You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 9, 2022

Myanmar Clarifies Foreign Currency Conversion Requirements

Subscribe to Updates

Following Myanmar’s recently announced notification requiring conversion of all foreign currency transfers and balances to Myanmar kyat (MMK), the Central Bank of Myanmar (CBM) has issued additional detailed guidance to banks on how to manage transfers, outbound remittances, and various other transactions involving balances in foreign currency. The CBM also announced that the union government and ministries are exempt from the foreign currency conversion requirements.

The developments came on April 5, 2022, when the CBM issued Directive No. 5/2022, exempting these government bodies from the requirement, and Directive No. 6/2022, which provides instructions for banks licensed as authorized dealers (ADs) permitted to exchange currencies. The directive makes AD-licensed banks responsible for handling the conversion process by (1) transferring the amount in question to the concerned company’s account, (2) converting the amount to MMK at the CBM exchange rate, and (3) depositing it in an MMK-denominated account. The conversion process must be carried out within one working day of receiving the following types of funds:

  • Export earnings
  • Other earnings (including from services)
  • Foreign currency investments (excluding foreign currency allowed by the CBM’s Foreign Currency Management Committee)

The conversion process is also required for the following two types of funds, which require the AD-licensed bank to perform additional checks:

  • Loans for investment. AD-licensed banks may only proceed with the conversion process after determining that CBM approval has been obtained in accordance with section 29(a) of the Foreign Currency Management Law and Rule 48 of the Foreign Currency Management Rules.
  • Unilateral transactions. AD-licensed banks may only proceed with the conversion process after determining that CBM approval has been obtained in accordance with the rules 54 and 55 of the Foreign Exchange Management Rules.

As noted in the previous notification instituting the foreign exchange requirements, outbound transfers of foreign currency by resident individuals and entities in Myanmar are to be carried out with the permission of CBM’s Foreign Exchange Supervisory Committee. Directive No. 6/2022 stipulates that this includes (but is not limited to) the following:

  • Payment for imports (including advance payments)
  • Payment for service fees and other expenses
  • Remittance of dividends accruing from foreign investment, and return of investment capital
  • Transfers for investment in foreign countries
  • Making loan and interest payments to lenders in foreign countries
  • Transferring expenses and fees as stipulated in rule 27 of the Foreign Exchange Management Rules

After obtaining the Foreign Exchange Supervisory Committee’s permission for an outbound transfer, AD-licensed banks are to sell foreign currency according to the CBM exchange rate, and can charge fees of MMK 3 per USD 1.

Related Professionals

Practices

Banking and Finance

Location

RELATED INSIGHTS​ 

December 4, 2024
Thailand Legal Basics, a valuable primer for foreign investors, explores all aspects of living and doing business in Thailand. Written by specialists at Tilleke & Gibbins in Bangkok, it is the only comprehensive English-language guide to the Thai legal system with a focus on the concerns of foreign business and investment.
Read More
October 24, 2024
On September 27, 2024, the Securities and Exchange Commission of Thailand (SEC) issued a circular clarifying reporting obligations in relation to listed company securities held by the company’s directors, executives, auditors, or persons related to them (“Key Persons”). The circular aimed to address growing concerns over transparency in shareholding, particularly when shares are used as loan collateral by company executives without sufficient public disclosure, which can lead to sudden share loss and executive departures, destabilizing the company. This circular is likely a stopgap measure, and a full overhaul of the reporting regulations may be needed. The current reporting obligations came into effect on March 16, 2024, and were designed to simplify reporting procedures while still maintaining transparency in the capital markets. The rules allow the Key Persons to consolidate multiple transactions and report them only when certain thresholds are crossed — such as when the total transaction value reaches THB 3 million or when six months have passed since the last report. The rules were intended to reduce the number of minor reports and limit penalties for missed deadlines. However, recent scandals have raised concerns about the reporting rules, particularly issues related to the enforcement of share collateral on executives’ or directors’ loans where the listed company may face a change of direction and management due to such forced sales. To ease these concerns, the SEC issued the new circular to reiterate the rules and lay out three key situations triggering a reporting duty: Force-Selling Due to Default: If shares are forcibly sold due to a loan default, this must be reported, and the transaction should be recorded with the Thailand Securities Depository (TSD). Transfer of Shares to Custodians: Under current rules, the transfer of shares to/from a custodian holding them on behalf of a beneficial owner does not
Read More
October 20, 2024
Following the U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs, Thailand’s Securities and Exchange Commission (SEC) is reassessing regulations on the investments of mutual funds and private funds (collectively “Funds”). The SEC has launched a public consultation on new draft notifications introducing  the new asset classes that can be held by Funds, and aims to bring these rules into effect on January 1, 2025. The highlights of these changes are set out below. Eligible New Asset Classes The new asset classes that can be held by Funds can be categorized into two types—investment tokens and crypto assets—and the determination will focus on substance over form. Investment tokens: If the substance involves raising funds, regardless of what the assets are called, and they are legally issued and offered or approved by home regulators that are members of the International Organization of Securities Commissions (IOSCO), Funds can invest in these types of assets as transferable securities within the permitted ratio. Crypto assets: The eligible crypto assets which Funds are entitled to hold focus on crypto ETFs or offshore funds investing in crypto assets, and they are subject to investment limits. Funds can hold crypto assets directly, but only temporarily, and only for the purpose of purchasing, selling, or exchanging the crypto assets, not speculative purposes. The notifications state that Funds may hold Bitcoin/Ethereum for no longer than five business days and USDT/USDC for no more than one month. Investment Limits Typically, the rules segregate investment limits into listed and non-listed digital assets, and the limits depend on the sophistication of the investors in the Funds. In general, UI Funds (mutual funds offered to institutional investors or ultra-high net worth investors) can invest in these new asset classes without any limitations, although net exposure to other crypto assets  –  which
Read More
September 24, 2024
In recent years, Thailand has witnessed significant developments in its personal finance sector, particularly in alternative lending options. This article explores two key concepts in the Thai financial landscape: nano finance and personal loans. These alternative lending models, regulated by the Bank of Thailand (BOT), aim to provide more accessible financial services to individuals and small entrepreneurs who might have limited access to traditional funding sources. Nano Finance: Empowering Small Entrepreneurs The nano finance scheme under the BOT’s supervision is designed to provide funding to small entrepreneurs who might have limited access to traditional financial resources. One of the key features of this scheme is the ability of licensed nano finance providers to use alternative data in assessing loan applicants’ ability to repay (information-based lending). To implement this approach, nano finance providers must have an internal policy on credit approval that supports: Identifying scope and processes for utilizing alternative factors or technologies in determining debt repayment capacity, credit line limits for each loan applicant and total credit limits, and acceptable debt repayment targets; Having resources and personnel with sufficient knowledge, capability, experience, and expertise to operate efficiently and effectively, as well as clear checks and balances; Establishing guidelines for selecting and analyzing factors or financial models to evaluate or predict loan applicants’ ability and willingness to repay; Having an internal sandbox to test key success factors of the selected factors or models; and Having a process for monitoring and reviewing the application of the selected factors or models in assessing debt repayment capability. This approach allows nano finance providers to make more informed lending decisions based on a broader range of data, potentially increasing access to finance for small entrepreneurs who may not have traditional credit histories or collateral. Personal Loans The personal loan scheme under BOT supervision aims
Read More