Burma

Dollar Up as Burma Relaxes Car Import Rules

By THE IRRAWADDY Friday, September 16, 2011

In this photo taken on Jan 22, 2011, a model poses next to a Rammar vehicle during an expo in Rangoon. (Photo: AP)

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After months of steady depreciation, the US dollar appears to be reversing its slide against the Burmese kyat, as the government relaxes restrictions on car imports to allow owners of older vehicles to replace them with newer models.

The scheme is seen as part of an effort to bolster the value of the dollar, whose fall has dealt a heavy blow to Burma's export sector. Since the government announced on Sept 11 that cars between 20 and 40 years old could be used to get permits to import newer models, the dollar has surged to 805 kyat from recent lows of around 680 kyat.

Since the beginning of this year, the dollar's value against the local currency has plummeted from more than 1,000 kyat to less than 700 kyat late last month.

After registering for the substitution process, permits will be issued to vehicle owners allowing them to purchase and import models built after 1995 that cost less than US $3,500 in the country of manufacture.

Car prices have long been prohibitively high in Burma, where top generals and their cronies maintain a monopoly over the lucrative trade in imported vehicles. By providing a rare window of opportunity for local people to bypass this stranglehold, the government has created a sudden demand for dollars and dollar-denominated Foreign Exchange Certificates (FECs) needed to purchase newer vehicles.

Under the new program, legal workers abroad and sailors who officially open foreign exchange accounts at state-owned banks will also be allowed to import cars.

With the strengthening of the dollar, the price of gold in the country has also increased to 734,000 kyat ($920) per kyat-thar (16g).

Forty-year-old cars will be processed from Sept 19 to October, while 30- to 40-year-old cars will be processed from November to December and 20- to 30-year-old cars from January to March.

The government has also announced that arrangements are underway for foreign automobile companies from China, Japan, Thailand and South Korea to set up showrooms in Burma so that the public can easily buy cars without any restrictions in the future.

COMMENTS (9)

Muhammad Umar Wrote:

25/09/2011

Which cars i can export to burma from japan

teaky Wrote:

24/09/2011

@ aye -- German and US governments initiated "Cash-for-Clunkers" programs in 2009 in order that people who owned old cars sold them to the government and purchased new cars. In effect, the government subsidized old car owners to buy new cars resulting in that car companies could sell more cars creating new jobs.

What the Burmese government did is to increase the demand of US dollars. I might say it's a wise move.

teaky Wrote:

24/09/2011

If the production of many new cars costs about $35,000, they won't be sold for around $10,000 on the market except in Burma. The article doesn't say either the imported cars must be new. Any car made after 1995 and costs less than US$3,500 in the country of manufacture can be purchased and imported which is a very reasonable plan.

Regarding the Burmese government trying to fix the exchange rate at K500 for US$1, there were reports that President U Thein Sein commented about the recent low exchange rates when he met with some merchants.

Since the news of this car import program has been initiated the dollar to kyat exchange rate went up more than 15%. Consequently, Burma can export more products (because they become cheaper) and Burmese expatriates and those working abroad may send home more money (because they get more kyats). It might even be better if the government buys dollars putting more kyats on the market like the US Federal Reserve Bank did which is called Quantitative Easing (QE).

Pat Wrote:

22/09/2011

Is it 3500 usd or 35000 usd.. It'll be ridiculous to actually find cars that are produced at 3500 usd.. I'd even say there could be none..

aye Wrote:

21/09/2011

A great move by the government to help weaken the kyat to a level to stabilize the economy. Cars in any other country are not traded as they are in Burma as a commodity and they depreciate in value and therefore they shouldn't be traded as such. The move to weaken the dollar will stimulate export to a better level which will continue to create jobs in manufacturing and more importantly agriculture which many in the country rely upon instead of only thinking about ones self interests about how much an individual has made or lost on a bad investment of buying a car. Cars should not be traded like commodities I'm sorry and yes I will also lose money if I am to sell my car now.

Tom Tun Wrote:

19/09/2011

How many of former Socialism law still alive in Burma including auto import business? Socialist regime died along time ago but it still crawling inside the new government and corrupt the whole country. It is time to expose old law still alive in new regime.

thantzinwin Wrote:

18/09/2011

Relaxing of car import rule effect on a lot of people who had car in hand. Of course some for good and some for bad. I'm the one who effect bad impact because i just bought one car just before this news. This car was not include in above programme. Now the car price was seriously fallen down. Also I'm seafarer and before i bought this car, i sold US$ with fallen rate. So i lost two times. A lot of my friends also facing this problem. We lost our one year salary within a week. I glad for the people who get good benefit from this new law, but sad for who get lost. Especially for seafarer same as me. Thank you for allow me to express my feeling. I'm sure it will be different with most of other view.

Nat Ka Lay Wrote:

18/09/2011

Then and again, rice men will be richer again. Poors who own old car just to survive will be left nothing. He will lose his car. The permit he got won't give him car immediately. For instance, such as retirees, how can he find $ 35,000/-, and + +? At least double amount will be needed to hold a key for a new car.

U know Wrote:

18/09/2011

Please note that government never make the USD price going up. They will try to reduce to 500kyats per 1 USD. Don´t write wrong news, your impression will go down, peoples won´t trust your site anymore. Now Government is using Myanmar currency to change new cars.

Keep in your mind they want to enter international money exchange market assist by IMF. IMF will not accept to high price such as 1 USD= 800,900,1000. Government still have over 4,400 factories to sell in Myanmar currency, keep in your mind that what is the future Myanmar currency?

1USD=500Kyats, this is the government target.