Annual Report on Exchange Arrangements and Exchange Restrictions, 2007


International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article XIVYes.
Exchange Measures
Restrictions and/or multiple currency practicesThe staff report for the 2006 Article IV consultation with Myanmar states that as of September 20, 2006, Myanmar maintained exchange restrictions and multiple currency practices subject to Fund approval under Article VIII. These include (i) limits on the availability of foreign exchange for foreign travel by residents, (ii) limits on remittances of wage income by nonresidents, and (iii) limits on payments and transfers for certain other invisible transactions, and a multiple currency practice resulting from the divergence between the official exchange rate and the parallel market-determined FEC rate.
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.
Other security restrictionsYes.
References to legal instruments and hyperlinksn.a.
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 in an officially tolerated parallel foreign exchange market. FECs are issued by the Central Bank of Myanmar (CBM) in denominations of 1, 5, 10, and 20 units and are exchangeable for euros, yen, pounds sterling, Swiss francs, and U.S. dollars or for authorized traveler’s checks at the rate of FEC 1 per US$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 U.S. dollars for 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 ±2%. The exchange rates of the kyat for the euro, Indian rupee, yen, Pakistani rupee, pound sterling, Singapore dollar, Sri Lanka rupee, Swiss franc, and the U.S. 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 daily foreign exchange 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.
References to legal instruments and hyperlinksn.a.
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 currencyControls apply to the use of domestic currency for current and capital transactions and payments.
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). 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.
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)
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 who have been granted an official permit to travel abroad are allowed to buy the equivalent of US$100–US$200 against FECs, and those who have sufficient balance in their foreign currency account are allowed to withdraw from their own foreign currency accounts with the approval of the MFR.
Foreigners are not required to purchase FECs on arrival.
On imports
Domestic currencyThe importation of Myanmar currency is prohibited.
Foreign currencyForeigners may bring in up to US$2,000 or its equivalent without any declaration.
References to legal instruments and hyperlinksn.a.
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 U.S. 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. However, telegraphic transfers are also allowed with agreement between the seller and the buyer.
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.
Approval requiredYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyConversion is permitted only for payment of official expenses.
References to legal instruments and hyperlinksn.a.
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.
Approval requiredYes.
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.
Approval requiredYes.
Blocked accountsNo.
References to legal instruments and hyperlinksn.a.
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 or service earnings.
Advance payment requirementsA 100% advance payment is required.
Advance import depositsYes.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementn.a.
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. 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. 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, liquor, beer, cigarettes, fresh or dried fruit, chewing gum, water, cakes, and chocolate). These may be imported for the use of hotels and duty-free shops in exceptional cases.
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 for trade fair purposes.
Import taxes and/or tariffsImport 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 US$1.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
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.
Without quotasIn practice, state agencies responsible for production may export any product in excess of what 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 companies that have entered into a joint-venture agreement with other enterprises or that have obtained permission from the ministries concerned are also allowed to export these products.
Export taxesExports from which proceeds are received in foreign currency are subject to a commercial tax of 8% and an income tax of 2%.
References to legal instruments and hyperlinksn.a.
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 US$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.
Indicative limits/bona fide testn.a.
Investment-related payments
Prior approvalYes.
Indicative limits/bona fide testn.a.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testn.a.
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.
Indicative limits/bona fide testn.a.
Foreign workers’ wagesBalances of salary and lawfully earned income that remain after payment of taxes and deduction of living expenses of workers and their families may be transferred abroad through a bank with the approval of the CBM.
Prior approvalYes.
Credit card use abroadn.a.
Other payments
Prior approvalYes.
Indicative limits/bona fide testn.a.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsUse of funds is subject to exchange control approval.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsn.a.
Surrender requirementsn.a.
Controls on capital and money market instruments
On capital market securities
Bonds or other debt securitiesn.a.
On money market instrumentsn.a.
On collective investment securitiesn.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
Outward direct investmentn.a.
Inward direct investmentForeign investors may set up their business in the form of either a wholly foreign-owned or a joint venture with any partner (an individual, a private company, a cooperative society, or a state-owned enterprise). In all joint ventures, the minimum share of a foreign party is 35% of the total equity capital. If foreign investors intend to form wholly foreign-owned ventures, they must negotiate with the respective ministry and submit the proposal to the Myanmar Investment Commission (MIC) through the respective ministry. Economic activities allowed under the Foreign Investment Law cover almost all sectors of the economy (MIC Notification No. 1/89). The Union of Myanmar Foreign Investment Law provides attractive tax incentives such as a tax holiday for three years, which is extendable. Moreover, the MIC may also grant exemption or relief from income tax on profit that is reinvested within one year; relief from income tax of up to 50% on the profit from exports; rights to pay income tax on behalf of foreign employees and to deduct the same from the assessable income of the enterprise; rights to pay income tax of foreign employees at the rate applicable, and to pay development expenditure; rights to accelerate depreciation; rights to carry forward and set off losses up to three consecutive years from the year the loss is sustained; an exemption or relief or both from customs duty or other taxes on import of machinery equipment, instruments, machinery components, spare parts, and materials used during the period of construction; and an exemption or relief or both from customs duty or other taxes or both on imported raw materials for the first three years of commercial production after the completion of construction.
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
Gifts, endowments, inheritances, and legaciesn.a.
Settlements of debts abroad by immigrantsn.a.
Transfer of assetsn.a.
Transfer of gambling and prize earningsYes.
References to legal instruments and hyperlinksMIC Notification No. 1/89; Union of Myanmar Foreign Investment Law.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Borrowing abroadState approval is required.
Maintenance of accounts abroadYes.
Lending locally in foreign exchangen.a.
Differential treatment of deposit accounts held by nonresidentsn.a.
Provisions specific to institutional investorsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
No significant changes occurred in the exchange and trade system.

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