BANGKOK >> Myanmar is exempting approved foreign investors, embassies, United Nations agencies and non-government organizations from its rules requiring conversion of foreign exchange into the local currency, officials said Thursday.
Aung Naing Oo, the army-installed government’s minister for Investment and Foreign Economic Relations, said Thursday in an online briefing that details of the central bank’s new rule were being worked out.
But he said foreign companies and others qualifying would be given an automatic exemption. That includes businesses operating in Myanmar’s only special economic zone, Thilawa, south of the biggest city, Yangon.
“There will be no additional burden to businesses because of the notification of the Bank of Myanmar,” he said. “We have already expected, anticipated there will be some negative impact… .”
The Bank of Myanmar’s announcement that foreign currency bank holdings must be converted to kyats within one day of their receipt appeared aimed at alleviating a shortfall in hard currency following a Feb. 1, 2021 military takeover that ousted the elected government of Aung San Suu Kyi.
Aung Naing Oo said it was intended to stabilize the exchange rate after the kyat fell to more than 2,000 kyat to the U.S. dollar.
The new policy had raised vehement protests from foreign governments and business organizations.
A statement by the American Chamber of Commerce and British, French, Australian chambers and similar groups said the requirement to swap all dollars and other foreign currencies for kyats would lower Myanmar standards of living, discourage foreign business activity and foreign investment and cause trade tensions.
“Implementation of these measures and the associated lack of clear exemptions for foreign investments creates significant, and for some, insurmountable challenges to all businesses operating in Myanmar,” the statement said.
Critics of the new policy noted that limits on bank withdrawals would further complicate its implementation. To clarify, the government plans to draw up “standard operating instructions” on obtaining foreign exchange and obtaining cash from banks, Aung Naing Oo said.
Myanmar’s economy has slumped amid widespread public resistance to the military takeover and the pandemic, which has in turn kept away tourists whose spending accounts for a large share of the country’s foreign exchange earnings.
Meanwhile, the U.S. and other Western countries have imposed targeted sanctions on the military, army-affiliated businesses, military leaders and their families, freezing assets held in those countries.
Myanmar has been ruled by the military for most of the time since it gained independence from the British in 1948. But for about a decade beginning in 2011 the country began a faltering transition toward democracy and its economy began to take off as it opened further to foreign investment.
Many major foreign businesses have opted to leave, or suspended operations in Myanmar, since the military seized power last year, citing rising risks and a deteriorating business environment, as well as the sanctions.