resume, but we see no indication that this will happen soon,” said a source at a Japanese importer of new vehicles.

Cars are not the only victims of the government’s frantic efforts to improve its balance of trade. Because boosting exports is not easy, the government is cracking down on imports to reduce the trade deficit.

Myanmar required import licenses for 3,931 items before the civilian government was ousted by the military in February 2021. As of last May, the tally stood at 9,099. Products range from large electronics public to clothes.

The situation does not seem to be improving. For the two quarters to March, Myanmar reported exports of $8.1 billion and imports totaling $7.9 billion.

But the trade surplus was largely due to reduced purchases of capital goods by foreign and domestic firms. Imports of consumer goods increased by 8% compared to the previous year period.

Myanmar has fallen back into a trade deficit since April due to factors including rising fuel prices.

Authorities further tightened trade controls in April. The Foreign Exchange Supervisory Board now allocates foreign currency for imports of essential goods.

This introduced more red tape in obtaining import licenses. A process that once took about a week has recently taken over a month.

Foreign currency is needed to pay for imports of industrial materials. Myanmar authorities only allow currency exchange at the official exchange rate set at around 10% above the floating rate of the Kyat, the national currency. This limited the amount of foreign currency that could be obtained in the market.