Myanmar Updates Guidelines For THB-MMK Direct Payment Mechanism
January 27, 2023 at 10:11 am
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On December 30, 2022, the Central Bank of Myanmar (CBM) updated its guidelines on the Thai baht to Myanmar kyat (THB-MMK) direct payment mechanism for Myanmar-Thailand border trade and other flows of capital. The CBM's guidelines outline an expanded mechanism allowing more trade gates and more designated banks, stipulating banking arrangements for worker remittances, setting out a payment mechanism for exports, clarifying procedures for importing goods via the Myanmar-Thailand border trade, and instituting new reporting procedures.
The THB-MMK mechanism came into being on March 3, 2022, as a pilot project for border trade in Myawaddy, Tachileik, and other areas approved by Myanmar's Central Committee on Ensuring Smooth Flow of Trade and Goods. In this update, Myawaddy, Tachileik, Myeik, Kawthoung, Mawtaung, and other approved border trading zones are identified as open to the THB-MMK mechanism.
During 2022, the following banks were approved to provide services for the THB-MMK direct payment mechanism:
Approved March 4: Ayeyarwaddy Farmers Development Bank and Kasikornbank Public Company Limited
Approved July 29: Myanmar Economic Bank and Bangkok Bank Public Company Limited (Yangon branch)
Approved August 12: Kanbawza Bank (KBZ) and Bangkok Bank Public Company Limited (Yangon branch)
Approved December 30: Ayeyarwady Bank and Bangkok Bank Public Company Limited (Yangon branch), CB Bank PCL and Bangkok Bank Public Company Limited (Yangon branch), UAB Bank and Krung Thai Public Company Limited, Myanmar Apex Bank and Siam Commercial Bank Myanmar Limited, Yoma Bank and Siam Commercial Bank Myanmar Limited
Banking arrangements for workers' remittances were also stipulated in the new update. In this regard, designated banks can process these remittances by partnering with CBM-permitted international currency transfer businesses, mobile banking service providers, and mobile money service providers after obtaining approval from the CBM.
An addition to the direct payment mechanism is a requirement that exporters manage their received export earnings in accordance with the directives released by the CBM. Export earnings from permitted THB-MMK direct payments must also be scrutinized for whether they have been correctly deposited into the bank accounts of the exporters during the specified period.
Procedures for importing goods via Myanmar-Thailand border trade were also updated in the new guidelines. Designated banks must now provide companies applying for an import license with original bank statements or credit advice proving incoming export earnings or other sources of income if requested. For imports that do not require an import license, companies will need to provide the aforementioned documentation, upon request, for the purpose of import declaration.
In providing such documents, importers can consider all currencies held in their account (e.g., THB, RMB, USD, etc.) cumulatively, and export earnings obtained from one border trade gate on the Myanmar-Thailand border can be transferred for use at another trade gate.
Since more border areas are permitted to participate in the THB-MMK direct payment mechanism, detailed reporting procedures have also been included in the updated guidelines. One notable example is that transaction reports related to bilateral trade matters must be completed using the Myanmar Automated Cargo Clearance System. For border areas that do not have access to the system, the Customs Department, Internal Revenue Department, Central Committee on Ensuring Smooth Flow of Trade and Goods, and a group of designated banks will process transaction reports.
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