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

January 26, 2023

Myanmar Updates Guidelines for THB-MMK Direct Payment Mechanism

Subscribe to Updates

On December 30, 2022, the Central Bank of Myanmar (CBM) updated its guidelines on the Thai baht to Myanmar kyat (THB-MMK) direct payment mechanism for Myanmar-Thailand border trade and other flows of capital. The CBM’s guidelines outline an expanded mechanism allowing more trade gates and more designated banks, stipulating banking arrangements for worker remittances, setting out a payment mechanism for exports, clarifying procedures for importing goods via the Myanmar-Thailand border trade, and instituting new reporting procedures.

The THB-MMK mechanism came into being on March 3, 2022, as a pilot project for border trade in Myawaddy, Tachileik, and other areas approved by Myanmar’s Central Committee on Ensuring Smooth Flow of Trade and Goods. In this update, Myawaddy, Tachileik, Myeik, Kawthoung, Mawtaung, and other approved border trading zones are identified as open to the THB-MMK mechanism.

During 2022, the following banks were approved to provide services for the THB-MMK direct payment mechanism:

  • Approved March 4: Ayeyarwaddy Farmers Development Bank and Kasikornbank Public Company Limited
  • Approved July 29: Myanmar Economic Bank and Bangkok Bank Public Company Limited (Yangon branch)
  • Approved August 12: Kanbawza Bank (KBZ) and Bangkok Bank Public Company Limited (Yangon branch)
  • Approved December 30: Ayeyarwady Bank and Bangkok Bank Public Company Limited (Yangon branch), CB Bank PCL and Bangkok Bank Public Company Limited (Yangon branch), UAB Bank and Krung Thai Public Company Limited, Myanmar Apex Bank and Siam Commercial Bank Myanmar Limited, Yoma Bank and Siam Commercial Bank Myanmar Limited

Banking arrangements for workers’ remittances were also stipulated in the new update. In this regard, designated banks can process these remittances by partnering with CBM-permitted international currency transfer businesses, mobile banking service providers, and mobile money service providers after obtaining approval from the CBM.

An addition to the direct payment mechanism is a requirement that exporters manage their received export earnings in accordance with the directives released by the CBM. Export earnings from permitted THB-MMK direct payments must also be scrutinized for whether they have been correctly deposited into the bank accounts of the exporters during the specified period.

Procedures for importing goods via Myanmar-Thailand border trade were also updated in the new guidelines. Designated banks must now provide companies applying for an import license with original bank statements or credit advice proving incoming export earnings or other sources of income if requested. For imports that do not require an import license, companies will need to provide the aforementioned documentation, upon request, for the purpose of import declaration.

In providing such documents, importers can consider all currencies held in their account (e.g., THB, RMB, USD, etc.) cumulatively, and export earnings obtained from one border trade gate on the Myanmar-Thailand border can be transferred for use at another trade gate.

Since more border areas are permitted to participate in the THB-MMK direct payment mechanism, detailed reporting procedures have also been included in the updated guidelines. One notable example is that transaction reports related to bilateral trade matters must be completed using the Myanmar Automated Cargo Clearance System. For border areas that do not have access to the system, the Customs Department, Internal Revenue Department, Central Committee on Ensuring Smooth Flow of Trade and Goods, and a group of designated banks will process transaction reports.

For more details on using the THB-MMK direct payment system, or on any aspect of financial regulations in Myanmar, please contact Tilleke & Gibbins at [email protected].

