Foreign businesses question Myanmar's foreign currency rules

Foreign business groups in Myanmar have raised concerns about new rules requiring businesses and individuals to convert all foreign currency held in bank accounts into the local currency.

A statement issued Friday by the American Chamber of Commerce and British, French, Australian chambers, and similar groups says the rules would lower Myanmar's standards of living, stop the foreign business activity and foreign investment and cause trade tensions.

“As written, the regulations effectively prevent the use of foreign currency in Myanmar which disconnects Myanmar from the global economy and global financial system,” it says.

“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 says.

Details of the new rules have yet to be announced. But the central bank said in another notice that they would apply to income from the export and other sources such as services, investments, loans for investment and other transactions.

The change appears aimed at helping make up for a shortfall in hard currency following a Feb. 1, 2021, military takeover that ousted the elected government of Aung San Suu Kyi.

The U.S. and other Western countries have imposed targeted sanctions on the military, army-affiliated businesses, military leaders, and their families.

The economy has slumped amid widespread public resistance to the 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.

A deputy governor of Myanmar’s Central Bank was shot at her home on Thursday, days after the tough new regulations were issued. There were conflicting accounts of whether Than Than Swe, appointed to her post after the military seized power, survived the attack.

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.

Scores of foreign businesses have opted to leave since the military seized power last year.