Myanmar’s Central Bank announced on Monday that it has introduced new rules relating to the employment of foreigners by local privately-owned banks.
In a five-page order, the junta-controlled Central Bank outlined a series of restrictions that seek to limit both the number of foreigners in the country’s banking sector and their influence.
Under the new rules, banks can hire no more than 25 non-Myanmar nationals, none of whom are permitted hold the position of chair or vice-chair within their organizations.
If a foreigner is hired to act as chief executive officer, a Myanmar citizen must be appointed as deputy chief executive officer, according to the order.
All foreign hires will also be subject to vetting by the Central Bank, which will examine both their relevant professional qualifications and their political activities.
The move is seen as being aimed not only at limiting the involvement of foreigners in the banking sector, but also at reining in private banks.
“It will make it a lot harder for the private banks to operate,” said one financial expert, who said the regime appears to be trying to tighten its control over banks as part of its effort to consolidate power in the wake of the February 1 coup.
The arrest of Sean Turnell, the economic advisor to ousted State Counsellor Aung San Suu Kyi, on the day of the coup was the first sign that the military was intent on curtailing foreign influence over key sectors of the economy.
Turnell, a native of Australia, has been charged with violating Section 3(1) of the Official Secrets Act and faces up to 14 years in prison if found guilty.
Soon after seizing power, the military council led by Senior General Min Aung Hlaing purged the Central Bank of most of its senior members and appointed new officials with ties to the military.
Besides replacing Kyaw Kyaw Maing, the bank’s chair under the previous civilian government, with Than Nyein, who held the position under the former military regime, the junta also detained its widely respected vice-chair, Bo Bo Nge.
The bank’s board of governors now consists entirely of people with military backgrounds, according to observers.
The impact of the latest move will likely be limited under the current circumstances, said the expert who spoke to Myanmar Now, as few banks in the country are fully operational due to the effects of Covid-19 and the coup on the general economy.
In the long run, however, it could harm prospects for an economic recovery, he added.
“Because banks can’t do much for now, the drawbacks will not be very apparent right away. However, it could be more damaging later, when the pandemic calms down and businesses resume operations,” he said.
Most private banks in Myanmar are chaired by their owners or members of their families, with foreigners acting as executive directors or occupying senior administrative positions.
