After months of steady depreciation, the US dollar appears to be reversing its slide against the Burmese kyat, as the government relaxes restrictions on car imports to allow owners of older vehicles to replace them with newer models.
The scheme is seen as part of an effort to bolster the value of the dollar, whose fall has dealt a heavy blow to Burma's export sector. Since the government announced on Sept 11 that cars between 20 and 40 years old could be used to get permits to import newer models, the dollar has surged to 805 kyat from recent lows of around 680 kyat.
Since the beginning of this year, the dollar's value against the local currency has plummeted from more than 1,000 kyat to less than 700 kyat late last month.
After registering for the substitution process, permits will be issued to vehicle owners allowing them to purchase and import models built after 1995 that cost less than US $3,500 in the country of manufacture.
Car prices have long been prohibitively high in Burma, where top generals and their cronies maintain a monopoly over the lucrative trade in imported vehicles. By providing a rare window of opportunity for local people to bypass this stranglehold, the government has created a sudden demand for dollars and dollar-denominated Foreign Exchange Certificates (FECs) needed to purchase newer vehicles.
Under the new program, legal workers abroad and sailors who officially open foreign exchange accounts at state-owned banks will also be allowed to import cars.
With the strengthening of the dollar, the price of gold in the country has also increased to 734,000 kyat ($920) per kyat-thar (16g).
Forty-year-old cars will be processed from Sept 19 to October, while 30- to 40-year-old cars will be processed from November to December and 20- to 30-year-old cars from January to March.
The government has also announced that arrangements are underway for foreign automobile companies from China, Japan, Thailand and South Korea to set up showrooms in Burma so that the public can easily buy cars without any restrictions in the future.