Related Professionals

Practices

Banking and Finance

Customs and International Trade

Location

RELATED INSIGHTS​ 

January 10, 2025
Tilleke & Gibbins’ project finance team in Vietnam has contributed the Vietnam chapter to the 2025 edition of The Legal 500’s Project Finance guide. As part of The Legal 500’s Country Comparative Guides series, this publication provides businesses and investors with crucial information about the legal and regulatory aspects of project finance across jurisdictions worldwide. The Q&A-format chapters deliver detailed insights into the legal regimes governing an array of project finance topics, including: Ownership structures and corporate governance; Security interests, regimes, and enforcement; Regulatory requirements and consents; Foreign exchange considerations; Environmental, social, and governance (ESG) issues; Public-private partnerships; Foreign judgments; Tax considerations; Common funding structures; and Insurance law principles. Tilleke & Gibbins also prepared the Thailand chapter for this edition. The Vietnam chapter is available as a PDF via the button below, with the full guide freely accessible on The Legal 500 website.
Read More
January 9, 2025
Thailand’s Fiscal Policy Office (FPO) has released a draft of its planned Financial Business Hub Act, which is in line with the government’s aim of positioning Thailand as a regional financial hub and a critical player in the global economy. The draft act, on which the FPO is accepting comments until January 9, 2025, details the framework for promoting and attracting international financial businesses and related services to operate in Thailand, proposes various incentives, and outlines supervisory guidelines. This article examines key elements of the draft Financial Business Hub Act relevant to financial business operators. Incentivized Financial Businesses The draft act identifies the financial businesses to be promoted and incentivized. These target businesses include: Commercial banking businesses, Payment service businesses, Securities businesses, Derivatives businesses, Digital assets businesses, Insurance and reinsurance brokerage businesses, and Other financial-related businesses as determined by the Committee for the Supervision and Promotion of Financial Centers. Thailand’s finance minister explained that initially, the draft law intends to target businesses using an “out-out” model, which describes the raising of capital abroad for investment abroad, before expanding to an “out-in” model, in which capital is raised abroad for investment domestically. Therefore, the draft law currently specifies that the target businesses must only provide services to nonresidents without soliciting residents of Thailand to use their services. Authorization Targeted financial business operators will need to receive authorization from the Committee for the Supervision and Promotion of Financial Centers. The main eligibility criteria for authorization are the incorporation an entity (e.g., a company registered in Thailand, a branch of a foreign juristic person) with an office in designated areas to be specified in a royal decree (currently expected to be Bangkok and adjacent provinces) and the possession of other qualifications as prescribed in the draft act. Target businesses in Thailand will
Read More
January 7, 2025
Myanmar’s Ministry of Commerce (MOC) announced a significant policy change allowing foreign companies incorporated in Myanmar under the Myanmar Companies Law 2017 to export eight categories of locally produced commodities, with effect from December 17, 2024. Notification 93/2024 allows eligible foreign companies—companies with more than 35% of their shares held by foreign entities or individuals—to export, manufacture, or trade the following additional commodities: Value-added meats, fish, and fishery products Value-added agricultural products Pulp and various papers Seeds Refined metals Semifinished or finished horticultural products, including fruits and vegetables Wood-based furniture Products supporting environmental conservation The notification, which was issued under the Export and Import Law 2012, does not set a minimum capital requirement for foreign companies taking advantage of these opportunities. Any type of foreign company can apply to export the eight commodities listed above. Companies permitted or endorsed by the Myanmar Investment Commission (MIC) that wish to engage in these opportunities must also adhere to the rules and regulations set by the MIC. To facilitate the export process, the notification specifies that foreign companies must obtain an export recommendation from the relevant government departments and an export license from the MOC’s Department of Trade for each of these commodities. For more information on this announcement, the relevant licensing authorities for different commodities, or any other aspect of import and export matters in Myanmar, please contact Tilleke & Gibbins at [email protected].
Read More
December 18, 2024
The EU-Thailand Free Trade Agreement is drawing a lot of interest as the fourth round recently concluded in Bangkok. Despite negotiations starting in 2013, there was a ten-year pause before we saw the first round of negotiations end in September 2023. The initial plan was for four rounds of negotiations, with the free trade agreement (FTA) finalized in 2025. However, following the fourth round it is clear that the negotiations are still ongoing. Now, the question is: how much closer are the EU and Thailand to concluding their FTA? The EU initially submitted 13 chapter proposals for the FTA, followed by a further 12, and these became the springboard for the negotiations. Given the complexity of agreeing on an accord of this size, there will probably be additional proposals submitted in 2025. These chapters have seen sector-specific negotiation groups formed, and although it has been difficult to truly gauge the status, steady progress has been made in each. Arguably one of the biggest points of discussion pertains to the customs process for imports and exports. Both sides aim to align their practices in relation to rules of origin and custom rates, with preferential tariff treatments offered to goods originating from Thailand and the EU, as well as talks of eliminating or reducing relevant taxes. The desire for a faster customs clearance can be seen in EU proposals for clearance of goods on arrival. Although there has been progress in agreeing to a more simplified customs process, more work needs to be done before we hear news of the agreed-upon fees and charges, or confirmation of what goods would be allowed temporary admission. When we consider customs clearance, it is important to also examine what this FTA could mean for rightsholders. One piece of good news is that it appears
Read More