Financial Structure and Exchange
Arrangements
Myanmar's financial structure includes
State and private banks and a State insurance institution. The State
banks are the Central Bank of Myanmar and four major specialised banks
namely the Myanma Economic Bank which provides countrywide domestic
banking and saving services, the Myanma Investment and Commercial Bank
which renders both domestic and foreign exchange transactions, the
Myanma Foreign Trade Bank which deals in foreign exchange transactions
and the Myanma Agricultural and Rural Development Bank which provides
seasonal and term loans for agriculture and livestock breeding. The
Small Loans Department was separated from the Myanma Economic Bank and
set up as a finance company, namely the Myanma Small Loans Enterprise,
which deals in pawn-shop opera- tions. The Myanma Insurance is the sole
insurance institution in Myanmar and presently underwrites various kinds
of insurance.
In accordance with the new banking laws,
the Central Bank of Myanmar has granted operating licences to eight
domestic private banks and had granted permission to open representative
offices of the seven foreign banks.
Central
Bank of Myanmar
The Central Bank of Myanmar Law (1990)
empowers the Central Bank to operate with relative independence and to
exercise supervisory and regulatory authority over a wide range of
financial institutions, both State and private owned. In particular,
the Central Bank is also empowered to set reserve requirements,
maximum discount rates, maximum and minimum interest rates on loans
and deposits, asset and liability ratios and minimum cash margins. In
this regard, the stipulations are applicable uniformly to all
financial institutions without discrimination. Thus, the law enables
the Central Bank to rely less on quantitative credit control but more
on indirect instruments of monetary control including the use of
reserve ratio and interest rate policy. It also includes provisions
governing the relations of the Central Bank with the Government,
measures and procedures to formulate and implement monetary policy,
implementation of exchange rate policy and control of foreign exchange
transactions and the powers of the board of directors to ensure the
effective performance of the Central Bank.
The Financial Institutions of Myanmar Law
(1990) provides for the establishment of financial institutions,
whether State-owned, jointly owned by the State and private or
private, to perform financial activities with the permission of the
Central Bank.
Exchange
Management
The purpose of exchange management is to
conserve the available foreign exchange reserves of the country.
Exchange management is administered by the Controller of Foreign
Exchange of the Exchange Management Department of the Central Bank of
Myanmar and the Exchange Management Board in accordance with the
Instructions from the Ministry of Finance and Revenue. Both
exportation and importation of kyats are prohibited. The Kyat is not
negotiable abroad. All external payments are subject to authorisation.
All export proceeds and invisible receipts must be declared to the
Myanma Foreign Trade Bank at present.
Exchange
Arrangement
The currency of Myanmar is the Myanmar
Kyat. which is pegged to the SDR at K 8.50847 = S D R 1. Myanmar
applies margins of 2 per cent in respect of spot exchange
transactions, based on the fixed Kyat - S D R rate. The buying and
selling rates of the Kyat for the Deutsche mark, the French franc, the
Japanese yen, the pound sterling, the Swiss franc, and the US dollar
quoted by the Myanma Foreign Trade Bank are determined on the basis of
the daily calculations of the value of these currencies against the S
D R. Buying and selling rates for other currencies such as Singapore
dollar, Italian lira, Hong Kong dollar, Netherlands guilder, etc., are
determined on the basis of appropriate cross rates in different money
markets of various geographical regions. There are no taxes or
subsidies on purchases or sales of foreign exchange. There are no
arrangements for forward cover against exchange rate risk operating in
the official or the commercial banking sector.
The Central Bank of Myanmar has issued
Foreign Exchange Certificates (FECs), equivalent in US dollar, since
February 1993, in order to enhance the foreign exchange earnings and
for the convenience of tourists. FECs can be used by both residents
and non- residents alike for any type of payment within the Union of
Myanmar. Tourists entering Myanmar are required to exchange
compulsorily the prescribed minimum amount of US $ 300 with 300 FEC
units, which will not be reconverted at the time of departure from
Myanmar. However, in the case of unutilised balance of the FECs
exchanged above the 300 FEC units the balance will be reconverted at
the time of departure on presentation of the FEC Voucher at the
exchange counters. FECs are exchangeable with US dollars or pounds
sterling or with acceptable Traveller's Cheques. Myanmar residents who
own foreign currencies are permitted to exchange them with FECs, but
they cannot reconvert their FECs into foreign currencies. However, any
Myanmar resident who owns a minimum of 100 FEC units is allowed to
open a new foreign currency account or to deposit them into his
existing foreign currency account at State-owned commercial banks on
payment of a 10 per cent service charge. The banks concerned will then
credit the remaining 90 per cent value of FECs into the US dollar
denominated foreign currency account of the individual Myanmar
resident. The organisations which are authorised to obtain FECs from
the Central Bank of Myanmar are the State-owned commercial banks,
State-owned hotels holding money changer licence and private
individuals who hold FECs changer licence. FECs cannot be sold for
Myanmar Kyat.
