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​ 

December 7, 2023
Thailand’s Securities and Exchange Commission (SEC) has updated its regulations regarding public initial coin offerings (ICOs) that exhibit debt-like or infrastructure-backed characteristics. These new regulations are set to transform the landscape for digital fundraising, ensuring enhanced investor protection and risk mitigation. The introduction of these regulations is a major move toward cultivating a more transparent and secure digital token market in Thailand. It highlights the importance of comprehensive information disclosure and aligning digital-asset fundraising practices with established financial standards. The adjustments require more collaboration between token issuers and ICO portals to comply with the developing regulatory environment. The key features of the new regulations, which took effect on November 16, 2023, are summarized below. Debt-Like ICOs Debt-like digital tokens are digital tokens for which a fixed rate of return is predetermined. The rate does not vary based on the performance of the project or enterprise, but it may be supplemented by extra returns. To ensure that investors have access to adequate and essential information prior to making informed investment decisions, and to evaluate the risk of default by the issuer, the regulation requires disclosure of the project’s creditworthiness and risk assessment factors, as detailed below. Project creditworthiness. Disclosures about project creditworthiness should include information about the credibility assessment of the project, which should be conducted reasonably by an ICO portal or an independent expert. Risk assessment factors. Disclosures should include information about the factors considered in the assessment of risks—particularly the financial capability to repay the investment project’s debt. Infrastructure-Backed ICOs Infrastructure-backed digital tokens are issued for investment in infrastructure assets or to earn a share of the revenue stream from infrastructure projects. The regulations for the ICOs of these infrastructure-backed tokens have been revised to align with those for infrastructure trusts. These regulatory updates cover various aspects: Definition
Read More
December 6, 2023
Over the past two years, Laos has experienced a sharp depreciation in the value of the kip (LAK) against foreign currencies. To thwart this depreciation and get its currency back on track, the government took a series of measures and issued the Law on Foreign Exchange Management No. 15/NA of July 7, 2022 (the “FX Law”) to improve management of the foreign currency and reiterate restrictions on foreign currency in the country. The amended law also aimed to strengthen foreign exchange liquidity and increase the reserve of foreign currency held in Laos. This year, the prime minister of Laos issued the Order on the Implementation of Foreign Exchange Management, which came into force on July 14, 2023. The order addresses foreign currency use, movement, and possession and clarifies administrative roles regarding the FX Law. This article outlines some of the key points related to the FX Law and the prime minister’s recent order. Use of Foreign Currency Other than a major relaxation regarding remuneration for foreign employees, the amended FX Law retains Laos’ strict regulatory approach to the use of foreign currencies. The general rule is that foreign currency payments for goods, services, debt, dividends, or taxes are prohibited; these payments must be in LAK. The amended law also seems to prevent suggestions that a price in LAK may be adjusted based on another currency. One of the few exceptions to these requirements is for the export of goods and services abroad, in which case it is acceptable to receive payment in foreign currencies. Similarly, the import of goods may allow payment in foreign currency. Announcements or advertisements of the price of goods or services in a foreign currency are likewise prohibited, as is offering a salary in foreign currency when advertising a job in Laos. Similarly, employees’ remuneration,
Read More
November 21, 2023
In this article originally published by World Trademark Review, Tilleke & Gibbins senior associate David Mol shares advice on how to collaborate effectively with customs officials at Cambodian border points and ports, offering a guide on how to successfully monitor for—and enforce against—counterfeit and grey market goods.   Can rights holders record trademark and brand-related IP information with Customs and, if so, how?   At present, there is no formal customs IP recordal system in place in Cambodia. However, rights holders may consider: a request letter to Customs; or recordal of an exclusive distributorship. Request letter to Customs A request letter to Customs would be an effective measure in cases where a rights holder is aware of a specific customs checkpoint that is being used to smuggle infringing goods. The rights holder may request to set up a meeting with Customs at the checkpoint to provide officials with: guidance on the issue; the IP rights involved; and information on product identification. The rights holder may further request the official’s assistance in monitoring shipments for certain goods. Customs has been open and cooperative in the past, setting up direct communication lines between rights holders and border officials. Officials then: monitor shipments; exchange sighting reports; and set up inspections where applicable. However, this option is not directly regulated under any laws or regulations, and can only be considered as an ad hoc approach in cases where the rights holder is aware of issues at a specific checkpoint. We usually do not recommend using this approach to alert all checkpoints in Cambodia, as it is rather time-intensive, requiring close cooperation and active liaison with officials. Instead, targeting specific checkpoints has proven to work in our experience. A request letter to Customs may apply to all types of intellectual property. However, a recently issued regulation that addresses suspensions
Read More
October 30, 2023
On October 9, 2023, Laos issued Presidential Decree No. 003, which raised excise tax rates for certain goods, effective immediately. The move to increase excise tax rates comes amid the marked depreciation of the Lao kip (LAK). The Lao government is trying to monitor and discourage imports of non-essential products in order to reduce the outflow of foreign currency from the country. Increasing the tax rate for some of these products is part of these efforts. The specific products and excise tax rates are listed in the table below.   This new rate policy is also in line with recent government efforts to encourage avoiding payment in foreign currency to prevent the depletion of foreign currency reserves in Laos. In this regard, commercial banks have already taken action to ration the supply of foreign currency by prioritizing imports of essential goods, such as fuel. The products listed above formalize this impetus to prioritize certain imports and discourage others deemed not essential. In addition, the increased excise tax rates on fuel-powered vehicles show the commitment of the Lao government to move toward electric vehicles, which would also lessen the country’s dependence on fuel imports. For more information on these excise tax changes, or on any aspect of Laos’ international trade regulations, please contact Tilleke & Gibbins at [email protected].
Read More