Why Myanmar forex license move may backfire

Author: Brian Yap | Published: 9 Nov 2015

Myanmar’s recent revocation of foreign exchange licenses to thousands of businesses has shocked local lawyers, who have dismissed it as an act of impulse with serious implications.  

The Central Bank of Myanmar (CBM) issued a notification last month requiring, with immediate effect, all commercial entities to relinquish their licenses in a bid to revive the country’ ailing currency, the kyat.

But though counsel acknowledge the need to contain the kyat’s steep depreciation, some have criticised the impetuousness of the government’s de-dollarisation approach to the excessive use of the currency in the country.

"It is a knee-jerk reaction to want to cancel all the licenses in a way that the central bank hasn’t taken in account all the implications," said Simon Makinson, a partner at Allen & Overy in Yangon.

The mass currency rout triggered by an indiscriminate preference for the dollar, which has appreciated 25%...