Central Bank Eases Forex Access for Importers of Some Commodities
By Kyaw Hsu Mon 18 June 2015
RANGOON — The Central Bank of Myanmar will allow the unrestricted sale of foreign currencies at official rates to importers of edible oil, fuel and cement, rolling back a policy that had limited withdrawals in an apparent bid to ward off supply shortages and a rise in the commodities’ prices.
The state-run Global New Light of Myanmar on Thursday quoted Central Bank Deputy Governor Sett Aung as saying the lifting of restrictions was also “intended to prevent unwanted hikes in foreign currency rates.”
The report said government-owned Myanma Economic Bank and Myanmar Investment and Commercial Bank would begin the plan starting on June 17. However, industry sources said some private banks would not begin until next week.
Win Myint, chairman of the Myanmar Petroleum Importers Association, said fuel importers could officially buy US dollars from government banks without limits starting from Wednesday, but there were some difficulties in dealing with private banks.
“Some private banks … thought it was only allowed for diesel importers, then they refused to sell dollars to petrol importers, but it will be OK later,” he said.
The continued slide of the Burmese kyat against the US dollar has resulted in a widening gap between the Central Bank’s official exchange rate and the black market alternative. According to foreign currency exchangers, Thursday’s black market exchange rate stood at about 1,200 kyats per dollar, while the official rate remained 1,105 kyats per dollar. The black market exchange had reached as high as 1,300 kyats to a dollar last week.
Since October the Central Bank has been limiting its sale of the US dollar to private banks in an attempt to reverse the local currency’s fall, ultimately leaving importers with difficulty coming up with the cash to complete transnational transactions.
“Because of the dollar shortage in the market, we couldn’t pay when fuel ships came to port, we worried for the shortage of fuel distribution here too,” Win Myint said.
Under the Myanmar Petroleum Importers Association, there are about 75 companies that are importing fuels. According to association data, about 150,000 to 200,000 tons of diesel and 70,000 tons of petroleum are imported monthly.
Chit Khine, the chairman of Myanmar Apex Bank, said that if the government’s plan to make foreign exchange more readily available succeeds in better balancing demand and supply, the dollar exchange rate would stabilize.
“I heard that the government is collecting data on how much petroleum is being imported by customers of which banks and how many dollars are required every month, so I expect they will make more progress on this,” he said.
While the loosening of restrictions was welcomed by the Myanmar Petroleum Importers Association, a senior member of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) urged a broader easing on more essential imports, such as pharmaceuticals and other edible commodities.
“If pharmaceutical product prices are also increased, importers will not be able to import, so this would also be problem for people. That’s why the government should look also at these importers,” said Myat Thin Aung, a UMFCCI central executive committee member.
The kyat’s drop has raised the cost of imports on everything from electronics and beverages to construction and foodstuffs.