Central Bank of Myanmar clarifies obligations relating to foreign currency conversion

8 April 2022

On 5 April 2022, the Central Bank of Myanmar (“CBM”) issued Directive No. 5/2022 and Directive No. 6/2022 providing further information on Directive No. 4/2022 and Notification No. 12/2022 issued on 3 April 2022 relating to the conversion of foreign currency income into Myanmar Kyats.  

Our article titled “Central Bank of Myanmar requires foreign currency to be converted into Myanmar Kyat” provides more information on the 3 April 2022 issuances.

This Article sets out the key information provided by CBM on 5 April 2022.

Clarifications on AD bank obligations in converting foreign currency

The requirement set out in Directive No. 4/2022 is that banks holding an authorised dealer licence (“AD banks”) are to convert income, whether from trade or non-trade sources, received from overseas into Myanmar Kyats within one working day of the receipt of those funds. This Directive also provided that, from 4 April 2022, foreign currency can only be transferred out of Myanmar with the approval of the Foreign Exchange Management Department.

Directive No. 5/2022 clarifies that the entirety of Directive No. 4/2022 does not apply to the accounts of the Union Government or Ministries.

Notification No. 12/2022 (“Notification No. 12”) provides that foreign currency earned by Myanmar residents must be deposited in AD banks and converted into Myanmar Kyats within one working day of receipt. Directive No. 6/2022 (“Directive No. 6”) clarifies that Notification No. 12 applies to Myanmar residents’ incoming international transfer in foreign currency from abroad, outgoing transfer of foreign currency abroad and foreign currency held in foreign currency accounts with Myanmar banks.

Directive No. 6 also provides more information on the obligations on AD banks in relation to conversion of foreign currency, which it must complete within one business day. 

No

Type of funds

Action by AD bank

1

Export proceeds

·         Transfer and deposit the foreign currency into the relevant company’s account on the date of receipt

 

·         Convert the foreign currency at CBM’s specified exchange rate and deposit the converted sum into the relevant company’s Myanmar Kyat account

2

Other proceeds including services

·         Transfer and deposit the foreign currency into the relevant company or individual’s foreign currency account on the date of receipt

 

·         Convert the foreign currency at CBM’s specified exchange rate and deposit the converted sum into the relevant company or individual’s Myanmar Kyat account

3

Inflow of funds for investment

·         Transfer and deposit funds received in foreign currency for the purposes of investment into the relevant company’s foreign currency account on the date of receipt

 

·         Convert the foreign currency at CBM’s specified exchange rate and deposit the converted sum into the relevant company’s Myanmar Kyat account. Funds granted an exemption by the Foreign Exchange Supervisory Committee (“FESC”) are not subject to this obligation

4

Loan received for investment

·         Verify if CBM’s permission is obtained for such offshore loan under the Foreign Exchange Management Law and the Foreign Exchange Management Regulation (“FEMR”). If such CBM’s permission has been obtained, transfer and deposit funds received from such offshore loan into the relevant company’s foreign currency account on the date of receipt

 

·         Convert the foreign currency at CBM’s specified exchange rate and deposit the converted sum into the relevant company’s Myanmar Kyat account. Funds granted an exemption by the FESC are not subject to this obligation

5

Unilateral transfers for gifts, donations, maintenance cost, inheritances, receipts from transfer of real estate, aid or allowance (other than such aid or allowance permitted by the Union Government)

·         Verify if CBM’s permission is obtained under paragraphs 54 and 55 of FEMR. If such CBM’s permission has been obtained, to transfer and deposit the foreign currency received from such unilateral transfer into the relevant company’s foreign currency account on the date of receipt

 

·         Convert the foreign currency at CBM’s specified exchange rate and deposit the converted sum into the relevant company’s Myanmar Kyat account


Directive No. 6 instructs that Myanmar residents seeking to transfer foreign currency out of the country for the following reasons must seek the permission of the FESC:

  • Payment for imports (including advance payments)
  • Payment for services and other costs
  • Payment for dividends and return of capital
  • Transfer for offshore investments
  • Repayment for offshore loan principals and interests
  • Transfer for expenses as provided in paragraph 27 of the FEMR (including travel cost in connection with foreign trips, healthcare costs, educational cost and examination fees, participation in conferences and seminars, living cost of family member(s) residing abroad)

If FESC permission is obtained for the transfer of foreign currency out of Myanmar, the AD banks must sell the foreign currency to the permitted person at the exchange rate specified by CBM with service fees of MMK 1 per US$1 collected. Exceptions may be prescribed by CBM.