Economic Policy

in Myanmar
2021-2023
June 2023
The Myanmar Development Observatory (MDO) specializes in research and analytical
work concerning the development trajectory of Myanmar, with particular focus on the
socio-economic circumstances, the progress on the Sustainable Development Goals,
and the impact of the conflict. Working with a range of stakeholders, including UN
agencies, Civil Society, the private sector and think tanks, the MDO acts as an
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benefit the most vulnerable in Myanmar and enhance their resilience.

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Table of Contents

1 Introduction .......................................................................................... 4

2 Economic policy phases since February

2021 ........................................................................................................... 6
2.1 Phase 1: damage control ..................................................................... 8
2.2 Phase 2: failed normalisation ............................................................... 9
2.3 Phase 3: the three themes crystallise ............................................... 10
2.4 Phase 4: the three themes continued;
some incentives introduced ............................................... 12

3 Theme 1: internal control ..................................................................... 13

3.1 The expansion of the regulatory state ......................................... 13
3.2 Cronyism and khaki capitalism ....................................................... 14

4 Theme 2: national self-sufficiency ................................................... 18

4.1 Increasing domestic production and exports ............................. 19
4.2 Reducing domestic consumption and imports ............................. 20

5 Theme 3: key external partners ........................................................... 22

5.1 Trade ...................................................................................................... 23
5.1 Investment .............................................................................................. 23

6 Conclusion .......................................................................................... 25

Annex I: Myanmar’s 2021 exports by product type ............................... 27

Annex II: Myanmar’s 2021 imports by product type ............................... 28

Annex III: Economic policy measures, announcements,

and regulatory enforcement actions ........................................................... 29
04 | ECONOMIC POLICY IN MYANMAR, 2021-2023

1 Introduction
The events of February 2021 heralded dramatic
changes in economic policy in Myanmar, with the
country diverging sharply from the economic
liberalisation of the 2011-2021 period. Policy
changes have been numerous, with opaque
decision-making, confusing communications and
several policy reversals creating uncertainty as to
the State Administration Council’s (SAC) economic
plan. Indeed, some argue there is no coherent plan
noting that economic policy is characterised by
reactive responses to immediate problems and
reversions to the economic orthodoxy of previous
regimes. Nevertheless, despite the apparent lack
of coherence, it is possible to identify several
overriding themes that govern the SAC’s approach
to economic policy.

Internally, the SAC has sought to increase its

control of key sectors and economic actors
through the expansion of the regulatory state,
through an increased role for state-owned
enterprises (SOEs), and by awarding contracts to
people friendly to the regime (cronies).
05 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Externally, the SAC has attempted to reduce

Myanmar’s exposure to international economic
forces through the promotion of policies aimed at
national self-sufficiency. The focus has been on
increasing domestic production in key areas such
as agriculture, the promotion of exports and the
minimisation of imports.

Although self-sufficiency is a stated goal of the

SAC, this stops short of complete autarky. The SAC
recognises that it needs the resources and support
of some foreign actors and therefore a third theme
of economic policy over the past two years has
been the promotion of ties with key external
partners, namely China, Thailand, Russia and, to
some extent, India.

This briefing note will first consider the phases in

economic policy since the regime change in
February 2021, before addressing the three themes
driving the SAC’s economic agenda. In doing so,
this note aims to support UNDP partners’ thinking
and engagement on economic policy in Myanmar.
06 | ECONOMIC POLICY IN MYANMAR, 2021-2023

2
Economic policy phases
since February 2021

Economic policy in Myanmar since February 2021 has lacked coherence and
consistency, with frequent course corrections and abortive announcements. One
way to explain this is to acknowledge that the SAC’s thinking has adapted over the
past two years, sometimes through trial and error, sometimes in response to
events.

Looking at the policy detail (see Annex III), we can identify four phases under the
SAC. These phases are imprecise – there are no clear start and end dates and the
SAC’s thinking at each stage is not set out in neat policy documents. As time has
gone on, however, the continuity between the phases has increased and in phases
three and four we see the crystallisation of economic policy around the three
themes outlined above: internal control, national self-sufficiency, and the
promotion of ties with key external partners.
07 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Figure 1 Economic policy phases since February 2021

 08 | ECONOMIC POLICY IN MYANMAR, 2021-2023

2.1
Phase 1: damage control
February to August 2021

In a speech on 9 February 2021, Min Aung April 2021, because of the continued risk of
Hlaing promised that economic policy would bank runs as well as a shortage of physical
not deviate from its previous course. Min Aung cash, 5 the Central Bank of Myanmar (CBM)
Hlaing committed to making Myanmar an imposed various daily and weekly withdrawal
easy place to do business and he welcomed limits. By May, the focus of the CBM had turned
foreign investment, a position that was then to adjusting bank reserve requirements to
incorporated into the SAC’s nine governing ease the liquidity issues that had been caused,
1
objectives that were unveiled in July 2021. 1 in part, by decreased deposits as bank
6
The SAC even employed a Canadian lobbying customers responded to withdrawal limits.
firm to improve relations with western
countries and avoid over-reliance on China. 2 In the meantime, the MMK’s fifteen percent
slide between the February and the beginning
For various reasons, this is not how it played of May appears to have been the trigger for
out. Instead, in the immediate period under the import restrictions being imposed on a range
SAC, the economic priority was to avoid of goods, including motorcycles and some
collapse. February-March 2021 was particularly food and drinks products. 7 The Ministry of
unstable, with protests and the Commerce stated that these moves were
commencement of the civil disobedience intended to reduce demand for foreign
movement (CDM) creating major economic exchange.
disruption. The queues at cash machines were
a symbol of an economy close to collapse, As can be seen, despite the initial
demonstrating widespread distrust in the communications from the SAC, this period
banking system. By 22 February 2021, a general was characterised by reactive economic
strike shuttered the banks entirely. 3 policymaking aimed at avoiding economic or
financial collapse. But by August, the SAC
The SAC’s response in March 2021 was to force wanted a reset.
banks to reopen, threatening them with state
4
takeovers if they did not. Subsequently, in

1 https://www.gnlm.com.mm/republic-of-the-union-of-myanmar-state-administration-council-chairman-senior-general-min-
aung-hlaing-makes-speech-to-public/; https://www.mdn.gov.mm/en/republic-union-myanmar-state-administration-council-nine-
objectives.
2 https://www.reuters.com/article/us-myanmar-politics-lobbyist-idUSKBN2AY0K0.
3 https://www.nytimes.com/article/myanmar-news-protests-coup.html; https://www.aljazeera.com/news/2021/2/8/myanmar-
military-leader-gives-first-address-to-nation-since-coup
4 https://www.frontiermyanmar.net/en/military-piles-pressure-on-private-banks-to-reopen-or-else/.
5 Giesecke and Devrient, the company that supplied raw materials for the production of bank notes in Myanmar, ceased their supply
(https://www.frontiermyanmar.net/en/german-company-halts-supply-of-myanmar-bank-note-components/).
6 See measures 1-5 listed in Annex III.
7 See measures 6-7 listed in Annex III (https://www.scm-legal.com/post/myanmar-soap-and-toothpaste-import-ban;
https://www.scm-legal.com/post/myanmar-restricts-importing-food-products-overland).
 09 | ECONOMIC POLICY IN MYANMAR, 2021-2023

2.2
Phase 2: failed normalisation
August 2021 to March 2022

On 3 August 2021, the CBM signalled its However, the SAC continued to be buffeted by
intention to get a grip on the foreign exchange the market. The MMK’s value dropped
(forex) market by resetting the exchange rate dramatically in September 2021, triggering the
regime. An explicit managed float was temporary abandonment of the exchange rate
adopted with a CBM-determined reference regime adopted just a month prior. Despite
rate of 1650 MMK to 1 USD and a trading band increased USD auctions to stabilise the price of
of +/- 0.8 percent. This was a move away from MMK, the CBM still ended up having to devalue
11
the market-determined reference rate that twice in six months.
8
had been the de jure approach since 2019. 8
Nevertheless, it was a signal of the CBM’s The clearest sign of the attempted
commitment to price stability and relative normalisation’s failure was the SAC repeatedly
normalisation. resorting to import restrictions (e.g. cars) and
capital controls (forex surrender requirements)
In tax policy, the SAC reduced corporation tax to address USD outflows. By the end of Q1 2022,
to try to support businesses to cope with the CBM had abandoned attempts to maintain
economic uncertainty and decreased taxes the value of MMK through open market
due on assets purchased with undocumented interventions due to concerns about dwindling
income, a measure aimed at formalising USD reserves.
9
economic activity.

The SAC also made announcements (MIC

notification 1/2023) that sought to begin
repairing relations with the outside world,
signalling its openness to foreign investment in
10
a set of high priority areas.

8 Measure 10, Annex III. On the previous exchange rate regime, see: International Monetary Fund, Annual Report on Exchange
Arrangements and Exchange Restrictions (Washington, DC: IMF, 2020).
9 Measures 16-17, Annex III.
10 Measure 23, Annex III.
11 Measures 12 and 22, Annex III.
 10 | ECONOMIC POLICY IN MYANMAR, 2021-2023

2.3
Phase 3: the three themes crystallise
March to August 2022

As the attempted normalisation failed, the SAC Similarly, the SAC increasingly used the tax
resorted to a series of dramatic interventions system during this phase to exert greater
to stabilise MMK and rebuild USD reserves. In control over the Myanmar population and
addition, in this phase we see the greater use economy. Increases in fines for tax non-
of economic policy tools to exert control over compliance and the introduction of tax
the economy and the actions of the Myanmar identification numbers for all entities in
people. Myanmar are the clearest examples.
Furthermore, new mobile money regulations
April to August 2022 saw the introduction of a were introduced, presumably to restrict the
13
series of far-reaching forex controls. These use of such services by the opposition.
were often poorly designed and
communicated, leading to subsequent The SAC also undertook extensive regulatory
clarifications and amendments. Trade was enforcement action in key sectors during this
also further restricted, most notably with a car phase. 14 Interventions in the gold, jade, palm
12
import ban introduced in June 2022. oil and fuel markets were ostensibly aimed at
price stability, improving regulation, removing
The primary motive for these measures was to market manipulators and other bad actors, or
prevent USD outflows and rebuild the CBM’s increasing tax compliance. However, once
USD reserves. But the forex controls and trade again, these measures were likely largely
restrictions are not just about reducing motivated by a desire to increase control in
Myanmar’s exposure to the global economy – these sectors.
each measure also seeks to obtain
information on domestic economic actors and During this phase we can also see an increase
their activities, in line with the SAC’s objective in contracts and favourable import licences
of exerting greater control within Myanmar’s granted to businesspeople close to the SAC
borders. (‘cronies’) and the expansion of the role of
SOEs.

