Home MMBIZ News Private Banks Flouting Money Transfer Rules: Auto Importers

Private Banks Flouting Money Transfer Rules: Auto Importers

 

Some private banks are charging auto importers extra money on international money transfers in addition to the transfer service fee, breaching money transfer standards set by the Central Bank of Myanmar (CBM), the Automobile Importers Association alleged.

The private banks are charging between K10 to 15 (1-1.5 cents) per dollar extra for money transfers to foreign countries. The extra fees are being charged without prior notice since October, auto importers said.

The government permitted imports of foreign goods through private banks after it relaxed its foreign currency regime last year. The overcharging has been happening only with private banks and state banks such as Myanmar Foreign Trade Bank (MFTB) and Myanmar Investment and Commercial Bank (MICB) do not charge such fees, auto importers said.

Although the state banks don’t charge any fees, businesspeople prefer private banks as they provide much faster service.

Local private banks claim that the CBM has given approval to charge the extra fee, according to local media reports. However, there was no official announcement allowing private banks to charge these fees.

“The CBM has not announced any such ‘trade-in’ amount while importing automobiles, and we have filed complaints to the Internal Revenue Department, the CBM and Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI),” the association’s chairman U Htay Aung said.

Private bank officials blamed the difference between the local and international currency exchange market, and said the additional charges are collected to bridge the huge gap in currency exchange rates. Some private banks have even been reported to stop offering money transfer services because of the losses incurred due to the currency rate difference.

The association also blasted the government’s new cost, insurance and freight (CIF) charges on imported cars, saying this is forcing them to pay an extra amount to private banks which are trying to balance out exchange rates when transferring money for imports.

The association held a press conference recently to raise this issue. U Htay Aung, said that end consumers will get affected by this as they will end up paying more.

Joint-Secretary of the association Dr Khant Win said: “This so called ‘trade-in’ amount is an additional charge. This [overcharging] has happened not only to car importers but also to other commodity importers, and this is affecting consumers too.”

Charging extra fees will daunt other import-oriented industries as well, U Htay Aung said.

Deputy Minister for Finance Maung Maung Thein earlier said it is impossible to adopt a floating currency exchange system to avoid this situation. The interbank market that allows transactions between banks would first have to be launched before starting a floating exchange rate regime, where currency rates are set by market forces.

There has been a sharp plunge in the value of kyat, the local currency, since the CBM adopted a managed float system in April 2012. The exchange rate was then set at K818 per dollar. In July last year, the rate hit an all-time high of K1,004 per dollar, and is now hovering around K985.

Besides overcharging, automobile importers said different prices are charged for individual and company imports for the same car.

According to the Automobile Association data, up to December last year, 82,187 cars were imported through the old automobile substitution program, 6,305 through sea routes by overseas workers, embassy staff, hotels and gem entrepreneurs, 10,792 cars by individual importers and 25,035 cars through automobile sales centres.

More than two million vehicles have been imported in the last couple of years, the association’s data shows.

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