Myanmar’s central bank has announced a broad exemption of foreign entities from a controversial new policy requiring foreign exchange to be converted into local currency, a rule that triggered panic among business groups and residents.
The exemption, dated April 20, includes companies with approved foreign investments, firms in special economic zones, international non-government organizations, diplomats, United Nations agencies, and airlines.
In an effort to exert more control over foreign currency flows in the military-run nation, the central bank declared on April 3 that foreign exchange earned locally must be deposited at licensed banks and exchanged for the local kyat currency within one working day.
The rules rattled businesses in Myanmar, which has seen a mass exodus of foreign firms in the past year, spooked by conflict, instability, sanctions, and policy uncertainty in the wake of the military’s coup in February 2021.
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The change will provide some relief for fuel importers, which, according to some industry sources, have been impacted by the exchange requirement.
Fuel shortages have been widely reported among residents in Myanmar this week, which the junta has repeatedly rejected as rumors.
The exemption notice did not provide a reason for the about-face, which came after some industry groups and embassies warned business activity in the country could be severely impacted.
The American and European chambers of commerce did not immediately respond to requests for comment on the exemption notice.
Those were among signatories to a joint statement from foreign business chambers that had warned the new currency rules would create “insurmountable challenges” for some businesses and would disconnect the country from the global financial system.
Myanmar’s fragile economy has been in crisis since the coup, which halted a decade of political and economic reforms and sent the kyat into a downward spiral.