Myanmar business complains about lack of dollars due to restrictions imposed by military junta

Companies operating in Myanmar complain about the lack of dollars, writes a Japanese agency Nikkei. The shortfall is due to the tight currency controls imposed by the military regime that came to power in the country last year. According to some companies, this jeopardizes doing business in Myanmar. “The inaccessibility of foreign currencies is our main problem,” a local spokesman for one of the Japanese trading houses quoted the Nikkei as saying. Foreign companies operating in Myanmar need to convert their local revenues in Myanmar kyats into dollars, which has become much more difficult since the military came to power in the country. They came to power last February, declaring a state of emergency and removing Myanmar’s civilian government.

In April, the military regime created the Foreign Exchange Supervisory Committee, which is supposed to regulate local monetary policy (FESC). In the same month, the Myanmar Central Bank required all foreign currency deposit holders, with the exception of certain companies and organizations, to convert the currency into kyats. In general, the government controls the circulation of currency, distributing it among importers at the official exchange rate. In particular, companies must obtain FESC permission to transfer money out of the country, including payments for imported goods. In addition, the Myanmar authorities have introduced licenses for the import of many goods and restrictions on imports for each specific company.

According to the Nikkei, citing sources, this led to the emergence of a black market for the currency. As one source notes, “In fact, this policy means that the authorities have moved to a policy of allowing a dual market and a black market” and “if you do not insist on buying dollars through the usual channels, you always have the opportunity to buy cash dollars.” At the same time, the dollar exchange rate on the black market is almost twice as different from the official one – 3400-3600 kyats per dollar against 2100 kyats per dollar officially. In late August, the local central bank said it would intervene for $200 million after the black market exchange rate for the dollar topped 4,000 kyats.

Yana Rozhdestvenskaya