12 Measures 35-53, Annex III.

13 Measures 30, 50, 51, 54, 55 and 68, Annex III.
14 https://www.frontiermyanmar.net/en/junta-weaponises-digital-banking-transition-to-starve-resistance-funding%EF%BF%BC/.
 11 | ECONOMIC POLICY IN MYANMAR, 2021-2023

On the topic of self-sufficiency, the SAC

already reactively imposed import restrictions
under phase one followed by more systematic
measures from phase two onwards. But it is
only during phase three that we see evidence
of policies targeted at increasing domestic
supply in areas deemed important by the SAC,
15
such as edible oils. Such policies expand
during phase four.

Regarding promoting ties with key external

partners, it is during phase three that the SAC
starts targeting messaging about foreign
investment at China rather than the general
messages welcoming all foreign investment
as observed in phases one and two. During
phase three the SAC also establishes a
bilateral trade settlement mechanism with
Thailand. The SAC then expands this pattern
further in phase four, exploring the possibility
of using the Russian Mir payments system and
taking initial steps towards establishing the
Indian rupee (INR) as a trade settlement
currency, and further liberalising the use of the
16
Chinese yuan (CNY) and Thai baht (THB).

15 See measure 47, Annex III.

16 See measures 27, 41, 71, 74, 77, 88 and 92, Annex III.
 12| ECONOMIC POLICY IN MYANMAR, 2021-2023

2.4
Phase 4: the three themes continued; some
incentives introduced
August 2022 – May 2023

Phase four is an evolution of phase three. Many remittances and 35 percent of export earnings.
of the policies in this phase are similar – It seems likely that the adoption of these more
further trade restrictions, exchange controls, nuanced policies focused on incentives was
measures to address tax fraud and non- partly due to some within the regime
compliance, tighter financial regulation, and recognising that the draconian measures from
increased regulatory enforcement. But, in phase three had negative consequences (e.g.
some ways, the SAC’s approach also became remittances being sent back to Myanmar
more nuanced during this phase. The state through the informal financial sector). 18
newspaper, The Global New Light of Myanmar,
began publishing unofficial forex rates, a As noted above, the SAC’s approach to
tacit acceptance of the black market in economic policy has not been entirely
currency (a policy that is paired with the coherent or consistent over time. But there has
provision of informal permissions to forex been an evolution in the SAC’s thinking in the
traders enabling them to operate using the past two years, which has now crystalised into
unofficial rates). Financial incentives were three core themes: internal control, national
introduced to encourage the formalisation of self-sufficiency, limited reliance on key
remittance payments by Myanmar citizens external partners. The following sections will
working abroad. The SAC sought to use the tax consider these themes in more depth.
system to stimulate the economy, introducing
a greater level of tax relief for SMEs and tax
exemptions in priority sectors. 17 This was
matched by increased lending to SMEs
including in the agricultural sector. Perhaps
most significantly, the CBM introduced
substantially more flexibility in the exchange
control regime through grace periods for

17 SAC priority areas, in particular electric vehicles and solar power.

18 See measures 67-114, Annex III.
 13 | ECONOMIC POLICY IN MYANMAR, 2021-2023

3
Theme 1: internal control

The SAC has used various economic policies to increase its control of key sectors
and economic actors. The SAC’s primary methods have been the expansion of the
regulatory state, and increasing the role of SOEs and SAC-linked businesspeople.

3.1 The expansion of the regulatory state

In stark contrast to Min Aung Hlaing’s claim in maligned. This is particularly the case for those
February 2021 that Myanmar would remain an introduced between April and August 2022.
easy place to do business, strict regulatory The most drastic of these controls was the
controls have become a central feature of the introduction, on 3 April 2022, of a requirement
SAC’s economic policy. Such regulatory for nearly all individuals and entities to
measures include import and export repatriate and convert to MMK all foreign-
restrictions, capital controls, price controls, tax currency income received from abroad within
compliance measures, and new restrictions on one day of its receipt; this also applied
financial services, company registration and retroactively to foreign currency balances
employment. Annex III shows the scale of the already in the country. Restrictions on
controls introduced by the SAC regime, with international, outbound forex transactions
regulatory measures constituting over half of were imposed the following day. In addition,
the announcements and policies listed. 19 the CBM restricted the domestic use of forex
and international bank cards, prohibited the
Of the myriad regulations, foreign exchange repayment of foreign loans, and limited
controls have been the most impactful and importers’ access to forex.

19 See various measures from 35-65 in Annex III.

 14| ECONOMIC POLICY IN MYANMAR, 2021-2023

Increased regulatory enforcement has been a activities has been the SAC’s concern with USD
logical next step for the SAC following the outflows and its forex reserves. This is
proliferation of regulations. The establishment particularly the case for the import restrictions
of the Foreign Exchange Supervisory and forex controls. However, this cannot
Committee (FESC) has enabled closer scrutiny explain the introduction of export restrictions,
of forex movements in Myanmar. The CBM has tax compliance measures and the other
been particularly proactive in its enforcement, restrictions relating to mobile money,
acting against hundreds of companies in the company incorporation and employment.
past year (prosecutions, revoking licences and What unifies all these disparate measures is
issuing warnings). In key markets such as the central theme of control. Each policy is
palm oil and fuel, the SAC has sought to designed to restrict the actions of market
reduce imports and address price inflation actors and collect more information on them
through a mixture of quotas and crackdowns and their activities. In other words, the SAC has
on purportedly unlicenced retailors. 20 sought to utilise the tools of the regulatory
state in a systematic attempt to exert control
One theme linking many of these regu- over the economic activities of companies and
latory measures and regulatory enforcement people in Myanmar.

3.2 Cronyism and khaki capitalism

The second set of economic tools utilised by 1988 regimes of the State Law and Order
the SAC regime to exert greater control within Restoration Council (SLORC) (1988-1997) and
Myanmar’s borders has been the expansion of the State Peace and Development Council
crony and khaki capitalism. Crony capitalism (SPDC) (1997-2011).
refers to the process by which a government
grants licences, contracts, and other forms of After assuming power in 1988, the SLORC and
economic access to a small group of subsequently the SPDC regime sought to
politically connected individuals and abandon the state-led economic model of the
companies. Khaki capitalism refers primarily to Burma Socialist Programme Party (BSPP). The
the direct involvement of the military in the SLORC and SPDC’s pro-market reforms were,
economy through military-owned companies however, carefully calibrated and aimed at
(synonymous with SOEs in this context). 21 To retaining a significant degree of state control.
understand how crony and khaki capitalism in Key decision makers were concerned about
Myanmar plays into the SAC’s wider approach the impacts of rapid liberalisation, both due to
to economic management and how it links to the lack of capacity amongst Myanmar’s
the theme of control, it is relevant to consider business community and because it could
the historical record, in particular the post- lead to lost earnings for SOEs. As such, SOEs

20 https://www.mizzimaburmese.com/article/109071; http://burmese.dvb.no/archives/537702; http://burmese.dvb.no/archives/577854;

https://energy.frontiermyanmar.com/crackdowns-unlicensed-fuel-retailers-reported; https://www.frontiermyanmar.net/en/junta-
squeeze-on-fuel-supply-powers-growing-black-market/.
21 Gerard McCarthy, “Military Capitalism in Myanmar: Examining the Origins, Continuities and Evolution of “Khaki Capital”, ISEAS–Yusof
Ishak Institute (2019): 1 – 39.
 15 | ECONOMIC POLICY IN MYANMAR, 2021-2023

retained a substantial role in the economy major parts of the Myanmar economy. The
through the military’s two large conglomerates SOEs also retained a significant, albeit
– Union of Myanmar Economic Holdings reduced, role.
Limited (MEHL) and the Myanmar Economic
Corporation (MEC). 22 In addition, the Now, we are seeing the SAC reverting to the
privatisation process was directed at a small approach of the SLORC/SPDC regimes, with a
number of carefully cultivated “national clear, concerted effort by the regime to
entrepreneurs” in a system of state-mediated increase the role of SOEs, and reshape and
23
capitalism. expand the crony economy to ensure key
sectors are dominated by SAC-linked
The relationship between the new national individuals. Some argue that the pursuit of
entrepreneurs and the state was complex and profit and rent via these routes is an end in
27
specific arrangements depended upon the itself. That question is beyond the scope of
sector, but the overall system can be this brief, however, it is clear that the SAC sees
described as a “limited access order” through these actors – SOEs and cronies – as key tools
which rents create dependencies, patronage in its management of and control over the
24
opportunities and, ultimately, loyalty. In economy and it sees cronyism as a crucial
neoclassical economic terms, the methods of mechanism to maintain control of important
this system – monopolies, sprawling conglo- societal actors through patronage.
merates, regulatory and licencing restrictions,
opaque contracts, arbitrary enforcement – Palm oil is a case in point. In September 2021,
create unhelpful distortions, inefficiencies, and the SAC opted to restrict import permissions to
25
frictions. But this was a feature (not a bug) a select group of businesses and provide them
of a system that was designed to regulate with preferential forex access. This was
access to resources and opportunities to implemented through the Myanmar Edible Oil
ensure the state could utilise the economy to Dealers' Association, with Association
maximise its political control. Dissenting voices members restricted to buying and selling
would lose licences and permits, acquie- palm oil at the reference price and a
scence would be rewarded with favourable maximum two percent profit margin. Here
contracts, and together the military and we see the concentration of the market in
26
business elites would grow rich. the hands of a small group of businesses
through a competitive but restrictive
Given their deep entrenchment in the mechanism that increases the ability of the
economy, the cronies did not go away during SAC to control supply and prices and increase
the 2011-2021 period of economic its powers of patronage. Subsequently, in early
liberalisation.Networks shifted to reflect 2023, the SAC undercut this approach by
changes in political power and the resorting to a cruder crony arrangement,
proliferation of foreign investors may have granting a more favourable import licence to
28
reduced their influence, but a small number of the Htoo Group run by U Tay Za.
Myanmar business elites retained key roles in

