Myanmar reduces percentage of foreign currency export earnings to be converted into kyat

18 December 2023

On 6 December 2023, the Central Bank of Myanmar (“CBM”) issued Notification No. 26/2023 (“Notification 26”) which reduces the percentage of foreign currency earnings exporters are required to convert into Myanmar kyat.

It will be recalled that CBM introduced a foreign exchange conversion requirement in April 2022 mandating that all foreign currency earned by Myanmar residents be deposited in banks in Myanmar authorised to deal in foreign currency (“authorised dealer banks”) and converted into Myanmar kyat within one working day of receipt. This requirement has undergone several amendments and clarifications. In relation to exporters, Notification No. 36/2022 stipulated that they were required to convert 65% of their export earnings into Myanmar kyat. This was further reduced to 50% via Notification No. 15/2023. Notification 26 reduces the mandated amount to be converted from 50% to 35%, effective immediately.

Notification 26 followed the issuance on 5 December 2023 of a letter from CBM to authorised dealer banks relating to the exchange rate to be utilised for foreign currency transacted on CBM’s online FX trading platform (“CBM platform”).

Letter No. FE 1/2937 (“Letter”) informs that CBM will no longer be setting the exchange rate for foreign currency exchange transacted on the CBM platform. Authorised dealer banks may, when making transactions through the CBM platform, utilise the exchange rates as agreed between the authorised dealer bank and the customer.

The Letter also notes that the remittance of foreign currency abroad continues to require approval from the Foreign Exchange Supervisory Committee.

Comment

These changes to Myanmar’s foreign exchange management regime enable exporters to not only retain a higher percentage of their export earnings, but to also sell the remaining foreign currency at a negotiated rate agreed upon with buyers through authorised dealer banks using the CBM platform.