In a significant acknowledgement of the importance of international investment in the country, the Central Bank of Myanmar (CBM) has issued an exemption for certain foreign direct investment (FDI) projects from their recently announced requirement to convert foreign currency balances to Myanmar kyat (MMK). This is welcome news for investors—particularly companies approved by the Myanmar Investment Commission (MIC) and companies established in special economic zones (SEZs). The exemption also covers certain diplomats, locally affiliated airlines, and employees of some international organizations.
The changes came on April 20, 2022, with Letter No FE 1/69, which specified that the foreign currency conversion requirements in CBM Notification No 12/2022 do not apply to:
- FDI businesses holding a permit from the MIC;
- Direct investment businesses located in SEZs;
- Diplomats, family members of foreign embassy personnel, those with diplomatic relations with Myanmar, and members of the diplomatic missions of foreign embassies in Myanmar;
- Employees of the United Nations and Myanmar citizens holding laissez-passer who are employed at missions of the United Nations and its specialized agencies in Myanmar;
- Foreign employees of development agencies carrying out aid activities in Myanmar;
- Foreign employees with diplomatic status from international organizations, international NGOs, and development agencies; and
- Myanmar state-owned airlines or airlines owned by Myanmar citizens.
The letter stipulates that banks authorized to exchange and deal in foreign currencies in Myanmar (AD-licensed banks) must carry out know your customer and customer due diligence procedures to verify the status of those included in the exemptions. Exemptions will only apply upon successful verification. Furthermore, AD-licensed banks are responsible for reporting these activities to the CBM.
For more details on these foreign exchange developments, or on any aspect of financial regulations in Myanmar, please contact Tilleke & Gibbins at [email protected].