22 Independent International Fact-Finding Mission on Myanmar, The economic interests of the Myanmar military (2019).
23 Lee Jones, “Explaining Myanmar's regime transition: the periphery is central”, Democratization 21, no. 5 (2014): 780-802.
24 Douglass North, John Wallis, Steven Webb, and Barry Weingast, “Limited Access Orders in the Developing World: A New Approach to
the Problems of Development”, World Bank Policy Research Working Paper, No. 4359 (2007).
25 Sebastian Doerr, DaliaMarin, Davide Suveratoand Thierry Verdier,“Mis-allocation withinfirms: internal finance and international trade”,
Bank for International Settlements Working Papers, No. 1030 (2022).
26 Lee Jones, “Explaining Myanmar's regime transition: the periphery is central”, Democratization 21, no. 5 (2014): 780-802.
27 https://justiceformyanmar.org/stories/who-profits-from-a-coup-the-power-and-greed-of-senior-general-min-aung-hlaing.
28 https://www.gnlm.com.mm/palm-oil-to-be-sold-through-myanmar-edible-oil-dealers%E2%80%8B-association/; Economic
Research Hub, “Myanmar’s Economic Governance after the Coup: Changes in Policy and Practice”, (2022).
 16 | ECONOMIC POLICY IN MYANMAR, 2021-2023

In the energy sector, the SAC’s preferred As noted above, businesses operating in the
approach has been to award favourable fuel sector have been subject to arrests and
contracts to cronies and SOEs, as well as licencing restrictions. And in a more high-
restricting bidding processes. In April 2022, a profile move, the SAC brought corruption
subsidiary of MEHL secured a monopoly on the charges against NLD-associated cronies U Chit
Ministry of Electricity and Energy’s meter Khine (Eden Group) and U Khin Shwe
supply after a restricted bidding process. In (Zaykabar). 32
February 2023, Global Star Co. Ltd., a subsidiary
of SAC-linked U Win Aung’s Dagon Group, Divestment by international companies has
became the authorised dealer for Chinese presented another opportunity for the SAC to
company Huawei’s solar products. In June reshape ownership and control in key
2022, Star Sapphire Group, headed by SAC- industries, as shown by the regime’s
linked businessman Tun Min Latt, was awarded intervention in the sale of the Myanmar
the contract to construct a power plant in operations of Telenor, a Norwegian telecoms
29 33
Kanpauk, Tanintharyi. The same month, company.
Venus Essential Myanmar, a company with
links to Min Aung Hlaing’s son, Aung Pyaw In some areas, cronies have been deployed
Sone, was awarded a series of solar power alongside SOEs in new administrative
projects in Naypyitaw, despite its non-existent arrangements. The recently established
track record in the sector (the company was committee to oversee fuel imports from Russia
only established in 2021). No other companies is one example. It is chaired by Nyo Saw of the
were invited to bid on the three new Myanmar Economic Corporation (MEC). The
30
contracts. This arrangement was made committee also includes various SAC-linked
possible by the May 2022 cancellation of 26 businesspeople: Hla Win (Star High Co), Hsan
tenders for power projects that were initiated Naung (Brighter Energy), Win Swe (Best Oil Co)
under the National League for Democracy and Maung Maung Naing (Yetagon Energy
34
(NLD) government. The companies involved Co). 33 This arrangement allows for the control
were then blacklisted, ostensibly for breaching of the supply of fuel, enabling preferential use
the tender rules. Relatedly, in January 2023, by the SAC, and it also creates further
Golden Future Linkage, a company owned by patronage opportunities.
Aung Pyaw Sone, was reported to be making
plans to develop a solar power facility in Perhaps the most high-profile development
Mandalay. 31 Collectively, these examples regarding SOEs relates to the Pinpet and
suggest a comprehensive reshaping of the Myingyan iron and steel mills. Both facilities
renewable and electricity sectors around SAC have long and abortive histories, being
interests. amongst the clearest examples of delays by
the MEC. After years of failed delivery and
The SAC has also resorted to intimidation mounting debts, the NLD pulled the plug on
tactics and criminal justice measures to these ventures in 2017. Their reactivation
reshape patronage networks and exert control. by the SAC demonstrates the faith the

29 http://burmese.dvb.no/archives/537782.
30 https://www.irrawaddy.com/news/burma/solar-power-contracts-awarded-to-company-linked-to-myanmar-junta-chiefs-
son.html; https://www.irrawaddy.com/news/burma/myanmar-junta-cancels-chinese-backed-solar-power-projects.html.
31 https://www.irrawaddy.com/news/burma/myanmar-regime-chiefs-son-proposes-mandalay-solar-power-plant.html.
32 https://myanmar-now.org/en/news/junta-detains-prominent-tycoon-chit-khine-and-accuses-him-of-corruption/;
https://www.irrawaddy.com/opinion/analysis/myanmar-tycoons-do-junta-bidding-amid-threat-of-arrest.html.
33 In this case, Shwe Byain Phyu, which is owned by SAC-linked U Thein Win Zaw, was able to acquire an 80 percent shareholding (see:
https://www.irrawaddy.com/opinion/analysis/myanmar-tycoons-do-junta-bidding-amid-threat-of-arrest.html).
34 https://www.irrawaddy.com/news/burma/myanmar-junta-generals-and-cronies-dominate-committee-formed-to-import-
russian-fuel.html.
 17 | ECONOMIC POLICY IN MYANMAR, 2021-2023

regime still has in the SOE - driveneconomic major expansion in SAC control of the
model. Furthermore, the coal that powers the economy of Myanmar. By taking this
Pinpet facility comes from three SAC-linked approach, the SAC enriches itself and its
35
companies in Ke See, in just one example of domestic allies, and is able to use economic
the regime utilising the crony system to tools to exert control over the people of
expand incentives to SAC-affiliated groups in Myanmar. But control is not the only focus for
borders regions. 36 the regime – many of these tools have also
been used in the pursuit of the second theme:
Cumulatively, these policies relating to the national self-sufficiency.
regulatory state, cronies, and SOEs add up to a

35 https://shanstatefrontline.com/large-scale-coal-mining-begins-in-central-shan-state-for-sac-regimes-new-pinpet-myingyan-
steel-production-hub/.
36 See here for another example: https://www.irrawaddy.com/news/junta-crony/myanmar-junta-crony-in-new-venture-with-
regime-allied-ethnic-armed-group.html.
18| ECONOMIC POLICY IN MYANMAR, 2021-2023

4
Theme 2: national
self-sufficiency
Under the BSPP regime (1962-1988), Myanmar’s economic policy was explicitly targeted at
achieving autarky through domestic production and import substitution. Possibly due to
the lack of economic success during this period, the SAC does not appear to want to go as
far as the BSPP. Nevertheless, the SAC’s approach to economic policy does reflect a desire
to increase national self-sufficiency in certain sectors. To achieve this, the SAC is
attempting to increase domestic production and exports, and reduce domestic
consumption and imports.

The SAC’s desire to increase national self-sufficiency is likely driven by several factors:

1. Public statements by the SAC indicate a strong mercantilist bent in its economic
thinking. In the mercantilist rendering, exports are positive for the economy and imports
are negative, thus government should prioritise trade surpluses. Relatedly, it is a priority
of SAC policy to build and maintain a substantial forex reserve.
2. The SAC wants to insulate the Myanmar economy from the decisions of foreign actors.
This is informed by the country’s long experience with sanctions as well as the more
recent experience of divestment by international companies and increasing challenges
in accessing cross-border financial services. The SAC sees forex reserves and
increasing domestic production as key means by which it can insulate the Myanmar
economy from external events and decisions.
3. It is likely that some of the initiatives to promote domestic production are related to the
SAC’s military imperatives.
 19 | ECONOMIC POLICY IN MYANMAR, 2021-2023

4.1 Increasing domestic production

and exports
Min Aung Hlaing first hinted at his desire to announced to promote livestock rearing. In
promote national self-sufficiency in his speech April 2023, the SAC made available a further
of 9 February 2021, in which he talked primarily MMK 70 billion of lending for edible oil and
of increasing domestic agricultural production, livestock producers.
particularly edible oils, dairy products, cotton
and value-added products such as onion Beyond agriculture, the SAC is attempting to
powder. This position has been fairly consistent stimulate the domestic production of “raw
over time, with a recent speech referencing materials” in areas where Myanmar has
sunflower oil, rice and cotton production. 37 36 reserves or some production potential and
This agricultural focus was also incorporated where imports are high – such as rubber,
into the SAC’s governing objectives of July 2021 cement, iron, and steel. Once again, the SAC
and remained in the latest version, published has made loans available to SMEs, alongside
38
in February 2023. The list of commodities and the SOE activities noted under theme 1 above
goods are somewhat consistent with the SAC’s (for iron and steel). This approach was
aim of moving the balance of trade towards enshrined in the February 2023 SAC governing
surplus by increasing domestic production in objectives and reflected in announcements
areas where imports are high (e.g. palm oil) made by the SAC in February and April 2023
39
and where exports could potentially increase regarding new or extended lending facilities.38
(e.g. rice, value-added food products – see It is too early to judge the effectiveness of
Annexes I and II for more details). these policies, however, there exists extensive
academic literature on the limitations of
Despite the coverage of this issue in speeches micro-level interventions such as SME lending
in the early SAC period, it was not until June in the absence of a macroeconomic
2022 that a concrete policy measure was environment that promotes stability,
announced in the form of a MMK 100 billion investment and growth.40 In addition,
lending facility for sunflower oil producers. It introducing substantial new lending without
took a further five months for the SAC to policies to address high and rising non-
launch the loan application process at which performing loans in Myanmar will likely
point another MMK 100 billion initiative was increase financial stability risk, with knock-on

37 https://www.burmalibrary.org/en/the-global-new-light-of-myanmar-thursday-23-march-2023.
38 https://www.gnlm.com.mm/republic-of-the-union-of-myanmar-state-administration-council-chairman-senior-general-min-
aung-hlaing-makes-speech-to-public/; https://www.mdn.gov.mm/en/republic-union-myanmar-state-administration-council-nine-
objectives; https://www.mopf.gov.mm/sites/default/files/upload_pdf/2023/02/SAC%2012%20Objectives-Eng.pdf.
39 https://www.gnlm.com.mm/only-when-the-production-of-raw-materials-is-robust-will-the-finished-products-gain-progress-
with-a-firm-market-senior-general/; https://www.mopf.gov.mm/sites/default/files/upload_pdf/2023/02/SAC%2012%20Objectives-
Eng.pdf; https://oec.world/en/profile/country/mmr; Ei Thwe, Dilip Khatiwada and Alexandros Gasparatos, “Life cycle assessment of a
cement plant in Naypyitaw, Myanmar”, Cleaner Environmental Systems, Vol. 2 (2021).
40 See, for example: Simon Bridge and Ken O’Neill, Understanding Enterprise: Entrepreneurship and Small Business (Macmillan: 2012)
and D. J. Storey and Francis J. Greene, Small Business and Entrepreneurship (Pearson: 2010).
 20 | ECONOMIC POLICY IN MYANMAR, 2021-2023

41
effects on productivity and growth. particularly refined petroleum, constitutes a
sizeable proportion of Myanmar’s imports
A final area in which the SAC is seeking to (nearly 15 percent in 2021), so the SAC sees
increase domestic production is energy. The substantial advantages in increasing
approach here has been to award contracts to domestic energy production for household use
crony companies and SOEs to implement as an alternative to petroleum, including to
42
solar, hydropower and gas projects. Petroleum, power electric vehicles.

