New Foreign Currency Conversion Requirements and Exemptions in Myanmar

The 3rd April 2022, the Central Bank of Myanmar (“CBM”) issued Notification 12/2022 (“Notification”) and Directive 4/2022 (“Guideline 4”) on foreign currency conversion. They entered into force on and from 3rd April 2022.

5and In April 2022, the CBM issued Directive No. 6/2022 (“Guideline 6”) to prescribe procedures for transfer of foreign currency to Myanmar, conversion and transfer/repatriation of foreign currency abroad.

The main requirements under the Notice and Directive 4 and Directive 6 are summarized below.

Notification requirements

  • Any resident of Myanmar receiving foreign currency from abroad must remit the foreign currency to Myanmar through a funds transfer to a foreign currency account opened with a bank holding an authorized dealer’s license (“Bank AD”) in Myanmar, and have the funds converted into Myanmar Kyat (“MMK”) within one business day. Foreign currency transferred to Myanmar before 3rd April 2022 are also subject to this new foreign currency conversion requirement.
  • The repatriation of any foreign currency abroad must be effected through an AD bank with the authorization of the Foreign Exchange Surveillance Committee (“CSCF”).
  • Failure to comply with the notification may be subject to legal action under the Foreign Exchange Management Act 2012.

Directive Requirements

  • Each of the AD banks is required to comply with foreign currency conversion requirements and implementing measures and policies.
  • The exchange rate for converting USD prescribed by the CBM is 1850 MMK to 1 USD. Other foreign currencies will be calculated based on the exchange rate of 1,850 MMK to 1 USD.
  • Effective from 4and April 2022, any foreign currency received in cash from abroad in the course of commercial and non-commercial activities (such as the export of goods, the provision of services, investment funds not subject to the exemption approved by the FESC) and deposited in a bank account opened with the AD Bank must be converted into MMK at the exchange rate prescribed by the CBM within one business day from the date of receipt.
  • Prior to accepting and crediting each funds transfer received into a relevant bank account as an offshore loan, investment fund or unilateral funds transfer, the relevant AD bank must verify whether the fund has received CBM approval. .
  • Myanmar resident must obtain FESC approval before they can transfer foreign currency funds overseas for payment of imported goods, services, dividends paid, capital investment payment, refund loans, etc.
  • AD banks may charge a bank service fee for each funds transfer at 3 MMK per USD.

Exemptions

The 20and In April 2022, the BCM issued Letter No. FE 1/69 to exempt certain activities and persons from the requirements of depositing foreign currency funds received from abroad with AD banks and converting them into MMK under the notification as follows:

  • Foreign direct investment activities under the Myanmar Investment Commission (“microphone“) permit
  • Investments by companies made in Special Economic Zones (“SEZ”)
  • Foreign diplomats and their family members from embassies located in Myanmar
  • Foreign staff members of diplomatic entities serving at the same rank as diplomats of foreign embassies
  • Members of the staff of the United Nations (“UN”) and its agencies, and nationals of Myanmar holding a UN staff passport (laissez-passer)
  • Foreign staff members of foreign development agencies assisting Myanmar
  • Foreign staff members working at diplomatic rank in international organizations such as ICRC, ILO, INGOs and development agencies such as TICA, JICA
  • International airlines owned by the state and citizens of Myanmar.