Tuesday, June 27, 2017
The Myanmar Times
The Myanmar Times

Central Bank takes aim at dollar-denominated deposits

The Central Bank of Myanmar had already published warnings twice and defined the type of punishments in relation to different institutions, said U Win Thaw, director general of the Foreign Exchange Management Department at the Central Bank of Myanmar.

The comments were made regarding the illegal use of dollars in local businesses.

The central bank currently has no power to prosecute.

Regarding apartment and condominium lease payments which are settled in dollars, and then deposited into the private banks, the central bank will work out the solution carefully, he added.

“The situation will be okay if the central bank clearly implements it.

Dollar deposits are to be checked. 

Banks tend to accept all deposits [local and foreign currency-denominated], but they should be scrutinising unpermitted dollar-denominated deposits instead.

“Some banks are taking in both permitted [local currency] and unpermitted [foreign currency] deposits,” the director general explained.

Local banks and foreign banks have been in discussion regarding the implementation of a local payment system using Myanmar kyats. 

They also discussed the issue that the central bank is taking action, so private banks should cooperate to examine whether any financial institutions have unpermitted foreign currency deposits. They should submit any discoveries or findings to the central bank.  

The central bank is exploring ways for banks to exchange kyats to dollars more conveniently and will crack down on banks and businesses which use foreign currencies illegally, said U Win Thaw.

Although the central bank has issued a notice not to use foreign currency for local payments twice in the past two years, the body has not fully implemented the rule, said U Maung Maung Lay, vice chair of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).

“They [the Central Bank of Myanmar] do not take action systematically in Myanmar. They just talk about it. If they take actions systematically, the system can become efficient. They forget something … and do not enforce the regulation strictly.

“If they perform systematically, they will need the political will of the government. They can succeed only with this. Myanmar is lax in enforcing and educating the people about policies and rules. Therefore, the country will not be efficient for long time,” the UMFCCI vice chair remarked.

In most of the other countries, dollars are not widely used for local payments as the countries value and trust their own currencies.

For example, Indonesia only uses its own currency. If Indonesian authorities catch business transactions which used foreign currencies, perpetrators are fined $10,000 and have their transacted items confiscated.

Translation by Zar Zar Soe, Kyaw Soe Htet and Khine Thazin Han