Throughout 2022, the Central Bank of Myanmar (CBM) has implemented a series of rules surrounding the compulsory conversion of foreign currency balances in the country. This began on April 3, when the CBM issued a notification directing foreign currency holders in Myanmar to convert their foreign earnings into Myanmar kyat (MMK), within one day, at the official exchange rate. Since then, the CBM has issued further clarifications and instructions for banks authorized to handle foreign currency, responded to some 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 process has not been without some trial-and-error as well, with the CBM walking back some exemptions after they were enacted. Foreign investors and business owners, both in the country and abroad, have raised concerns about this centralized control of foreign currency flow and the depletion of foreign currency in Myanmar’s business community. To help readers understand the sometimes-surprising moves by the CBM over the past months, this article will summarize the key developments in the CBM’s efforts relating to foreign currency conversion. Establishment of Compulsory Exchange Requirement On April 3, 2022, the CBM issued Notification No. 12/2022 and Directive No. 4/2022 requiring nearly all individuals, companies, and other organizations in Myanmar to convert foreign-currency income received from abroad to MMK within one working day of receipt. These requirements took immediate effect for all transfers and applied retroactively to foreign currency balances already in the country. All authorized dealer (AD) banks (i.e., those licensed to exchange foreign currency) were instructed to convert foreign currency held in the foreign currency accounts of “internal residents”—which included locally registered companies, organizations, and offices; Myanmar branches of foreign companies; and individuals residing or established in Myanmar

Thailand’s Trade Competition Commission has amended the guidelines prohibiting large purchasers from setting unfair credit terms for small and medium-sized enterprises (SMEs). The new guidelines, which were published in the Government Gazette on August 17, 2022, revise the definition of SMEs and clarify the duties of concerned parties. The original guidelines, which took effect in December 2021, set a favorable maximum period for credit terms for SMEs selling products or services to a third-party purchaser. Prescribing longer credit terms than the mandatory period would constitute an unfair trade practice in violation of the Trade Competition Act B.E. 2560 (2017). In defining what businesses are considered SMEs, the guidelines set thresholds for the number of employees and amount of annual turnover. The amended guidelines maintain these thresholds, but the new guidelines require that both employee-number and turnover thresholds be met in order for a business to be considered an SME. In contrast, the original guidelines only required either the employee-number threshold or the turnover threshold to be met. This amendment will likely mean that fewer business operators qualify as SMEs. Accordingly, two types of businesses are defined as SMEs under the guidelines: Manufacturers of goods with up to 200 employees and an annual turnover of no more than THB 500 million (approximately USD 13.5 million); or Service providers or wholesale or retail businesses with up to 100 employees and an annual turnover of no more than THB 300 million (approximately USD 8.1 million). To benefit from protection under the new guidelines against unfair credit terms, SMEs must provide documents proving the number of employees and the amount of annual turnover to trade partners that purchase goods or services from them. The new guidelines come into force on September 16, 2022. For more information on the unfair credit term guidelines, or

Thailand’s Board of Investment (BOI) has extended its previously announced period for reduction of import duty on imported raw and essential materials for battery manufacturing for electric vehicles and other applications. The BOI’s announcement No. 5/2565 dated August 8, 2022, extended the reduction period to a maximum of five years. The BOI’s promoted activities list includes two battery-manufacturing business activities: Activity 4.8.3.1 – Battery manufacturing Activity 5.2.6.1 – High energy density battery manufacturing Qualifying battery manufacturers who have cell or module manufacturing processes are eligible for 90% import duty reductions on raw and essential materials that cannot be produced in Thailand. These reductions will be available on an annual basis, and are renewable for five years in total—up from the original two years. Existing projects (i.e., those which have the original two-year duration in their BOI certificate) can also benefit from the extension by preparing a project amendment form, along with a clarification letter and supporting documents, for submission to the BOI office. For more details on these customs duty reductions, or on any aspect of investment promotion in Thailand, please contact Charuwan Charoonchitsathian at [email protected] or +66 2056 5657, or Napassorn Lertussavavivat at [email protected] or +66 2056 5662.

On July 27, 2022, Myanmar’s Ministry of Commerce (MOC) issued Newsletter No. 8/2022 to effectively ban foreign companies and foreign joint ventures from exporting value-added beans, corn, and sesame. This newsletter repealed Newsletter No. 2/2020, which had prescribed the criteria for beans, corn, and sesame to be considered “value-added” crops. These criteria had to be fulfilled in order for these commodities to be exported in accordance with Notification No. 24/2019, which had permitted foreign companies and foreign joint ventures to purchase seven categories of commodities from local manufacturers for export, subject to certain terms and conditions. These include: Meat and fish; Value-added crops; Pulp and paper; Seeds; Refined metals; Semi-finished or finished valued-added fruit products; and Timber-based furniture. With the repeal of the conditions in Newsletter No. 2/2020, foreign exporters are left with no reference criteria for how to achieve “value-added” status for beans, corn, and sesame, and thus will not be able to submit a complete application for the necessary export license. However, exportation of the other items in the list above remains unaffected and open to foreign exporters who meet the applicable requirements. The MOC explained their decision to revoke the permitted criteria by noting that some foreign companies were not actually producing beans, corn, and sesame that fulfilled the criteria for value-added status as laid out in Newsletter No. 2/2020, but were falsely exporting their goods as “value-added crops.” The revocation of the export criteria for beans, corn, and sesame took immediate effect. For more details on these export restrictions, or on any aspect of importation and exportation regulations in Myanmar, please contact Tilleke & Gibbins at [email protected].