4.2 Reducing domestic consumption

and imports
Of course, reducing imports is the other way of administration of trade, with increased
moving from trade deficit to surplus. obstacles for firms seeking customs and port
Consequently, the SAC has been proactive in clearance, have also had an impact on
44
this area, adopting a two-pronged approach: companies importing goods to Myanmar. 43
constructing barriers to trade and reducing These barriers have been imposed on top of
domestic demand. the sweeping foreign exchange controls noted
above, which make it challenging for
To reduce domestic demand, the SAC has businesses to access the forex needed to
implemented price controls, as with palm oil, import goods.
and restricted market access and supply, as
with fuel (see theme 1 for further details). The The most recent trade data released by the
SAC leadership has also encouraged Ministry of Commerce indicate these
behavioural change, for example by urging measures might be having some impact, with
people to consume less oil in their diets. annual imports down 7 percent in 2022-2023
45
compared with the 2018-20 annual average.44
But the introduction of widespread barriers to However, exports are also down, and the trade
trade such as import licencing requirements deficit persists. Thus, on its own terms, the bid
and import quotas have been the more for self-sufficiency is far from complete.
notable policy moves. By April 2023, the SAC
had introduced licencing requirements on 74 In concluding this section, we should note the
46
percent of all import lines in a major reversal of recent rise in protectionist measures globally.4
the trade liberalisation of the previous decade In this context and given the dramatic drop in
43
(it was 35 percent in 2021). Changes in the the value of MMK since February 2021, it is not

41 https://www.imf.org/en/Publications/CR/Issues/2020/03/26/Myanmar-2019-Article-IV-Consultation-Press-Release-Staff-Report-
and-Statement-by-the-49292; https://finance.frontiermyanmar.com/news/banking/first-private-bank-sees-surge-non-performing-
loans; https://www.vdb-loi.com/mm_publications/central-bank-of-myanmar-new-notification-on-write-off-of-loans/.
42 https://www.irrawaddy.com/specials/junta-watch/junta-watch-monument-to-dictators-colossal-vanity-rises-regime-wedding-
veils-violence-and-more.html.
43 The World Bank, Myanmar Economic Monitor: Reforms Reversed (July 2022).
44 Economic Research Hub, “Myanmar’s Economic Governance after the Coup: Changes in Policy and Practice”, (2022).
45 An average of the years 2018-2020 have been used to avoid the volatile immediate post-February 2021 period.
46 https://www.ft.com/content/92d95586-f1eb-4148-ae32-1864f7deeb43; https://www.theguardian.com/world/2023/may/29/chinas-
war-chest-beijing-seeks-to-remedy-its-vulnerability-to-food-and-energy-embargoes.
 21| ECONOMIC POLICY IN MYANMAR, 2021-2023

surprising that the SAC responded with appear to have incorporated thinking on the
measures targeting trade. Nevertheless, capital account into its analysis of the
thespecific policies deployed by the SAC have country’s balance of payments position, nor
been sweeping and often rather blunt, leaving does there seem to be adequate recognition
businesses scrambling to respond and of the role played by imports in the production
households struggling to cope. Effective policy of goods for export. The approach is also short
measures tend to flow from a solid termist, prioritising a narrow definition of self-
understanding of a country’s challenges. It is sufficiency today without due regard for
therefore concerning that the SAC does not productivity growth in the longer term.

Figure 2 Annual import/export volumes

47
Source: Myanmar Ministry of Commerce

47 https://www.commerce.gov.mm.
 22| ECONOMIC POLICY IN MYANMAR, 2021-2023

5
Theme 3: key external
partners
Although the SAC wants to promote increased self-sufficiency in certain areas, the
regime’s leadership recognises that external parties cannot be completely ignored. Initially,
in the first phase under the SAC, there was an openness, at least in public statements,
towards continued investment from a broad range of countries. However, following a flurry
of private sector divestment decisions from a diverse array of countries in the first year of
48 49
the SAC regime, the suspension of international financial institution (IFI) support, and
50
the imposition of financial sanctions by several jurisdictions, the SAC changed course.
Instead of attempting to maintain economic relationships with (and perceived
dependencies on) a broad range of countries and institutions, the SAC pivoted to
cultivating partnerships with its neighbours and a limited number of countries in its broader
region. Once again, the SAC’s approach partly reflects Myanmar’s 1990s experience, when
the state avoided near-bankruptcy thanks to foreign investment and trade deals, with
51
China and Thailand playing particularly important roles.

48 Australia, Canada, France, Germany, Hong Kong, India, Japan, Malaysia, Norway, Singapore, Switzerland, Thailand, Taiwan, United
Kingdom, and United States. For details, see: World Bank, Myanmar Economic Monitor: Contending with Constraints (January 2022).
49 https://www.reuters.com/world/asia-pacific/world-bank-halts-payment-requests-myanmar-projects-made-after-feb-1-coup-
2021-02-25/; https://thediplomat.com/2021/11/myanmars-missing-millions/
50 Australia, Canada, European Union, New Zealand, United Kingdom, and United States. For details, see: Global Witness, “Missed
Opportunities: The need for a better approach to sanctions in response to Myanmar’s military coup”, (2022).
51 Lee Jones, “Explaining Myanmar's regime transition: the periphery is central”, Democratization 21, no. 5 (2014): 780-802.
 23| ECONOMIC POLICY IN MYANMAR, 2021-2023

5.1 Trade
55
Despite the frequent talk of self-sufficiency, need to be established. Several meetings
senior SAC figures have explicitly recognised have also been held between the SAC and its
the importance of trade with Myanmar’s Russian counterparts to explore payments
neighbours (in particular: Bangladesh, China, cooperation. Russian fuel imports are also
52
India and Thailand). To facilitate this trade assisting the SAC to overcome Myanmar’s fuel
(and reduce reliance on USD), the SAC has shortages (see Theme 1 for more detail on the
56
taken concrete steps to establish bilateral mechanism governing these imports).56
trade settlement mechanisms with these Although the trade settlement mechanisms
53
countries. In April 2022, the CBM established are taking time to establish and scale up, and
the THB as an official settlement currency for they only currently facilitate non-USD
bilateral land border trade; a similar settlement of a small proportion of Myanmar’s
arrangement had been agreed for the Chinese trade, they demonstrate the SAC’s efforts to
54
yuan a few months prior.53 Myanmar recently deepen trade ties with a small number of
reached an initial agreement with India on regional partners, whilst moving away from
MMK-INR trade settlement, although the dependence on others. 57
settlement mechanism and other details still

5.2 Investment
The SAC has also been seeking to make up for venture to construct the country’s first wind
the drop in IFI investment and foreign direct turbines. But in a context of decreasing BRI
investment (FDI) from some countries, by lending globally and considerable uncertainty
pursuing deeper ties with certain key partners. for Chinese companies investing in Myanmar,
With regard to China, the announcements the outlook for substantially increased Chinese
59
about further investment have mainly focused investment does not look favourable. This is
on the energy sector and on transport and borne out in the figures, which show that two
trade infrastructure, with various relaunches of years on from the beginning of the SAC
Belt and Road Initiative (BRI) projects e.g. the administration, approved FDI from China for
Kyauk Phyu Port in Rakhine and Myitkyina 2022-23 is less than 10 percent of the average
58
Economic Development Zone in Kachin. In for the years 2015-20. The equivalent figure
60
March 2023, the SAC also signed an from Hong Kong is 33 percent.
agreement on a joint Myanmar - Chinese

52 https://www.gnlm.com.mm/republic-of-the-union-of-myanmar-state-administration-council-chairman-senior-general-min-
aung-hlaing-makes-speech-to-public/; https://thediplomat.com/2022/03/myanmar-oks-use-of-thai-currency-in-border-trade/
53 https://thediplomat.com/2022/03/myanmar-oks-use-of-thai-currency-in-border-trade/
54 https://www.tilleke.com/insights/myanmar-relaxes-foreign-currency-conversion-requirements-at-chinese-and-thai-borders/
55 https://www.reuters.com/world/india/indias-new-trade-policy-aims-promote-rupee-trade-2023-03-31/
56 https://www.reuters.com/world/asia-pacific/myanmar-discussing-with-russia-use-mir-card-payments-2022-09-20/
57 https://oec.world/en/profile/country/mmr; https://tradingeconomics.com/myanmar/exports-by-country;
https://www.globaltimes.cn/page/202207/1270273.shtml
58 https://economictimes.indiatimes.com/news/defence/bri-china-plans-mega-infra-project-in-myanmar-close-to-arunachal-
border/articleshow/96265637.cms
59 https://www.ft.com/content/da01c562-ad29-4c34-ae5e-a0aafddd377c
60 https://www.dica.gov.mm/sites/default/files/document-files/2023_-
april_foreign_direct_investment_yearly_approved_amount_country.pdf
 24 | ECONOMIC POLICY IN MYANMAR, 2021-2023

The SAC has also been pursuing further Singapore is the largest source of FDI
investment and technical support from Russia. amongst these countries, but even there
The aforementioned Pinpet iron and steel the level of approved FDI has dropped to less
61
facility is a joint venture between the MEC and than 40 percent of the average for 2015-20.
Tyazhpromexport, a Russian SOE. In addition, It is also worth noting that, whilst Singaporean
there have been various reports of investments are technically counted as FDI,
agreements between the SAC and Rosatom much of this activity is a reflection of
regarding both nuclear and wind power Myanmar-based companies operating from
generation. Nevertheless, solid commitments Singapore as part of their Myanmar
have been scarce, with Russia not featuring in operations.
the top ten list of FDI sources.
In summary, Myanmar’s FDI position is severely
Other countries continuing to make or plan diminished, demonstrating that the SAC’s
investments in Myanmar are Singapore, outreach and cultivation of key partners is not
Thailand, Japan, and the Republic of Korea. yet delivering returns at a macro level.

