Chapter

MYANMAR

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Myanmar is the Myanmar kyat.
Exchange rate structure
DualIn addition to the official exchange rate, foreign exchange certificates (FECs) are issued by the Central Bank of Myanmar (CBM) in denominations of 1, 5, 10, and 20 units and are exchangeable with six hard currencies or with acceptable traveler’s checks. FECs are widely used and serve the needs of visitors and investors in Myanmar. FECs are available for kyats at the market-determined rate at the exchange centers in Yangon. Seven exchange centers operate in Yangon and 19 in other cities. Holders of FECs may deposit them into their foreign exchange accounts. An unofficial parallel market for foreign exchange also exists.
Classification
Conventional pegged arrangementThe Myanmar kyat is officially pegged to the SDR at K 8.50847 per SDR 1. Myanmar applies margins of 2% to spot exchange transactions, based on the fixed kyat-SDR rate. The buying and selling rates of the kyat for the euro, Japanese yen, Swiss franc, pound sterling, and the U.S. dollar, quoted by the Myanmar Foreign Trade Bank (MFTB), are determined on the basis of the daily calculations of the value of these currencies against the SDR, as are rates for the currencies of some member countries of the ACU (i.e., the Bangladesh taka, Indian rupee, Iranian rial, Nepalese rupee, Pakistan rupee, and Sri Lanka rupee). The buying and selling rates for the Hong Kong dollar, Malaysian ringgit, and Singapore dollar are determined daily on the basis of the appropriate cross rates in the Singapore market, and the buying and selling rates for other currencies are based on the appropriate cross rates published in The Asian Wall Street Journal or the London Financial Times.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with member countries of the ACU are made in ACU dollars through the ACU mechanism.
Payment arrangements
Regional arrangementsMyanmar is a member of the ACU.
Clearing agreementsYes.
Barter agreements and open accountsBilateral trade arrangements with neighboring countries exist. These arrangements do not provide for the extension of credit.
Administration of controlExchange control is administered by the CBM in accordance with instructions from the Ministry of Finance and Revenue (MFR). A Foreign Exchange Control Board headed by the Deputy Prime Minister allocates foreign exchange for the public sector. The central bank limits foreign currency operations to two state-owned banks, the MFTB and the Myanmar Investment and Commercial Bank (MICB).
International security restrictions
In accordance with UN sanctionsYes.
Payment arrears
OfficialArrears are maintained with respect to debt-service payments of the central government.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold are not allowed for the private sector. Jewelry for personal use may be brought into Myanmar, subject to customs declaration at the port of arrival. Personal jewelry of a prescribed value may be taken out, subject to the condition that the jewelry will be brought back into the country. No conditions are attached, however, to the taking out of personal jewelry that was declared to customs when it was brought into Myanmar. Gold bullion may not be imported from any source.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of Myanmar currency is prohibited.
Foreign currencyResidents who have been granted an official permit to travel abroad are allowed to buy $500 from the MFTB and the MICB on presentation of $500 of FECs or the equivalent from their own foreign currency accounts. Nonresidents leaving Myanmar within six months of arriving may take out any balance of foreign currency they brought in with them and may also reconvert the remaining balance of the FECs purchased in excess of the minimum required purchase of $300.
On imports
Domestic currencyThe importation of Myanmar currency is prohibited.
Foreign currencyTravelers may bring in up to $2,000 or its equivalent without any declaration. Tourists arriving in Myanmar are required to purchase FECs equivalent to a minimum value of $300, but amounts in excess of this minimum may be reconverted into foreign exchange on departure.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyForeign currency accounts of national firms may be kept with private domestic banks permitted to conduct foreign exchange transactions. Accounts may be opened in U.S. dollars only by Myanmar nationals who earn foreign exchange. Account holders are allowed to import under import licenses issued by the Ministry of Commerce (MOC) on the basis of LCs or on a collection basis.
Approval requiredWith prior approval, account holders may use funds from their accounts to purchase air tickets for family visits abroad and to make payments for personal imports, for examination fees for their children, and for medical treatment abroad. Transfers of funds between accounts are permitted.
Held abroadThese accounts may be opened, but approval is required.
Accounts in domestic currency convertible into foreign currencyConversion is permitted only for payment of official expenses.
Nonresident Accounts
Foreign exchange accounts permittedForeign currency accounts of diplomatic missions and international organizations and their home-based personnel may be kept with the MFTB only. For other nonresidents, prior approval is required.
Domestic currency accountsThese accounts are permitted, but all debits and credits require prior authorization.
Convertible into foreign currencyThese accounts may be converted, but approval is required.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetAn import program for the public sector is prepared annually as part of the foreign exchange budget drawn up jointly by the Ministry of National Planning and Economic Development and the MFR.
Financing requirements for importsAll payments for imports not originating from border trade are made through private domestic banks permitted to conduct foreign exchange business. State economic enterprises obtain foreign exchange directly from the MFTB, within the approved foreign exchange budget, after receiving endorsement from the respective ministries. Payments for border imports may be effected directly from the proceeds of border exports. Myanmar nationals who have opened foreign currency accounts are allowed to make unlimited payments for personal imports with the funds from their accounts. Myanmar nationals working abroad under official permits who have not yet opened foreign currency accounts may make payments on their personal imports out of their accumulated savings of legitimate funds.
Advance payment requirementsThe state banks require a 100% advance payment, while private bank requirements vary according to the credit standing of their customers.
Advance import depositsYes.
Documentation requirements for release of foreign exchange for imports
Preshipment inspectionYes.
Letters of creditYes.
Import licenses used as exchange licensesYes.
