Annual Report on Exchange Arrangements and Exchange Restrictions 2005


International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of December 31, 2004)

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, an unofficial rate is determined on an officially tolerated parallel foreign exchange market. 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 euros, yen, pounds sterling, Swiss francs, and dollars or with authorized traveler’s checks at the rate of FEC 1 per $1. FECs are widely used and serve the needs of visitors and investors in Myanmar. FECs may be exchanged for kyats at a fixed rate at FEC exchange centers. There is also an illegal parallel market that exchanges dollars with kyats at a premium over the parallel market FEC rate. Holders of FECs may open foreign currency accounts and/or deposit their FECs into their foreign exchange accounts.
Managed floating with no predetermined path for the exchange rateThe kyat is officially pegged to the SDR at K 8.50847 per SDR 1 within margins of ±1%. The exchange rates of the kyat for the euro, Bangladesh taka, Indian rupee, yen, Pakistan rupee, pound sterling, Sri Lanka rupee, Swiss franc, and the dollar are determined on the basis of the daily calculations of the value of these currencies against the SDR. The exchange rates for other currencies are determined on the basis of the appropriate cross rates in the Singapore market.
The exchange rate of the parallel market, through which the majority of foreign exchange transactions take place, is determined freely.
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 AMUs through the ACU mechanism. Border trade may be conducted in euros, kyats, yen, Singapore dollars, U.S. dollars, and, in the respective border areas, Chinese yuan, Indian rupees, Lao kip, and Thai baht.
Controls on the use of domestic currency
For current transactions and paymentsYes.
For capital transactions
Transactions in capital and money market instrumentsYes.
Transactions in derivatives and other instrumentsYes.
Credit operationsYes.
Use of foreign exchange among residentsYes.
Payments 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. Ten percent of the gross earnings of Myanmar nationals working abroad must be paid as income tax. Myanmar nationals working abroad in UN organizations are not required to pay this tax.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)In accordance with the relevant UN Security Council resolutions, measures have been taken to freeze the funds and other financial assets of listed individuals and organizations associated with terrorism.
In accordance with UN sanctionsYes.
Payments arrears
OfficialArrears have been incurred 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 approval by the controller of foreign exchange and the condition that the jewelry 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 export of Myanmar currency is prohibited.
Foreign currencyResidents, other than government officials, who have been granted an official permit to travel abroad are allowed to buy the equivalent of $100–$200 from the Myanmar Foreign Trade Bank (MFTB) and the Myanmar Investment and Commercial Bank on presentation of FECs from their own foreign currency accounts. Government officials are allowed to take out the equivalent of $500 when traveling abroad. Nonresidents leaving Myanmar within six months of arriving may take out any balance of foreign currency they brought in with them.
Foreigners are not required to purchase FECs upon arrival.
On imports
Domestic currencyThe importation of Myanmar currency is prohibited.
Foreign currencyForeigners may bring in up to $2,000 or its equivalent without any declaration.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyForeign currency accounts of national firms may be kept with state-owned banks. Accounts may be opened in dollars or euros only by Myanmar nationals who earn foreign exchange. Account holders are allowed to effect imports under import licenses issued by the Ministry of Commerce (MOC) on the basis of LCs or telegraphic transfers.
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 prior approval is required.
Accounts in domestic currency held abroadn.a.
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 importsImports are permitted relative to the level of export earnings.
Advance payment requirementsA 100% advance payment is required.
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 from countries under UN embargo or with which Myanmar has severed diplomatic relations are prohibited. The state economic enterprises under the different ministries are authorized to engage in their own external trade, but must apply for an export or import license from the MOC. Private importers also need to obtain licenses, and their imports must consist of 80% of priority items A and 20% of priority items B. Generally, no quota or ceiling is imposed on import items. Some restrictions apply to the imports of certain goods, mainly foodstuffs (e.g., monosodium glutamate, soft drinks, all types of biscuits, canned goods, instant noodles, liquors, beer, cigarettes, fresh or dried fruit, chewing gum, water, cake, and chocolate). Import licenses for foreign trading companies have been suspended.
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 licensesOGLs are issued on a case-by-case basis.
Import taxes and/or tariffsEffective June 15, 2004, import customs duties are collected at the MFN rate ranging from zero to 40% of assessed value with the conversion factor for the calculation of assessed value set at K 450 per $1. Previously, imports were subject to a tax ranging from 2.5% to 20% with the calculation of assessed value made at the rates of K 100, K 150, and K 180 per $1, depending on the goods involved.
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 with those under UN embargo or with which Myanmar has severed diplomatic relations. Export licenses of foreign trading companies have been suspended.
Without quotasIn practice, state agencies responsible for production may export any product in excess of that which is needed for domestic consumption. State enterprises have a monopoly on the export of teak, petroleum, natural gas, pearls, jade, and other precious stones and metals. Private traders and cooperatives are also permitted to export some beans and pulse, and rattan under valid export permits issued by the MOC. Border trade of certain products, including teak, rubber, petroleum, cotton, and groundnuts, is not permitted.
Export taxesExports from which proceeds are received in foreign currency are subject to a commercial tax of 8% and an income tax of 2%.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAll payments for invisibles outside the public sector are subject to approval, which is granted on a case-by-case basis. The maximum amount that may be remitted against FECs is $10,000 a month or its equivalent.
Trade-related payments
Prior approvalPrior approval from the Controller of Foreign Exchange is required for remittances of insurance premiums.
Investment-related payments
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 not Myanmar nationals 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 or by private firms established under the Foreign Investment Law. 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 lawfully earned income 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.
Restrictions on use of fundsUse of funds is subject to exchange control approval.
Capital Transactions
Controls on capital transactionsYes.
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 a joint-venture arrangement, with the share of foreign capital representing at least 35% of the total capital. To facilitate and promote foreign investment, the commission may grant exemptions 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 exemptions 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. In addition, 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 transactions
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 transactions
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 2004
Imports and import paymentsJune 15. Import goods were subject to import duties in the range of zero to 40%, with the conversion factor set at the rate of K 450 per $1.

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