Figure 3 Total approved FDI

61 https://www.dica.gov.mm/sites/default/files/document-files/2023_ april_foreign_direct_investment_yearly_
approved_amount_country.pdf
 25 | ECONOMIC POLICY IN MYANMAR, 2021-2023

6
Conclusion
This brief has explored the development of the SAC’s economic policy. In the initial phase
after February 2021, the SAC restricted itself to a series of emergency responses to major
social and economic volatility. In the latter half of 2021, the SAC attempted to embark on a
partial normalisation, hoping to overcome the initial negative reaction to the events of
February 2021 and still attract foreign investment. However, by the first half of 2022 it was
clear the SAC was changing course in pursuit of economic policies that gave them
substantial control over the economy and society. This theme was reinforced by the pursuit
of national self-sufficiency through protectionism and the promotion of domestic
production. Meanwhile, as it became clear that February 2021 and the subsequent conflict
had precipitated a major decline in foreign investor sentiment towards Myanmar, the SAC
leant into relationships with traditional partners and neighbouring countries. But how
successful has the SAC been in pursuing its three themes?

Regarding the first theme, the SAC has increased its control over the economy and
successfully used economic tools to exert control over citizens and businesses, albeit
62
subject to territorial limitations. The continued existence of a major shadow economy, the
establishment of new black markets such as the one for MMK, and the growth in the
illicit economy are partial demonstrations of the limitations of the SAC’s policy of
63
control. Nevertheless, even here the SAC has sought to capitalise on these black/grey
markets to gain influence, strengthen its patronage networks and increase revenue.

On the second theme, the SAC has a long way to go to deliver self-sufficiency in
agriculture. The relatively small investments are unlikely to overcome chronic challenges in
the sector such as unproductive farming methods, challenges in accessing input
materials, and poor-quality infrastructure. Furthermore, these long-standing issues have
been exacerbated by the current conflict, which has led to movement restrictions and the
64
destruction of farmland. Outside of the conflict, there is also an incoherence in the SAC’s

62 https://thediplomat.com/2023/05/myanmars-military-is-no-longer-in-effective-control-of-the-country/
63 United Nations Office on Drugs and Crime, Myanmar Opium Survey: Cultivation, Production and Implications (2022); Oliver Slow, Return
of the Junta: Why Myanmar’s Military Must Go Back to the Barracks (London: Bloomsbury, 2023).
64 United Nations Office for the Coordination of Humanitarian Affairs, Humanitarian Needs Overview Myanmar 2023 (2023); World Bank,
Myanmar: Analysis of Farm Production Economics (2016).
 26 | ECONOMIC POLICY IN MYANMAR, 2021-2023

approach to agriculture, with the goals of self-sufficiency and a positive trade balance
pulling in opposite directions. For example, the prioritisation of some products for export,
such as pulses, has created issues for food availability and affordability domestically. More
broadly, the bid for a positive trade balance has been dented by a declining level of exports
under the SAC, and the policies in place to strengthen domestic production outside
agriculture appear insufficient.

Delivery against the third theme – enhancing relationships with key foreign partners – has
been limited. Despite lots of announcements and meetings, there has not been a particular
increase in concrete economic cooperation with China, Thailand, India, Bangladesh, and
Russia. The result of this failed effort, combined with broader negative investor sentiment,
has been hugely reduced FDI.

Thus, the themes have not been successfully pursued even when viewed on their own
terms. Further, when we consider the broader question of whether these themes and
policies have been beneficial for the economy of Myanmar, the assessment becomes even
more negative. Economic activity, including business investment, will likely be slowed by
the rapid and uneven implementation of burdensome, distorting regulations. Exchange
controls have decreased trust in the banking system, with knock-on impacts for financial
stability. Crony and khaki capitalism create myriad problems ranging from capital
65
misallocation to the stifling of economic dynamism.

New barriers to trade contribute to inflation and reduce market actors’ access to the goods
and services needed for domestic production. Likewise, lower levels of FDI have already
reduced employment opportunities, which may increase outward migration and contribute
to a “brain drain”, leading to a slowdown or reduction in human capital formation.

As such, the cumulative result of the SAC’s economic policies will likely be a slowdown in
productivity growth and a reduction in the country’s economic growth path. Indeed, this is
already being seen in the latest GDP estimates and forecasts, which show a significant
slowdown in 2022 and 2023 compared with the 2011-20 growth rate, even despite the
66
unprecedented contraction in 2021. Various other metrics and sector-specific studies are
similarly revealing the depth of the country’s economic challenges including increasing
67
unemployment, poverty and food insecurity. Of course, the difficulties for the people of
Myanmar go far beyond the economic sphere, but it seems the SAC’s pursuit of its three
economic policy themes are making a dire situation worse.

65 Sebastian Doerr, Dalia Marin, Davide Suverato and Thierry Verdier, “Mis-allocation within firms: internal finance and international
trade”, Bank for International Settlements Working Papers, No. 1030 (2022).
66 World Bank, Myanmar Economic Monitor: Navigating Uncertainty (January 2023).
67 United Nations Development Programme, Livelihoods Hanging by a Thread: A Survey of Garment Workers and Firms (2022); United
Nations Office for the Coordination of Humanitarian Affairs, Humanitarian Needs Overview Myanmar 2023 (2023); United Nations
Development Programme, Helping Communities Weather the Socio-economic Downturn: Building Urban Resilience (2022).
 27| ECONOMIC POLICY IN MYANMAR, 2021-2023

Annex I:
Myanmar’s 2021 exports by product type

Source: The Observatory of Economic Complexity (https://oec.world)

 28 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Annex II:
Myanmar’s 2021 imports by product type

Source: The Observatory of Economic Complexity (https://oec.world)

29 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Annex III:
Economic policy measures, announcements, and regulatory
enforcement actions

Please note, this is not an exhaustive list of all economic policies. It is a selection of key policies and announcements in the following
thematic areas: company law, business lending, exchange controls, exchange arrangements, the exchange rate regime, export and import
licencing and other restrictions and arrangements, financial regulation, financial stability, foreign investment, monetary policy, and tax.
Where possible, dates and details are provided in the table although the details in some areas are necessarily limited by the lack of clarity
in the original announcement.

Policy measure, announcement,

Date Thematic area Detail
or enforcement action (headline)

Phase 1: damage control (February to August 2021)

Monetary policy, CBM writes to banks stating that those refusing to reopen will be
1 5-Mar-21 Banks forced to reopen.
financial stability forced to transfer part of their accounts to the state-run institutions.

Monetary CBM imposes bank withdrawal limits: 500,000 MMK per day at ATMs, 2
Withdrawal
2 1-Apr-21 policy, financial million MMK per week for individual accounts,
limits imposed.
stability and 20 million per week for corporate accounts.

MOC imposes a temporary ban on the

Import
Temporary ban on some food and import of beverages including fruit juice and water, instant coffee,
3 12-Apr-21 licencing and
drinks imports. coffee mix, tea mix, yoghurt, cream, condensed milk, and evaporated
restrictions
milk importedthrough land borders.
Monetary policy, CBM reduces reserve requirements from 3.5 to 3% (down from 5% in
4 1-May-21 Bank reserve requirements loosened.
financial stability April 2020)
30 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Monetary
CBM (directive 7/2021) increases the weight of government treasury
5 7-May-21 policy, financial Bank reserve requirements loosened.
bonds with longer maturities in banks’ liquidity ratio calculations.
stability

Import
Temporary MOC introduces a temporary ban on motorcycle imports through
6 8-May-21 licencing and
import ban on motorcycles. land borders.
restrictions
Import Temporary
MOC introduces a temporary ban on the importation of soaps,
7 4-Jun-21 licencing and import ban on soaps, detergents,
detergents, and toothpaste through land borders.
restrictions toothpaste.

SAC economic policy objectives: (a) enhance production based on

agriculture and livestock through modern techniques and strengthen
SAC all-round development in
Economic announces 9 objectives for the other sectors; (b) develop a stable market economy and promote
8 16-Jul-21
policy objectives country, including 3 on economic international investment in order to enhance economic
policy. development; and (c) promote and
support local businesses to create employment opportunities and
increase domestic production.
CBM issues letter 4/2021 restricting the number of foreign employees
CBM permitted to be employed by Myanmar banks (25 employees for
Financial
9 2-Aug-21 restricts number of foreigners banks with >5% market share, 15 employees for those with 1-5%
regulation
permitted to work at banks market share, and 8 employees for smaller banks). CBM approval is
needed for new foreign employees.

Phase 2: failed normalisation (August 2021 to March 2022)

CBM introduces an explicit managed float regime with a

Managed float re-introduced with a
Exchange rate CBM-determined reference rate of 1650 MMK to USD and a trading
10 3-Aug-21 reference rate of 1650 MMK per
regime band of +/- 0.8% (prior to this, from February 2019, the reference rate
USD.
was market-determined).
CBM issues notification 33/2021 introducing FX surrender
FX surrender requirements introduced requirements for exporters. All unused export income held in a
11 3-Sep-21 Exchange controls
for exporters. foreign currency must be converted to MMK at the reference rate
within 4 months of the receipt of the income.
The CBM abandons the managed float regime introduced just a
Exchange Managed
12 10-Sep-21 month earlier, following problems in the USD FX market. CBM
rate regime float abandoned.
increases market interventions (USD sales).
31 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Exchange FX CBM issues a letter requiring banks to track and report on FX

13 17-Sep-21
controls transactions to be tracked. transactions.

