Myanmar’s Reforms to Open New Frontiers

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CEIC Macro Watch: Political reforms in Myanmar since early 2011 have been hailed as a major step towards rehabilitating its image. Cautiously optimistic, the international community has reacted by easing various sanctions and restrictions against Myanmar. Myanmar’s reforms, along with the encouraging response of the international community, present an opportunity not just for Myanmar but for prospective foreign investors. One of the more prominent economic-related reforms has been the transition in April 2012 to a managed float of the Myanmar kyat from its prior fixed exchange rate to the US dollar. Its exchange rate declined from a monthly average of MMK5.494/USD as of March 2012, approximating its “black market” rate, to a monthly average of MMK819.000 during April 2012 – the Kyat was trading at a monthly average of MMK874.268/USD as of March 2013. The move towards a market-based exchange rate has come a long way towards easing the complications of multiple exchange rates for both foreign investors and traders, while providing a more indicative measure of the true value of exchange to market participants. Previously, foreign entities operating within Myanmar were obliged to book the remuneration of labour and other auxiliary costs using the official fixed exchange rate, even when transactions were made in US dollars. On top of the new exchange rate regime, the removal of sanctions means that foreign investors may gain access to some of Myanmar’s relatively untapped growth potential. Myanmar’s oil and gas sector is expected to see an influx of foreign investments given the lack of prior exploration efforts. Natural gas is among Myanmar’s top sources of export revenue, accounting for USD3.5 billion out of Myanmar’s USD8.89 billion exports during 2012, though presently discovered reserves have been on a decline owing to sporadic exploration efforts. Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. By Anchalee Prasertkoon in Thailand - CEIC Analyst Back to Blog

30th May 2013 Myanmar’s Reforms to Open New Frontiers

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