Central Bank of Myanmar | New Notifications Allow Baht/Kyat Direct Payments at the Thai-Myanmar BorderMarch 29, 2022
The Central Bank of Myanmar (“CBM”) issued two notifications on 3 March 2022 providing permission and guidelines for Baht/Kyat direct payments at the Thai-Myanmar Border.
They are effective from the above date and apply to designated banks and all exporters and importers involved in the Thai-Myanmar cross-border trade.
In order to promote the local currency in accordance with the objectives of ASEAN Financial Integration, Baht/Kyat direct payments are being allowed at the Thai-Myanmar border to facilitate the smooth flow of goods, facilitate cross-border payments, and enhance bilateral trade between Thailand and Myanmar.
Opening of Baht accounts allowed at the designated banks
Exporters and importers are allowed to open Thai Baht accounts at the designated banks for the Thai-Myanmar cross-border trade.
Hence, the designated banks will be required to comply with the following guidelines for direct payments of Baht/Kyat on the Thai-Myanmar border.
Guidelines for direct payment and settlement processing
The initial designated banks for this process are branches and subsidiaries of Thai banks that have been granted banking licenses in Myanmar. Domestic banks will have to apply to the CBM for permission and must demonstrate that they have the capacity to set up mechanisms relating to direct payment and settlement in Thai Baht and Myanmar Kyat for the Thai-Myanmar cross-border trade.
Myawaddy and Tachileik have been initially designated as pilot project areas for direct payment and settlement in Thai Baht and Myanmar Kyat. Permission is initially granted for the Thai-Myanmar cross-border trade and will also cover money transfer transactions by Myanmar migrant workers in Thailand. If the system is found to be functioning properly for the cross-border trade, it will also be adopted for normal trading activities between Thailand and Myanmar.
Domestic banks, and branches and subsidiaries of Thai banks that are permitted by the CBM to provide banking services for the Thai-Myanmar cross-border trade are required to open bank accounts in Thai Baht and Myanmar Kyat at each other’s banks. In order to facilitate communication, the two correspondent banks involved in processing payments in Thai Baht and Myanmar Kyat at each other’s bank must enter into a bilateral cooperation agreement with the approval of the CBM.
Domestic banks are required to process the payments made/collection of payments of importers or exporters through the bank accounts in Thai Baht opened by such domestic banks at branches and subsidiaries of Thai banks as approved by the CBM, and notify their customers and correspondent banks of the processing of such transactions.
Branches and subsidiaries of Thai banks are required to make a plan for the documentation submission and review process that is to be adopted with domestic banks in order to collect or the amount receivable from the domestic banks or pay the amount payable to the domestic banks through the bank accounts in Thai Baht opened by such domestic banks.
During the three-month pilot period for payment and settlement in Thai Baht and Myanmar Kyat for the Thai-Myanmar cross-border trade, the Thai Baht-Myanmar Kyat exchange rate must be fixed by direct quotation at the prevailing market rate. Banks are required to report, in the prescribed form, to the Foreign Exchange Management Department of the CBM three times a day on the rates applied to the transactions processed and fixed by direct quotation at the prevailing market rate.
When Myanmar importers and exporters open bank accounts in Thai Baht and Myanmar Kyat at the domestic banks, the following information and documents are required to provide to the domestic banks in order to facilitate the cross-border trade payment and settlement process:
- Bank account application, initial deposit limits, exporter or importer certificate or license.
- Board of directors’ resolution, company or corporation registration certificate or license, and company or corporation’s constitution, membership certificate of the Union of Myanmar Federation of Chambers of Commerce and Industry (if required), authorization letter duly issued if an agent is appointed for this matter, and relevant invoices and sale contracts.