Burma has designated money in foreign currency earned through domestic business as legal earnings which can be used to import products.
The foreign earnings include currency earned through the sale of handicrafts and art items, and lease of buildings and compounds as well as salaries. Under the new rules, a foreign exchange currency account can be opened which would allow free transfers to other accounts in the Central Bank of Myanmar [Burma], the Rangoon-based weekly Voice reported on Sunday.
According to the report, Foreign Exchange Certificates (FECs) which are circulated in place of US dollars domestically are also transferable to accounts as US dollars, and wages paid in FECs are also transferable after a 10 percent surcharge.
Buying phone cards, petrol and diesel can be settled with FECs instead of US dollars, but phone call charges with foreign countries must be paid with FECs, the report said.
The new regulations were introduced following the news that four businessmen close to Burma's military regime have received permits to start private banking enterprises in September.
According to sources at the Ministry of Finance and Revenue (MFR) in Naypyidaw, the businessmen would like to open the banks before the election scheduled for later this year due to potential changes following the election.
“For now those who have private banking permits will have to register their banks at the Ministry of Commerce. The registration process will take one and a half months so they should be ready to do business by August,” said an MFR official.“All new private banks are commercial banks only.”
In late May, the Central Bank issued private banking licenses to Tay Za (Htoo Co., Ltd.), Zaw Zaw (Max Myanmar Co., Ltd.), Nay Aung (IGE Co., Ltd.) and Chit Khaing (Eden Group Co.,Ltd.). All businessmen are on the US sanctions list.
With the four new banks, there will be 18 privately owned banks in Burma.
The Financial Institution of Myanmar Law enacted in 1990 requires any financial institution to have capital of at least 60 million kyat (about US $60,000) in order to establish a private investment bank and of at least 30 million kyat ($30,000)for a private commercial bank.
Business sources have suggested that it is unfair that only businessmen who are close to the military regime have been allowed to establish private bank enterprises even though there are many businessmen in the country who have the necessary funds.
“It is really unfair that not every businessman who has the capital required by the law has the opportunity to do private banking. Only those who are directly dealing with the regime or are helpful to the generals are permitted. This is not a true market economy system. It's a monopoly,” said the businessman.
Businessmen in the banking industry said the MFR has treated existing private banks differently and limited new branches.
Kanbawza Bank, owned by Aung Ko Win, who is known as a confidant of the regime's deputy Vice Snr-Gen Maung Aye, has been allowed to increase capital up to 50 billion kyat ($ 50 million) and open branches without any restraints, a banker in Rangoon said.
“Discrimination between private banks exits in many ways. The most important is that whatever business you are allowed to do, you won't be successful unless you are friends with the generals or give them money,” said a businessman who said he had to wait nearly five years in order to open a new branch.
An economist in Rangoon said the country's economy will not improve without allowing more private banks and making overdue changes in banking and monetary policy to upgrade standards and services.
“Currency exchange, monetary and banking policies must be upgraded to international standards. We also need to have the economic sanctions lifted,” said the economist.
The banking system in Burma is tightly controlled by the junta, and there is a fundamental distrust of the system, say observers.
The junta triggered a banking crisis in February 2003 when it closed a dozen private banks. A run on deposits led the regime to cap withdrawal limits to 50,000 kyat ($50) per week and temporarily cancel account transfer transactions which significantly disrupted the national economy.
|
||
|
||
|
||
|
||
|
||
|
||