Burma: Changes Taking Place in Fuel Distribution Market

The sources added that the regime has been licensing private enterprises and individuals to import diesel since December 2009.
Since August 2008, the Ministry of Energy has allowed petrol stations to sell large quantities of fuel to holders of Foreign Exchange Certs (FECs).  Purchases made using the local kyat currency are still limited to two gallons per day.

The FEC is technically equal in value to the US dollar, although the two units often differ substantially on the black market in kyat terms. The FEC is currently worth more than the dollar because it is  widely used for fuel purchases.

Reports that the Burmese junta is planning to relax restrictions on the import of cars, buses and heavy equipment has created strong demand for US dollars and dollar-denominated foreign exchange certificates (FECs), putting pressure on the national currency, the kyat.

According to business sources in Rangoon, the black market exchange rate for the dollar has risen to 1,040 kyat, up from 1,015 yesterday, on news that the Ministry of Commerce has a plan to deregulate the import of cars following an announcement last week that it would allow private sector imports of buses and heavy equipment.

Normally, Burma's regime allows only a few thousand cars to be imported each year through the junta- controlled Union of Myanmar Economic Holding Limited (UMEHL) and businessmen close to the ruling generals. Currently, import restrictions have skewed the prices of cars—whether new or used—to levels that would be considered absurd in neighboring countries. Only the two highest-ranking members of the junta—Snr-Gen Than Shwe and Vice Snr-Gen Maung Aye—can grant import licenses.

Recent changes in economic policy have also boosted the value of the FEC. On 22nd Janaury, the FEC traded for 1,062 kyat on the black market, up from 1,050 kyat the previous day.

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