Effective April 29, 1993, foreigners and
non-residents can bring into Myanmar at any one time from any place
abroad any foreign currency not in excess of US dollars two thousand
or its equivalent without making a declaration to the Customs on
arrival.
The
Myanma Agricultural and Rural Development Bank
The Myanma Agricultural and Rural
Development Bank (MARDB) is one of the State- owned banks. It was
established in 1953 as State Agricultural Bank (SAB) and later had its
name changed to Myanma Agricultural Bank in 1976. Under the MARDB Law
enacted in July 1990 the Bank will support agricultural, livestock and
rural socio-economic enterprises including production, processing,
storage, distribution and marketing activities relating to agro and
livestock based industries. It has a countrywide network of 14
regional offices. 164 branches and 48 agency offices. It provides
short and long term credits to 2.5 million farmers for crop
production. salt production, livestock, fish and dairy farming etc.
From fiscal 1993/94 it launched the Rural Savings Mobilisation Scheme
under which savings, deposits and loans services were initiated for
all farmers and the rural population.
The
Myanma Economic Bank
The Myanma Ecnomic Bank was estanbished in
1976 for the purpose of developing general commercial and industrial
banking. It also acts as fiscal agent of the State. It provides
nationwide commercial banking with 259 bank branch offices. The
functions of the bank include accepting current accounts, savings
deposit accounts, and other accounts, issuing savings certificates,
advancing loans to economic enterprises in all sectors of the economy,
financing private business undertakings such as production, trade and
services as well as providing personal loans. It also acts as the
agent of the Central Bank of Myanmar for the operation of currency
chests throughout the country. Its also entrusted with the maintenance
of the accounts of the Government Departments and State Economic
Enterprises.
The Myanma Economic Bank has handed over
tre small loans business to the Myanma Small Loans Enterprise with
effect from 1993/94 Foreign Exchange Certificates issued by the
Central Bank of Myanmar promoting the tourism industry are being
handled by the Myanma Economic Bank branch offices.
| Future
Programme
The Myanma Economic Bank is
planning to extend its banking business from domestic commercial
banking to international financial services. |
The
Myanma Foreign Trade Bank
Myanma Foreign Trade Bank is to conduct
foreign exchange operations arising out of external trade as well as
non-trade foreign exchange operations. The Bank may enter into or
execute contracts relating to payments and receipts of foreign
exchange, and may also maintain clearing accounts under bilateral
counter-trade agreement.
The Bank is authorised to conduct
businesses of international banking and domestic banking. Some of the
services the bank is allowed are: accepting deposits in Kyats and
foreign currencies, giving loans and advances both secured and
unsecured, issuing, accepting, discounting, buying, selling and
collecting all securities including bills of exchange, all matters
relating to letter of credit, sales and purchases of travellers
cheques and foreign currencies; all matters relating to international
fund transfers and bank guarantees: accepting valuables for safe
keeping; making status enquiries and obtaining status reports on local
and foreign firms and banks.
| Future
Programme
The Myanma Foreign Trade Bank is
initiating to change gradually from a specialised bank into a
general commercial bank. The initial steps taken are the
acceptance of current deposits from individuals and firms, and
arrangements are being made for financing of export trade. |
Foreign
Correspondent Bank
The Myanma Foreign Trade Bank has long
established correspondent relationship with first class international
banks in all the major financial centres of the world. In addition,
through a network of over 120 correspondent banks in 58 countries,
banking transaction can be made with almost any country in the world.
