The government has adopted a multi-pronged strategy to try to counter the volatile US dollar-kyat exchange rate, which has prompted widespread complaint from Myanmar’s business community.
One area of focus is export earnings, a large proportion of which are either not processed through the official financial system or are deliberately misreported, according to senior government and Central Bank officials.
“We are working with businessmen to make sure export proceeds are returned [to Myanmar],” said U Than Myint. “Only if export flows become official will there be more US dollars [in the financial system] and the exchange rate will be stabilised, and the export-import process with be smooth.”
The Central Bank requires any foreign exchange transaction for import or export to be done through the banking sector, but a shortage of dollars and a volatile exchange rate often prompts traders to use the informal market instead. The authorities believe that making sure more dollar export earnings are processed through the banking sector will help address this shortage of dollars and the volatile exchange rate.
The Central Bank is monitoring and recording export earnings that are processed through Myanmar banks. The Ministry of Commerce, meanwhile, is checking through its customs department that the freight-on-board value of the goods being exported corresponds with the earnings being repatriated.
If there is a clear discrepancy between the value of goods a trader exports and the earnings he receives into his Myanmar bank account, then action can be taken, according to the Central Bank.
According to data collected by the commerce ministry and the Central Bank, the value of goods exported from Myanmar between January and August last year was US$4.95 billion. The volume of export earnings processed through licensed Myanmar banks, however, was just $3 billion.
“Therefore around 40pc of export earnings are not being received [through the financial system],” said one Central Bank official, who asked to remain anonymous. “We’re investigating whether the reminder has been received with six months of the export date.”
If the Central Bank can make sure more export earnings are processed through the banking sector, then the shortage of foreign exchange will decrease, he added.
But U Win Thaw, director general of the Foreign Exchange Management Department, noted that the Central Bank is only able to bring scrutiny to exports being conducted officially. Illegal border trade or other forms of black market export being conducted outside the banking system are impossible for the Central Bank to monitor.
