Myanmar: Authorities issue exemptions for some entities from policy on exchanging foreign currency into local currency as of April 22 /update 1

Event

The Myanmar military (Tatmadaw) government has announced exceptions from a policy that requires companies and residents to exchange foreign currency into local currency within one working day at licensed banks at the official rate as of April 22. According to the central bank's April 20 statement, exempted entities include companies operating in Special Economic Zones or involved in projects using foreign direct investment approved by Myanmar Investment Commission (MIC), international civil society groups, and Myanmar state-owned airlines. Exceptions are also in place for foreign diplomats and their family members, UN staff, foreign employees of development agencies, and Myanmar nationals holding laissez-passer passports, among others. Authorities said that the policy's violators would face legal action; the rule's enforcement level likely varies nationwide.

The policy will probably continue to prompt some business disruptions nationwide despite the exemptions; reports suggest that the official exchange rate is significantly lower than the unofficial exchange rate in the black market. Long lines may still form at the licensed banks as individuals and companies deposit foreign currency earnings. Rallies against the rule remain possible, especially in urban areas like Yangon and Mandalay. Increased security and localized transport and business disruptions are likely near any protests. Clashes are possible if security personnel attempt to disperse any gatherings forcibly.

Context

While the central bank's statement does not specify a reason for the exemptions, the announcement came after businesses in Myanmar expressed concern about the impact of the policy on exchanging foreign currency for local currency. Reports indicate that the Tatmadaw government issued the order April 3 to obtain the foreign currency needed to repay international loans. The international sanctions against the Tatmadaw authorities following the February 2021 coup have allegedly prompted a foreign currency shortage for the regime.

Advice

Plan for business disruptions. Avoid any demonstrations as a precaution. Heed all official instructions.