The
Myanma Investment and Commercial Bank
The Myanma Investment and Commercial Bank
was formerly established in 1989 within the organisational structure
of the Myanma Economic Bank. It became a separate entity as a State
owned Financial Institution in Myanmar under the Financial
Institutions of Myanmar Law 1990. It provides investment, development
and commercial banking facilities to local and foreign investors,
organisations, partnership firms, joint ventures, limited companies,
sole proprietorships and importers and exporters established and doing
business in accordance with the existing laws of Myanmar. It has
provided bank advances to foreign and local investors for the purpose
of processing and manufacturing, building and engineering, transport
and public utility services, distributive trade and marketing,
overseas trade in exports and for personal and professional purposes.
It has also extended branch banking facilities to Mandalay.
Domestic
Private Banks and Representative Offices ofForeign Banks
1. Domestic Private Banks
a. Myanma Citizens Bank Ltd.
b. Co-operative Bank Ltd.
c. Yatanabon Bank Ltd. (Mandalay)
d. First Private Bank Ltd.
e. Myawady Bank Ltd.
f. Yangon City Bank Ltd.
g. Yoma Bank Ltd.
h. Myanmar Oriental Bank Ltd.
2. Representative Offices of Foreign
Banks
a. The Thai Military Bank Ltd.
b. Banque Indosuez.
c. The Development Bank of Singapore Ltd.
d. United Overseas Bank Ltd.
e. Overseas Chinese Banking Corporation Ltd.
f. Siam City Bank Ltd.
g. Keppel Bank of Singapore Ltd.
Myanma
Small Loans Enterprise
The Myanma Small Loans Enterprise was
established as a separate entity formerly under the Myanma Economic
Bank. This enterprise was established in accordance with the market
oriented economic policy with a view to promoting and enhancing
efficiency of financial activities. A network of 182 branches has been
established throughout the country to facilitate financial
transactions.
The
Myanma Insurance
The State Law and Order Restoration
Council enacted the Myanma Insurance Law in July 1993 to replace the
Insurance Business Law of 1975, in order to facilitate wider coverage
of insurance business.
Myanma Insurance, the State-owned
organisation, is the sole insurance organization in Myanmar and
presently underwrites classes of insurance as shown below:
|
| (a)
Life Assurance; |
(b)
Third Party Liability insurance; |
| (c)
General Liability Insurance; |
(d)
Fire Insurance; |
| (e)
Marine Cargo Insurance; |
(f)
Marine Hull Insurance; |
| (g)
Aviation Insurance; |
(h)
Engineering Insurance; |
| (i)
Comprehensive Motor Insurance; |
(j)
Oil and Gas Insurance; |
| (k)
Cash-in-transit Insurance; |
(l)
Cash-in-safe Insurance; |
| (m)
Fidelity Insurance; |
(n)
Travelling Insurance; |
| (o)
Bodily Injury Insurance; |
(p)
Other classes of Insurance; |
| (q)
Insurance determined by the Ministry |
|
With a network of 34 branches established
throughout the country, Myanma Insurance fully satisfies over-all
demand for insurance coverage necessitated by the growth and diversity
of the economic activities in line with the market-oriented economic
policy of Myanmar.
Like other insurance enterprises all over
the world. Myanma Insurance has a very ambitious and efficient
reinsurance programme under which large risks written are ceded to
financially strong and well-established reinsurers worldwide.
Premium rates charged are reasonable and
competitive with those existing elsewhere.
With a view to meeting the ever-growing
requirements of its customer, insurance can be affected in a freely
convertible currency i.e, if premium is paid in a freely convertibit
currency the claim would be met with the same type of currency.
Myanma Insurance backed by internationally
reputable and renowned reinsurers is fully capable of meeting all the
insurance needs within Myanmar.
An entrepreneur or an organisation
operating an enterprise which may cause loss to State-owned property
or which may cause damage to the life and property of the public or
which may cause pollution to the environment shall effect compulsory
General Liability Insurance with the Myanma Insurance, from which the
Ministry may determine from time to time the entrepreneurs or
organisations which are to effect compulsory General Liability
Insurance.
State Organisations and Enterprises which
have fifty per cent and above of the capital investment subscribed by
the State, shall effect insurance only with the Myanma Insurance if
the class of Insurance they desire to effect is of the class which is
accepted by the Myanma Insurance.
Economic Organisations which have been
formed under a permit under the Union of Myanmar Foreign Investment
Law shall effect only with the Myanma Insurance the classes of
insurance which the Myanma Insurance determines from time to time.
However, fron amongst the classes of insurance which the said Economic
Organisations are to effect, the Ministry of Finance and Revenue may
exempt from effecting insurance of any class or more than one class,
in the interest of the State.
|