On July 13, 2022, the Central Bank of Myanmar (CBM) revoked its previous exemption from the foreign currency conversion requirement for companies that are registered with the Directorate of Investment and Company Administration (DICA) and have at least 10% foreign investment. Banks with authorized dealer  status are thus no longer permitted to exempt these companies from the CBM’s requirement to convert foreign currency transfers and balances to Myanmar kyat. This sudden revocation of the prior relaxation was circulated in CBM Letter No. FE-1/739 to AD banks for exchanging foreign currencies in Myanmar. The letter effectively reverses information the CBM circulated in meeting minutes on June 7. Notably, however, this does not affect foreign-owned companies approved by the Myanmar Investment Commission, or investments in special economic zones. These exemptions and others previously announced by the CBM in relation to the currency conversion requirement remain valid, and are not affected by this revocation. For more details on these foreign exchange developments, or on any aspect of financial regulations in Myanmar, please contact Tilleke & Gibbins at [email protected].

On May 30, 2022, Thailand’s Securities and Exchange Commission (SEC) announced that it would start regulating ready-to-use utility tokens, a type of digital token that had previously been exempted from the SEC’s approval and regulatory control. A public forum was open for comments from various stakeholders until June 29, 2022, and the draft regulation is expected to be issued soon. So far, the SEC has only supervised the issuance of not-ready-to-use utility tokens—digital tokens with the underlying right to acquire specific goods or services, which cannot be utilized upon issuance but at a later date. Due to the growing digital asset industry and lack of regulatory control, ready-to-use utility tokens have become more popular and many are listed for trading in digital asset exchanges. The SEC claimed that it is now necessary to regulate ready-to-use utility tokens as some issuers appeared to be exploiting the regulatory loophole to manipulate the price and supply of these tokens in both the primary and secondary markets, while providing insufficient data disclosure to investors. The SEC’s proposed principles include the following key points: Pre-Approval Requirements The same pre-approval requirement applicable to not-ready-to-use utility tokens will apply to ready-to-use utility tokens which an issuer intends to list on a digital asset exchange. This means that the issuer must proceed with the standard formalities, i.e., obtaining prior approval from the SEC, filing a draft prospectus, and offering the approved tokens via a SEC-approved ICO portal operator only. The SEC offers a fast-track (15 days) approval for qualifying ready-to-use utility tokens, which are those with plain-vanilla characteristics; with an offering price corresponding to the value of the underlying goods/services; for which the supply of goods and services does not vary with the price of the tokens (i.e., fixed coins); and which are not intended to be

On April 4, 2022, Myanmar’s State Administration Council (SAC) established the Foreign Exchange Supervisory Committee (FESC) to approve foreign currency conversion, make exemptions to foreign exchange restrictions, and permit overseas foreign currency transfers. The formation of the FESC was made official with the May 13, 2022, publication of the SAC’s Order 28/2022 in the Government Gazette, which appointed six individuals to the new committee. The FESC is the focal body tasked with implementing Myanmar’s recently adopted policy of requiring conversion of foreign currency transfers and balances to local currency. Since the policy was instituted in April 2022, the Central Bank of Myanmar issued further clarifications and instructions for banks authorized to handle foreign currency, responded to concerns from foreign investors by exempting certain foreign investment projects from the conversion requirement, and relaxed the currency conversion requirements for trade at the Chinese and Thai borders. The FESC supervises the flow of foreign currencies for domestic and foreign investment, manufacturing, exports and imports, and service businesses (including education- and health-related initiatives). The FESC is specifically responsible for considering and approving the use of foreign currency for the following: Importation of machinery, vehicles, equipment, and raw materials needed for the foreign investment and manufacturing; Importation of fuels, medicines, cooking oils, fertilizers, insecticides, and construction materials that are not available in the domestic market; Myanmar citizens’ social matters, such as going abroad for purposes of medical treatment, education, or religious activities; Importation of general goods, repayment of loan and interest payments to lenders in foreign countries, service payments, and repatriation of profits from investments; and Imports of various luxury products (e.g., brand-name goods, jewelry, sport cars, watches, etc.). The FESC will also perform other duties relating to foreign exchange management as assigned by the SAC. For more details on these foreign exchange developments,

Following the positive response to the recent Central Bank of Myanmar (CBM) announcement on the exemption of certain foreign direct investment (FDI) projects from the foreign currency conversion requirements, the CBM issued a further exemption on April 26, 2022, for exporters and importers conducting trade at the China-Myanmar or Thailand-Myanmar border. The CBM’s directive (No. 7/2022) extends the currency conversion (THB-MMK or CNY-MMK) deadline to one month, meaning that foreign currency obtained from border trade with Thailand or China no longer has to be converted into Myanmar kyat (MMK) within one day. After export earnings flow into an exporter’s account at an AD bank (i.e., a bank licensed to deal in foreign currency), the exporter can use the foreign currency as desired or sell it to the bank at the official exchange rate within one month. After one month, any unused balance remaining will be sold to the bank. Hence, banks are authorized to directly transact in the foreign currency (i.e., CNY-MMK or THB-MMK) of exporters and importers conducting border trade at the China-Myanmar and Thailand-Myanmar borders. Designated banks may carry out foreign currency settlement for imports without seeking approval from the Foreign Exchange Supervisory Committee. Export earnings, on the other hand, are to be scrutinized by AD banks to ensure that these earnings are deposited into the relevant exporter’s bank account in Myanmar in compliance with stipulations under the Foreign Exchange Management Law and its related regulations. Foreign currency transactions conducted under the China-Myanmar and Thailand-Myanmar border trade programs must be reported to the Foreign Exchange Management Department via the Border Trade Module of the department’s electronic reporting system. The day after issuing the above directive, the CBM issued a separate press release warning relevant parties to strictly comply with the Foreign Exchange Management Law and its related