SAC restricts the importation of palm oil to a limited number of

Import Palm oil businesses (8) in the Myanmar Edible Oil Dealers' Association.
14 21-Sep-21 licencing and imports restricted to select group of Association members are restricted to buying/selling palm oil at the
restrictions businesses. reference price and have a max 2 percent profit margin (to prevent
price gouging).

MOC introduces a temporary ban on car imports. Suspensions will be

Import applied to individual car import permissions including those held by
Car
15 30-Sep-21 licencing and government officials, to the old vehicle replacement programme and
imports restricted.
restrictions to import permissions
held by car dealers.
The September 2021 Union Tax Law reduces corporation income tax
16 30-Sep-21 Tax Corporation tax reduced
from 25% to 22%.

The September 2021 Union Tax Law reduces taxes for asset purchases
made with undocumented income. The UTL 2019 first introduced
Reduced
17 30-Sep-21 Tax lower tiered tax rates for the tax on income that had escaped
taxation on undocumented income.
assessment. The rates increased in 2020.
The 2021 UTL decreases the rates again.

FX surrender requirements for exporters CBM tightens the requirements of notification 33/2021 by reducing
18 3-Oct-21 Exchange controls tightened: grace period the time by which export income must be used or converted to MMK
reduced to 1 month. (1 month down from 4 months).

Exchange CNY permitted for settling border trade CBM permits the use of CNY and JPY for international payments and
19 12-Oct-21 arrangements with China. CNY and JPY settlements, and permits the use of CNY for land border trade with
(bilateral payments) permitted for international payments. China.
CBM issues notification 43/2021 capping the amount that can be
Monetary policy, paid in cash for basic goods and services 20 million MMK per
20 3-Nov-21 Cash transaction cap introduced.
financial stability transaction. The notification further states that parties should use
digital payment methods using the banking system.
CBM issues notification 46/2021 reducing the period in which
FX exporters must deposit export earnings with their bank following
Exchange
21 10-Nov-21 surrender requirements for exporters shipments, and banks must verify whether exporters received export
controls
tightened. proceeds into their bank accounts (3
months down from 6 months).
32 | ECONOMIC POLICY IN MYANMAR, 2021-2023

CBM attempts to formalise the exchange rate regime again, this time
New CBM
Exchange fixing the reference rate at 1780 MMK to USD and introducing a
22 10-Nov-21 reference rate of 1780 MMK per USD.
rate regime trading band of +/-0.5%. This remains overvalued compared with the
Tighter trading band introduced.
parallel rate for MMK available on the unofficial market.
Under the heading 'inviting investment' the MIC announces that it will
prioritise the following areas when considering domestic and
MIC international investment proposals: fertiliser, cement, iron and steel
Foreign
23 21-Nov-21 publishes a list of priority areas for manufacturing; agriculture;
investment
investment. value-added foodstuffs; electric vehicle manufacturing;
pharmaceutical and medical device manufacturing; and, public
transportation services.

MOC (newsletter 18/2021) adds 3070 tariff lines to the current list of
Import subject to import licenses (bringing the total number of lines
Licences
24 26-Nov-21 licencing and requiring import licences to 63%). This move significantly increases
now required for 63% of import lines.
restrictions the import licencing requirements for machinery, textiles, clothing,
metals, food, beverages, and tobacco products.
CBM increases its sales of USD (294 million) during the period
Foreign September to December,, almost tripling the amount sold compared
CBM
25 1-Dec-21 exchange market with the May-August period. The sales are directed at importers of
increases USD auctions.
intervention critical goods such as fuel and cooking oil using the reference rate
(lower than the parallel rate).

Introduction of a 20,000 MMK commercial tax on the sale and

Tax on SIM cards and internet service
26 1-Jan-22 Tax activation of SIM cards and a 15% commercial tax on the sale of
providers
internet services (up from 5%).

Exchange THB CBM permits the use of THB/MMK direct payments for Thai-Myanmar
27 3-Mar-22 arrangements permitted for settling some border cross-border trade (pilot project restricted to Myawaddy and
(bilateral payments) trade with Thailand. Tachileik).
Foreign
Final CBM conducts open market intervention (USD auction). This would be
28 8-Mar-22 exchange market
USD auction of H1 2022. the final such intervention until August 2022.
intervention

Corporation The March 2022 Union Tax Law reduced the corporation income tax
29 30-Mar-22 Tax tax rate reduced for companies listed rate from 20% to 17% for companies listed on the Myanmar stock
on the Myanmar stock exchange. exchange.
33 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Phase 3: the three themes crystallise (March to August 2022)

The Union Tax Law 2022 introduces more substantial fines for non-
compliance for all taxes: 100% of the tax and the following fines and 1
Increase in fines for tax non-
30 30-Mar-22 Tax million MMK for failure to pay tax the first time, 2 million MMK for the
compliance.
second time, 3 million MMK for the third time, and 6 million for the
third and subsequent failures to pay.
MIC
Foreign MIC announces that it will prioritise investment proposals related to
31 1-Apr-22 invites investment in edible oils
investment the production of edible oils.
production.

CBM introduces higher bank withdrawal limits: 100 million MMK per
Monetary policy,
32 1-Apr-22 Withdrawal limits loosened. week for factories purchasing raw materials and for government
financial stability
departments, with no limit for payroll.

Monetary policy, CBM extends the 3% minimum reserve requirement to April 2023 (75%
33 1-Apr-22 Bank reserve requirements loosened.
financial stability of which must be deposited at the CBM).

In recognition of the spread between the reference rate and the

Exchange rate New CBM reference rate of 1850 MMK
34 3-Apr-22 parallel (unofficial) rate, CBM increases the reference rate to 1850
regime per USD.
MMK per USD. Trading band continues at +/-0.5%.

CBM introduces requirements for nearly all individuals and entities to

Comprehensive,
repatriate and convert to MMK all foreign-currency income received
Exchange retroactive FX surrender requirements
35 3-Apr-22 from abroad within one day of its receipt (this doesn't apply to
controls introduced for Myanmar residents and
diplomats and foreign civil servants). This applies retroactively to
entities.
foreign currency balances already in the country.

Restrictions CBM introduces a requirement for all outbound cross-border

Exchange
36 4-Apr-22 imposed on international (outbound) transfers of foreign currency to be conducted through an authorised
controls
FX transactions. bank and to be approved by the FESC.

Exemptions
Exchange CBM clarifies that government ministries are exempted from the new
37 5-Apr-22 from FX surrender requirements
controls foreign currency conversion requirements.
introduced (government entities).

CBM reduces the monthly card spending limits for international

credit and debit cards such as MasterCard, VISA, and UPI from 5000
Exchange Spending to 2500 USD, and to 1200 USD for international co-branded credit
38 7-Apr-22
controls limits reduced for international cards. cards. Banks are instructed to
provide regular reports to the CBM on these accounts and FX
transactions.
34 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Withdrawal limits for international cards CBM reduces the withdrawal cap for international credit and debit
39 12-Apr-22 Exchange controls
tightened. cards from 5000 to 2500 USD.

CBM clarifies that various individuals and entities are exempt from
Further
the new foreign currency conversion requirements: companies with
exemptions from FX surrender
Exchange over 35% foreign ownership; direct investment businesses in SEZs;
40 20-Apr-22 requirements (various international
controls diplomats and employees of international organisations,
entities and
international NGOs and development agencies;
persons, airlines).
and, domestic and foreign-owned airlines.
SAC ministers (information/investment) blame global gas prices and
'terrorist action' for recent power outages. International investment is
SAC
sought for oil and gas production, including Chinese investment for
ministers seek to reassure
Foreign the Mee Laung Gyaing LNG project. Other plans include: solar power
41 21-Apr-22 international investors and the public
investment generation, converting fertiliser plants for electricity generation,
regarding
developing hydropower plants (Middle Paung Laung, Upper Yeywa,
energy sector plans.
Tha Htay, Upper Keng Tawng, Napin, and a domestic
transmission line for the Dapei hydropower plant).
CBM issues a partial exemption from the foreign currency conversion
Exchange Further exemptions from FX surrender requirements (announced on 3 April 2022) for businesses obtaining
42 26-Apr-22 arrangements requirements: grace period for THB and CNY through border trade with Thailand and China.
(bilateral payments) exporters to China and Thailand. Exporters will have one month to utilise the foreign currency income
before the bank is required to convert it to MMK.

CBM takes enforcement action against 177 companies for failing to

Exchange Enforcement comply with CBM notification 46/2021 (10 November 2021) regarding
43 29-Apr-22
controls action: FX surrender requirements. depositing export earnings with the bank within 3 months of
shipment.
The SAC restricts fuel consumption through the imposition of quotas
Import
Quotas for licenced retailers (the quotas also applies to fuel bought/sold
44 1-May-22 licencing and
introduced for fuel. within Myanmar). The authorities also increase checks in the sector,
restrictions
shutting down non-licenced (often small) retailers in various regions.

SAC officially establishes and appoints the FESC (order 28/2022),

Exchange FESC which is tasked with approving foreign currency conversion,
45 13-May-22
controls established. introducing exemptions to exchange controls, and permitting cross-
border foreign currency transfers.
35 | ECONOMIC POLICY IN MYANMAR, 2021-2023

CBM issues notification 195/2022 asking government-related entities

and private enterprises to use MMK only in making payments for
MMK to be used for domestic
46 22-May-22 Exchange controls sales of goods and services, and in pricing (noting that some hotels,
payments.
restaurants, and international schools are still transacting in foreign
currency).

Economic
SAC establishes 100 billion MMK fund to increase sunflower oil
47 1-Jun-22 development SAC establishes agriculture fund.
production.
(business lending)

Ministry of Transport and Communications issues a letter clarifying

the FESC's monthly limits for foreign currency held by the following: (1)
Further
Exchange 300,000 USD for members of the Myanmar International Freight
48 2-Jun-22 exemptions from FX surrender
controls Forwarders Association; (2) 2 million USD for members of the
requirements (logistics companies).
Myanmar Maritime Association (per shipping line); and, (3) 100,000
USD for airlines and other types of logistics companies.

Exchange Enforcement CBM to prosecute 137 companies for failing to comply with the
49 4-Jun-22
controls action: FX surrender requirements. requirement to deposit export earnings with the bank.