Import licenses and other nontariff measuresImports are free from tariffs, except for those imported from countries under UN embargo or with which Myanmar has severed diplomatic relations. With a few exceptions, private sector imports require import licenses for each transaction and are largely financed from the importer’s foreign currency account. Since November 1997, only one type of import license has been issued, under which 60% is allocated to essential goods and the remainder to nonessential goods. An importer wishing to import nonpriority or neutral items is generally required to import priority goods at a value equivalent to 50% and 25% of the values of nonpriority goods and of neutral items, respectively. Private importers must register at the MOC and renew their licenses annually. Border imports require permits. Exporters of agricultural, forestry, and fisheries products are encouraged to import up to the equivalent of 25% of the export value of selected items that will contribute to the production in these sectors. A 2% service charge payable in foreign exchange is charged for issuance of an import license on garments.
Negative listCertain items, such as opium and other narcotics, playing cards, and gold and silver bullion, may not be imported from any source.
Open general licensesJoint ventures with private interests may be granted OGLs on a case-by-case basis. State economic enterprises may import goods for their own use and for resale with OGLs, whereas government departments may import only for their own use.
Import taxes and/or tariffsTariff rates range from zero to 40%. Agricultural implements, raw materials, and other essential imports are taxed at low rates, while the highest rates are applied to imports of luxury goods.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsProceeds from exports must be fully repatriated.
Financing requirementsNo.
Documentation requirements
Letters of creditYes.
Preshipment inspectionYes.
Export licensesExport trade may be conducted with any country without restriction, except those under UN embargo or with which Myanmar has severed diplomatic relations.
Without quotasIn practice, state agencies responsible for production may export any product in excess of what is needed for domestic consumption. Special permits are required for exports of antiques. State enterprises have a monopoly on the exportation of rice, teak, petroleum, natural gas, pearls, jade, and precious stones and metals. Rice is exported by the Myanmar Agricultural Produce Trading through the Myanmar Export-Import Services; private traders and cooperatives are also permitted to export some beans and pulses, rattan, flour, and cut flowers under valid export permits issued by the MOC. Border trade of certain products, including rice, teak, rubber, petroleum, hides, leather, some beans and pulses, maize, cotton, and groundnuts, is not permitted.
Export taxesExcluding goods under the exemption list, duties were levied on all exports at 5%, provided the proceeds are received in foreign currency. A specific duty of K 10 per metric ton is levied on all varieties of rice. Effective January 1, 1999, export duties were abolished.
Other export taxesCustoms duties are levied on rice, bamboo, cereal, raw hides, and cakes.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAll payments for invisibles outside the public sector are subject to approval and are considered on a case-by-case basis. Remittances against FECs are permitted up to US$30,000 a month.
Trade-related paymentsRemittances of insurance premium payments other than for Myanmar Insurance are not permitted.
Prior approvalYes.
Investment-related paymentsInformation is not available on the amortization of loans or the depreciation of direct investments.
Prior approvalYes.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Personal payments
Prior approvalYes.
Quantitative limitsRemittances to retired government employees are permitted only if the persons concerned were nonnationals throughout their term of service and are now residing in their native countries. Family remittances are permitted only for foreign technicians employed under contract by the government; the limit is one-half of the net salary if the spouse is living abroad, and one-third of the net salary if the spouse is living in Myanmar.
Foreign workers’ wagesBalances of salary and lawful income earned that remain after payment of taxes and deduction of living expenses of the worker and his or her family may be transferred abroad through a bank with the approval of the CBM.
Prior approvalYes.
Other payments
Prior approvalYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsUnless exchange control authorities grant a special waiver, 10% of proceeds must be paid as income tax. Myanmar nationals working abroad with permission from the government are required to pay an income tax at the rate of 10% of their gross earnings in foreign exchange. Myanmar seamen serving abroad and Myanmar nationals working abroad in private organizations are required to transfer to Myanmar as tax 10% of their gross earnings in foreign exchange through embassies in their country of residence. Myanmar nationals working abroad in UN organizations are not required to pay income tax.
Restrictions on use of fundsUse of funds is subject to exchange control approval.
Capital Transactions
Controls on capital and money market instrumentsn.a.
Controls on derivatives and other instrumentsn.a.
Controls on credit operations
Commercial credits
To residents from nonresidentsYes.
Financial credits
To residents from nonresidentsYes.
Guarantees, sureties, and financial backup facilities
To residents from nonresidentsYes.
Controls on direct investment
Inward direct investmentThe Myanmar Investment Commission may accept proposals for investment from foreigners for full ownership and under joint venture, with the share of foreign capital representing at least 35% of the total capital. To facilitate and promote foreign investment, the commission may grant exemption from customs duties and other internal taxes on machinery and equipment imported during construction of the project, spare parts used in business, and raw materials imported for the first three years of commercial production, as well as exemption from the income tax for a period of up to three consecutive years, including the year when production of goods and services began, or for longer than three years, depending upon the profitability of the enterprise. Furthermore, accelerated depreciation allowances may be granted. Types of economic activity and the sectors open to foreign investment are specified in a detailed positive list.
Controls on liquidation of direct investmentThe government guarantees that an economic enterprise formed under a permit will not be nationalized during the term of the contract or during an extended term. Repatriation of capital and profits is allowed through banks after payment of taxes and prescribed funds.
Controls on real estate transa ions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsLand may not be owned by foreign investors but may be leased from the state.
Sale locally by nonresidentsYes.
Controls on personal capital movements
Transfer of gambling and prize earningsYes.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadState approval is required.
Maintenance of accounts abroadYes.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 1999
Exports and export proceedsJanuary 1. All export duties on commodities were abolished.

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