Central Bank of Myanmar Strengthens Grip over Foreign Loans

Extracted from the Myanmar Times.

Edwin stated in the article.

With a new circular letter addressed to Myanmar banks dated 3 July 2014 (the CBM Letter), the Central Bank of Myanmar has reasserted control over foreign loans that are provided to domestic and foreign owned borrowers in Myanmar. The CBM has clarified approval requirements and increased the account-ability of Myanmar banks for foreign loans that are brought into the country. The CBM Letter covers situations where the borrower has obtained a permit from the Myanmar Investment Commission (MIC), as well as all other borrowers.

Ever since the adoption of the Foreign Exchange Management Act (FEMA) and the Foreign Investment Law (FIL) of 2012, the fate of foreign loans has always remained somewhat confusing. Although there is no doubt that loans from overseas are possible as principle under both instruments, in practice clients often received conflicting information from bankers and advisors with respect to the approvals and process concerned. Unfortunately, this confusion that was not really cleared up with the CBM Directive of 2012 which implemented FEMA (Foreign Exchange Directive).