MOPF issues directive 1/2022 on withholding tax when paying a non-

Exemption resident third party. This directive removes an exemption on the need
relating to withholding tax revoked for to submit supporting documents regarding double taxation
50 9-Jun-22 Tax
payments to non-resident service agreements with the country of the service provider (the exemption
providers. had been introduced in 2020 and was available for payments up to
100,000 USD).

Announcement
Financial CBM publicly warns against using mobile payment services that are
51 10-Jun-22 regarding unauthorised mobile
regulation not officially permitted.
payments service providers.
Import The SAC introduces a prohibition on car imports, making more
Car
52 16-Jun-22 licencing and concrete and comprehensive the temporary suspension introduced
imports banned.
restrictions in September 2021.

Further exemptions from FX surrender

CBM minutes state that the foreign currency conversion requirement
requirements (DICA-registered
(announced on April 3) does not apply to DICA-registered
53 16-Jun-22 Exchange controls companies with >10% foreign
companies with at least 10% foreign investment and to Myanmar
investment and Myanmar staff of
citizens employed by exempt organisations such as the UN.
international organisations).

MOPF notification 20/2022 introduces a requirement for all

companies and organisations in Myanmar, including non-profits, to
Taxpayer identification number
54 30-Jun-22 Tax apply for a taxpayer identification number by 30 June 2022 or within
introduced for all entities.
90 days of establishment. This implements a policy stipulated in the
Tax Administration Law 2019.
36 | ECONOMIC POLICY IN MYANMAR, 2021-2023

56 billion MMK of commercial and income tax exemptions granted to

55 1-Jul-22 Tax Tax exemption for investment. entities that have obtained investment approval from MIC. The
exemption also applies to donations made to NGOs and INGOs.

FESC issues a statement requiring the use of USD to settle border

trade in rice, bean, corn, and edible crops. This is a partial reversal of
Exchange USD to
the previous policy permitting the use of other currencies (CNY, THB)
56 2-Jul-22 arrangements be used for border trade in certain
for such trade. Export earnings must be deposited in an authorised
(bilateral payments) food commodities.
bank at the CBM reference rate (1850 MMK to USD). Non-compliant
companies will have their export licence revoked.
Further CBM minutes state that companies with 10% and above foreign
exemptions from FX surrender investment and SEZ companies are exempted from the foreign
Exchange
57 7-Jul-22 requirements (SEZ companies, currency conversion requirements. The minutes also contain specific
controls
companies with list of foreign companies exempted (Woori Bank, Myanma Foreign
>10% foreign investment). Trade Bank, China National Oil Corporation, Panjab National Bank).

CBM (letter FE-1/739) revokes its previous exemption from the foreign
FX surrender requirements tightened:
currency conversion requirement for DICA-registered companies
Exchange exemption for DICA-registered
58 13-Jul-22 with at least 10% foreign investment (this doesn't include foreign-
controls companies with >10% foreign
owned companies approved by MIC and SEZ companies, which
investment revoked.
continue to be exempt).

Exchange Foreign CBM suspends the repayment of foreign loans by local residents
59 13-Jul-22
controls loan repayments suspended. (interest and capital).

MOPF announcement on the need for exporters to show proof of USD

Export licencing and Evidence of USD deposit required for
60 13-Jul-22 deposited with a licenced bank as part of an export licence
restrictions export licence.
application.
In accordance with FESC meeting 32/2002, CBM letter FE-1/754
FX surrender requirements tightened: FX
requests that banks convert to MMK any foreign currency balances
Exchange balances of companies with less than
61 15-Jul-22 held by companies with up to 35% foreign ownership. The letter
controls 35% foreign ownership to be
requests a report to CBM by 18:00 on the same day and warns of
immediately converted to MMK.
sanctions for non-compliance.

FX surrender requirements tightened:

CBM instructs banks to purchase any remaining USD balances held in
banks to immediately purchase
62 21-Jul-22 Exchange controls foreign currency accounts of companies, organisations, and
all outstanding FX balances (entities
individuals by 18:00.
and individuals).
Export Foreign MOC newsletter 8/2022 removes criteria for beans, corn and sesame
63 27-Jul-22 licencing and companies blocked from exporting to be considered 'value-added' crops, effectively prohibiting foreign
restrictions value-added beans, corn, and sesame. companies and joint ventures from exporting these products.
37 | ECONOMIC POLICY IN MYANMAR, 2021-2023

SAC establishes committee to arrange fuel imports from Russia. It is

Import licencing and Committee established to oversee fuel chaired by Nyo Saw (MEC) and also includes Maung Maung Kyaw
64 1-Aug-22
restrictions imports from Russia. (MEC), Hla Win (Star High Co), Hsan Naung (Brighter Energy), Win Swe
(Best Oil Co) and Maung Maung Naing (Yetagon Energy Co).
MoC issues a notification barring importers from conducting trade in
Exchange Importers USD from buying USD through the FESC. This regulation does not
65 1-Aug-22
controls denied access to foreign currency. apply to pharmaceutical companies which are permitted to
purchase USD from the informal market.

New CBM
Exchange CBM increases the MMK reference rate to 2100 per USD. The official
66 5-Aug-22 reference rate of 2100 MMK per USD.
rate regime trading band is reduced from +/- 0.5% to +/- 0.3%.
Tighter trading band introduced.

Phase 4: the three themes continued; some incentives introduced (August 2022 – May 2023)

CBM issues notification 36/2022 specifying that only 65% of export

income needs to be converted into MMK within one day. 35% of
Further exemptions from FX surrender export income can be used relatively freely for 30 days, with the
67 5-Aug-22 Exchange controls requirements: 30 day grace exporter and purchasing party permitted to use the foreign currency
period for 35% of export earnings. for cross-border transactions without requiring FESC approval. Banks
are still required to submit a daily transaction report. After 30 days,
the remainder must be converted to MMK by the exporter's bank.
SAC forms supervisory committee on mobile financial services to
Regulatory regulate the sector. Also in August, a leaked CBM letter instructs
committee established to oversee mobile money operators to maintain personal information on
Financial
68 15-Aug-22 mobile money sector; mobile money customers (names, phone numbers, passcodes, national identity
regulation
operators instructed to maintain cards, address and reason for cash transfer/withdrawal). They were
extensive information on customers. also instructed to install a CCTV system in their store or take pictures
of customers.

Foreign CBM CBM announces it will sell 200 million USD to the market to relieve the
69 31-Aug-22 exchange market announces first USD auction of H2 2022 rise in fuel costs. CBM also issues a letter to the public asking them to
intervention (targeted at fuel importers). ignore false rumours about fuel shortages and MMK depreciation.

Further exemptions from FX surrender CBM announces that Myanmar citizens receiving foreign currency
70 1-Sep-22 Exchange controls requirements: 21 day grace income from abroad into their bank accounts will be permitted to
period for remittances. use this income freely for 21 days before it is converted to MMK.
Exchange SAC announces that it is in discussions with Russia regarding the
Announcement regarding future use of
71 20-Sep-22 arrangements Mir payments system, with the intention of using it to facilitate
Russian Mir payments system.
(bilateral payments) bilateral MMR-RUS trade settled in MMK-RUB.
38 | ECONOMIC POLICY IN MYANMAR, 2021-2023

DICA begins restricting public access to information held on the

country's company registry, Myanmar Companies Online (MyCO).
DICA reduces company ownership
The MyCO electronic company registration system was launched in
transparency by blocking public
72 28-Sep-22 Company law 2018 using Japanese government funding, with the public
access to the Myanmar company
subsequently given access to the information from 2019 (for a 10-
registry.
20,000 MMK fee). MyCO holds information on who owns and controls
companies incorporated in Myanmar.
To restrict the money supply, CBM adjusts the rules regarding the
composition of reserve requirements. The minimum reserve
Monetary Bank requirement remains unchanged at 3%. However, 83% of this amount
73 28-Sep-22 policy, financial reserve requirements tightened must now be held with CBM (up from 75%), with 17% to be held as
stability (composition adjusted). cash reserves (down from 25%). CBM announced it will pay interest
on deposits over the minimum requirement to encourage further
tightening of the money supply.
Exchange FESC/CBM FESC letter FE-73 announces that CNY can be used by importers to
74 30-Sep-22 arrangements permits the use of CNY to pay for fuel purchase fuel. The letter authorises banks to facilitate the necessary
(bilateral payments) imports. cross-currency trades.

Enforcement action: unlicenced FX CBM sues Perfect Money and B to P Money Exchange for conducting
75 15-Oct-22 Exchange controls
traders. foreign exchange transactions without a licence.

MOPF announces a new regime for customs duties on medicines: 21

types of medicine that can be produced in Myanmar will be subject
Customs to 5% customs duty, 18 types of medicine including common
76 17-Oct-22 Tax
duty on medicines increased. products such as paracetamol will not have any customs duty
applied, and others will be subject to 1.5% customs duty (notification
85/2022).
Exchange SAC permits the use of CNY and RMB to purchase gemstones at the
CNY/THB permitted for gemstone
77 20-Oct-22 arrangements 2022 mid-year gems emporium (only USD and EUR were permitted
purchases.
(bilateral payments) previously).

SAC Industrial Zone Supervisory Committee orders companies operating

Exchange
78 21-Oct-22 orders Yangon industrial companies to in Yangon's industrial zones to submit their bank account
controls
report bank information. information.

SAC invites sunflower oil producers to

Economic SAC invites loan applications for its 100 billion MMK sunflower oil
apply for loans; SAC
79 1-Nov-22 development fund, established in June 2022. SAC also establishes a new fund of
establishes new agriculture fund
(business lending) the same size focused on increasing lending to livestock rearing.
targeted at livestock.
30 MMK CBM starts paying an additional 30 MMK for every USD remitted
Exchange
80 1-Nov-22 (per USD) incentive introduced for through authorised banks (applies to other currencies at an
controls
remittances. equivalent rate).
39 | ECONOMIC POLICY IN MYANMAR, 2021-2023

Some Myanmar exporters given access to customs free trade with

Export licencing and Customs relief for Myanmar exporters
81 1-Nov-22 China (pending Trade Department/MoC application process) under
restrictions to China.
the Regional Comprehensive Economic Partnership.

