Myanmar’s junta bows to foreign businesses after currency exchange outcry

Myanmar’s central bank has announced an exemption for foreign entities from a controversial new policy requiring all their foreign exchange held in banks or earned from business to be converted into local currency.

The rule that has been introduced just two weeks ago and caused widespread condemnation among business groups and residents alike.

The exemption includes companies with approved foreign investments, firms in special economic zones, international non-government organisations, diplomats, United Nations agencies and airlines, officials of the junta-backed government said on April 21.

The regulation was originally implemented in an effort to exert more control over foreign currency flows in the nation which is struggling with international sanctions and foreign currency outflows. This happened amid an ongoing conflict that led to instability and policy uncertainty in the wake of the military’s coup in February 2021 and triggered a mass exodus of foreign companies.

Businesses warn of “severe impact”

Industry groups and embassies warned that business activity in the country could be severely impacted if the regulation would be kept – on top of the adverse effects and outright chaos the coup already brought along for many economic sectors.

Foreign business chambers in Myanmar had warned in a joint statement that the new currency rule would create “insurmountable challenges” for businesses and would disconnect the country from the global financial system.

The change will now provide some relief, among others, for fuel importers, which initially were hit hard by the exchange requirement. It, however, remains unclear what now applies to purely domestic businesses that earn foreign currency from exports since the Central Bank of Myanmar only referred to “foreign entities.”

“We don’t want investment withdrawals”

Aung Naing Oo, the junta government’s minister for investment and foreign economic relations, said that the currency exchange measure has been originally installed to stabilise the country’s non-convertible currency, the kyat, after the latter has been in free fall since the coup.

But he conceded that the country is in a “transitional period,” particularly economically, and that there would be “no more additional burden” on foreign companies.

“Myanmar is committed to providing a secure, accessible and conducive investment environment. We do not wish to see investment withdrawals,” he said.



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Myanmar’s central bank has announced an exemption for foreign entities from a controversial new policy requiring all their foreign exchange held in banks or earned from business to be converted into local currency. The rule that has been introduced just two weeks ago and caused widespread condemnation among business groups and residents alike. The exemption includes companies with approved foreign investments, firms in special economic zones, international non-government organisations, diplomats, United Nations agencies and airlines, officials of the junta-backed government said on April 21. The regulation was originally implemented in an effort to exert more control over foreign currency flows...

Myanmar’s central bank has announced an exemption for foreign entities from a controversial new policy requiring all their foreign exchange held in banks or earned from business to be converted into local currency.

The rule that has been introduced just two weeks ago and caused widespread condemnation among business groups and residents alike.

The exemption includes companies with approved foreign investments, firms in special economic zones, international non-government organisations, diplomats, United Nations agencies and airlines, officials of the junta-backed government said on April 21.

The regulation was originally implemented in an effort to exert more control over foreign currency flows in the nation which is struggling with international sanctions and foreign currency outflows. This happened amid an ongoing conflict that led to instability and policy uncertainty in the wake of the military’s coup in February 2021 and triggered a mass exodus of foreign companies.

Businesses warn of “severe impact”

Industry groups and embassies warned that business activity in the country could be severely impacted if the regulation would be kept – on top of the adverse effects and outright chaos the coup already brought along for many economic sectors.

Foreign business chambers in Myanmar had warned in a joint statement that the new currency rule would create “insurmountable challenges” for businesses and would disconnect the country from the global financial system.

The change will now provide some relief, among others, for fuel importers, which initially were hit hard by the exchange requirement. It, however, remains unclear what now applies to purely domestic businesses that earn foreign currency from exports since the Central Bank of Myanmar only referred to “foreign entities.”

“We don’t want investment withdrawals”

Aung Naing Oo, the junta government’s minister for investment and foreign economic relations, said that the currency exchange measure has been originally installed to stabilise the country’s non-convertible currency, the kyat, after the latter has been in free fall since the coup.

But he conceded that the country is in a “transitional period,” particularly economically, and that there would be “no more additional burden” on foreign companies.

“Myanmar is committed to providing a secure, accessible and conducive investment environment. We do not wish to see investment withdrawals,” he said.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

 

 

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