Thein Sein Approves Burma Law on Central Bank

By Aung Hla Tun 12 July 2013

RANGOON — Burma’s president has signed a law giving the central bank more autonomy from the Finance Ministry and opening the way for development of the fledgling banking sector.

State-owned MRTV television reported the enactment by President Thein Sein late on Thursday and said details would be published in newspapers on Friday.

But there was nothing in any of Friday’s papers, including the New Light of Myanmar, a state daily that carries official announcements.

The law is part of a series of economic and political reforms pushed through by the quasi-civilian government of Thein Sein, in office since nearly half a century of military rule ended in March 2011.

Rules governing the central bank have to be adopted within three months of the law coming into force.

“In fact, rules and regulations have already been drawn up. So we can expect them to emerge very soon,” Win Hteik, a senior central bank official, told Reuters.

He said the governor and three deputy-governors would in future be nominated by the president and approved by parliament.

He also said the regulations could include details of how joint-venture banks could be set up with foreign lenders.

Foreign banks are not allowed to operate in Burma at present, and when they are allowed in, they will initially only be able to run joint ventures with local banks.

The date for their entry has not been set, although more than 30 foreign banks already have representative offices.

The website of the existing Central Bank of Myanmar, which is part of the Finance Ministry, says its aim is “to preserve the internal and external value of the Myanmar currency.”

Helped by the International Monetary Fund, the central bank introduced a managed float of the kyat in April 2012 as part of the unification of the exchange rate system.

It first floated at 818 per dollar, a level in line with the black market at the time but which the IMF and economists said was overvalued. Since then, the kyat has fallen and the central bank’s daily reference rate was set at 980 on Thursday.