MoC (Department of Trade) introduces a requirement for payments

Companies
for imports to be processed through authorised banks. The
required to use authorised banks to
Exchange notification informs importers that they should use foreign currency
82 1-Nov-22 pay for imports; invited to utilise FX
controls obtained through export earnings (utilising the 30 day grace period
earnings of exporters or remittances to
for 65% of export income introduced on 5 August) or remittances
pay for imports.
(utilising the 21 day grace period introduced on 1 September).
Import EV MOC announces a new pilot scheme for the importation of electric
83 11-Nov-22 licencing and import scheme and customs duty vehicles. MOPF announces that electric vehicles and related products
restrictions exemption. are exempt from customs duties (up to March 2023).

IRD issues a public ruling providing tighter definitions of tax

Measures
avoidance, tax underpayment, misrepresentation of tax information,
84 16-Nov-22 Tax to address tax fraud and non-
and tax evasion. This public ruling was brought under the Tax
compliance.
Administration Law 2019.

EV tax SAC Law 48 of 2022 amends the Union Taxation Law 2022 to exempt
85 17-Nov-22 Tax exemption (commercial tax and electric vehicles and their batteries from commercial tax and special
specific goods tax) goods tax.
MoC permits the use of CNY to pay taxes due on tissue-culture
Exchange MoC bananas. These bananas are grown for the Chinese market in Kachin
86 28-Nov-22 arrangements (tax permits the use of CNY for tax and exported through Kampaiti, with Chinese investment leading to
payments) payments on banana exports. market growth over the past decade. Myanmar imposed a tax on the
sector in 2019.
Global New Light of Myanmar (state newspaper) begins publishing
Exchange rate Unofficial exchange rates published in
87 1-Dec-22 the exchange rates available on the unofficial/black market. It refers
regime GNLM.
to these rates as 'external' rates.
Department of Trade (MoC) announces that licence applications for
Foreign imports at the Myawaddy trade zone will only be granted if importers
Exchange
88 11-Dec-22 currency required for import licence have foreign currency in their bank accounts. This announcement
controls
applications. relates to the 1 November notification regarding importers needing to
obtain foreign currency earned from exports or remittances.

CBM announces that it has undertaken a liquidity injection of 108

million USD during the previous 45 days. But the announcement
CBM announces USD liquidity injection
Foreign exchange does not make clear whether this injection refers to USD auctions or
89 15-Dec-22 undertaken during
market intervention to the result of policies regarding USD obtained through remittances
November-December 2022.
and exports. CBM announcement also refers to fraudulent fuel
companies procuring USD to disrupt the FX market.
40 | ECONOMIC POLICY IN MYANMAR, 2021-2023

CB Bank announces its intention to offer a contribution of 10 MMK

2865 + 40 MMK top-up (per USD)
for each USD remitted into its accounts by seamen and Myanmar
offered by CB Bank for seamen and
90 16-Dec-22 Exchange controls citizens working abroad. More significantly, an exchange rate of 2865
Myanmar citizens remitting foreign-
MMK per USD is available to these customers. This is in addition to the
earned income.
30 MMK per USD incentive introduced by CBM on 1 November 2022.

FESC grants companies with at least 35% foreign ownership an

Further exemption from the foreign currency conversion requirements if the
exemptions from FX surrender currency is to be used within Myanmar or for cross-border trade.
Exchange requirements: exemption for FESC authorisation is still required if the company wants to make
91 30-Dec-22
controls companies with outbound international payments using foreign currency for non-
>35% foreign ownership using FX within trading purposes. Foreign companies exporting non-value-added
Myanmar or for trade. agricultural products are still required to convert 65% of export
earnings into MMK in line with the policy of 5 August 2022.
CBM updates its guidelines on the use of THB-MMK payment for trade
Exchange Expansion
with Thailand, expanding the scheme to the border trading zones at
92 30-Dec-22 arrangements of THB-MMK payments for border
Myeik, Kawthoung, Mawtaung(on top of Myawaddy and Tachileik that
(bilateral payments) trade with Thailand.
were the focus of the pilot when it was introduced in March 2022).

CBM inspected 738 garment manufacturer's financial records,

CBM
Exchange subsequently warning 92 of them about not having local bank
93 1-Jan-23 issues warning to garment
controls accounts and 284 of them for not receiving FX payments (in breach
manufacturers regarding FX controls.
of recently introduced regulations).
CBM CBM asks for cooperation from Maybank to help to channel
Exchange
94 14-Jan-23 seeks to formalise remittances from remittances from Myanmar workers in Malaysia through formal
controls
Malaysia. banking channels rather than hundi.

Economic
SAC announces new SME development In its 2022/23 supplementary budget, the SAC sets aside 170 billion
95 1-Feb-23 development
fund. MMK for lending to SMEs.
(business lending)
SAC's new governing objectives include one addition to the 3
SAC announced in July 2021: to encourage micro, small, and medium-
Economic announces 12 objectives for the scale enterprises based on domestic raw materials in order to
96 3-Feb-23
policy objectives country, including 4 on economic substitute import goods and enhance export products to have long-
policy. term guarantees and create employment opportunities and
increase domestic production.

CBM makes an announcement about the circulation of false rumours

Exchange rate / CBM warns of false rumours regarding
97 10-Feb-23 which are creating downward pressure on MMK and instructs banks
exchange controls MMK weakness.
to identify the companies involved.
41 | ECONOMIC POLICY IN MYANMAR, 2021-2023

MIC notification 1/2023 states that electric vehicles, and renewable

New MIC notification inviting investment energy generation and distribution, are priority areas in which the
98 15-Feb-23 Foreign investment in EVs and renewable energy MIC will view investment proposals favourably. MIC notes that
and offering tax reliefs. investment in these areas will benefit from exemptions or reliefs from
customs duty or other internal taxes.

MOC announces electric vehicle import pilot rules: participating

companies must possess a showroom operating licence or be
Import registered with DICA, they need to obtain a permit from the National
New EV
99 22-Feb-23 licencing and Level Committee for EVs and Related Industries Development, and
import pilot announced.
restrictions they need to present a bank guarantee equivalent to 50 million MMK.
GNLM reported on various electric vehicle-related imports during
February (mainly chargers from China).
FX MoC (Trade Department) sets a new requirement for 65% of income
Exchange surrender requirements tightened: rice from rice exported via land borders to be converted to MMK at the
100 1-Mar-23
controls exporters required to convert 65% of CBM reference rate (2100 MMK per USD), reversing the previous policy
income to MMK at reference rate. which permitted retention of all export income.
CBM announces new procedures for the payment of taxes on income
earned abroad. Conversion to MMK prior to the payment of taxes is
Income no longer permitted. Myanmar taxpayers are required to open a
Exchange
101 1-Mar-23 tax due on foreign-earned income foreign currency account with a state-owned bank (Myanmar
controls
must be paid in foreign currency. Economic Bank, Myanmar Investment and Commercial Bank, and
Myanmar Foreign Trade Bank) or to make a foreign currency transfer
to Myanmar Economic Bank.

Myanmar Embassy in Bangkok announces that it will no longer

Banking provide reference letters to Myanmar tourists to enable them to open
Exchange
102 8-Mar-23 in Thailand becomes more a Thai bank account. Bangkok Bank also announces it is restricting
controls
challenging for Myanmar citizens. the ability of tourists to open bank
accounts.
SAC announces its intention to scrutinise the fuel sector to reduce
Import consumption and thereby the outflow of USD and the Myanmar
Scrutiny
103 9-Mar-23 licencing and Petroleum Trade Association issues a statement announcing
of the fuel sector set to increase.
restrictions increased consumption monitoring and inspections of retailers
(blacklisting and shutting down businesses who are non-compliant).

CBM revokes money changer licences of over 20 companies in 2023

Enforcement action: Money changer so far for failure to comply with exchange controls. This includes
104 23-Mar-23 Exchange controls
licences revoked. Global Innovations Finance, Mandalay Capital, Imperial Myanmar
Finance, and Myanmar National Airlines.
42 | ECONOMIC POLICY IN MYANMAR, 2021-2023

In May 2021, to ease liquidity issues, the CBM increased the weight of
Monetary policy, CBM maintains position on reserve government treasury bonds with longer maturities in banks’ liquidity
105 24-Mar-23
financial stability requirements adopted in May 2021. ratio calculations. That policy has now been extended until
September 2023.
Commercial tax exemptions introduced for various goods and
services including those related to electric vehicles and solar
Tax photovoltaic panels. Electric vehicles will also be exempt from special
106 30-Mar-23 Tax
exemptions for EVs and solar panels. commodity tax from until March 2024 and vehicles registered from
2023 to 2025 will be exempted from wheel tax, city entrance fees, and
tolls.

SME tax Income tax exemption threshold increased for new SMEs (i.e. in their
107 30-Mar-23 Tax
relief first 3 years) from 10 million MMK to 15 million MMK per year.

Gemstone Gemstone tax exemption removed for diamonds and emeralds (tax
108 30-Mar-23 Tax
sale tax exemptions removed. of between 5-11% due on the sale of gemstones).

Export MoC increases exporter licencing requirements. Licences are now

Licences
109 1-Jan-23 licencing and required for exports across 10,293 lines (out of 11,849) i.e. 86% (bulletin
now required for 86% of export lines.
restrictions 6/2023).

Import MoC increases importer licencing requirements. Licences are now

Licences
110 1-Apr-23 licencing and required for imports across 8,774 lines (out of 11,849) i.e. 74
now required for 74% of import lines.
restrictions (notification 19/2023).
DICA announces new requirements for newly registered businesses
Introduction of stricter company
111 1-Apr-23 Company law to submit detailed banking and financial information within 2 months
registration process.
of company registration.

Economic
SAC SAC announces a new 70 billion MMK fund open to loan applications
112 12-Apr-23 development
announces new agriculture lending. from oil mills and livestock producers (on a 5:2 basis).
(business lending)

Clarification CBM/FESC clarifies that the unofficial market rate can be used by
Exchange
113 20-Apr-23 re partial exemption to FX surrender exporters seeking to utilise up to 35% of their export income (within 30
controls
requirements for exporters. days) as per notification 36/2022 (5 August 2022).

Economic SAC announces increased lending support to SMEs (the financing for
114 20-Apr-23 development SAC statement on new SME loans. this comes from the JICA SME project which was initiated in 2015,
(business lending) with funding allocated to 11 banks between 2015 and 2019).
United Nations Development Programme
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UNDP Myanmar
UNDP Myanmar