BANGKOK (AP) — Myanmar is exempting approved foreign investors, embassies, United Nations agencies and nongovernmental organizations from its rules requiring the conversion of foreign currency into local currency, officials said Thursday.
Aung Naing Oo, minister of investment and foreign economic relations in the military-installed government, said in an online briefing on Thursday that details of the new central bank rule were being worked out.
But he said foreign companies and other eligible ones would get an automatic exemption. This includes companies operating in Myanmar’s only special economic zone, Thilawa, south of the largest city, Yangon.
“There will be no additional burden on businesses due to the notification from the Bank of Myanmar,” he said. “We have already planned, planned that there will be a negative impact. . . .”
The Bank of Myanmar’s announcement that foreign currency bank assets must be converted into kyats within one day of receipt appeared to be aimed at alleviating a shortage of hard currency following a military takeover. on February 1, 2021 which overthrew the elected government of Aung San Suu Kyi.
Aung Naing Oo said it was expected to stabilize the exchange rate after the kyat fell to over 2,000 kyats per US dollar.
The new policy had drawn vehement protests from foreign governments and professional organizations.
A statement from the American Chamber of Commerce and British, French, Australian and similar chambers said that requiring all dollars and other foreign currencies to be exchanged for kyats would lower Myanmar’s standard of living, discourage foreign business activity and foreign investment and would cause trade tensions.
“The implementation of these measures and the resulting lack of clear exemptions for foreign investment create significant, and some insurmountable, challenges for 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 develop “standard operational instructions” on obtaining foreign exchange and cash from banks, Aung Naing Oo said.
Myanmar’s economy has collapsed amid widespread public resistance to the military takeover and the pandemic, which in turn has driven away tourists whose spending accounts for a significant portion of the country’s foreign exchange earnings .
Meanwhile, the United States and other Western countries have imposed targeted sanctions on the military, military-affiliated companies, military leaders and their families, freezing assets held in those countries.
Myanmar has been ruled by the military most of the time since gaining independence from the British in 1948. But for about a decade from 2011, the country began a hesitant transition to democracy and its economy faltered. started to take off as it opened up more to foreign investment.
Many major foreign companies have opted out or suspended operations in Myanmar since the military took over last year, citing rising risks and a deteriorating business environment, as well as sanctions.