Knowledge Highlights 6 November 2024
Central Bank of Myanmar issues new rules regarding appointment of foreign employees
The Central Bank of Myanmar (“CBM”) issued Letter No. CBM/ MP/ FIR/ Bank Si Sit/1 (4/2021) titled “Instruction to comply for the matters related with employing of foreign employees at Banks”, which came into effect from 2 August 2021 (“Instruction”).
This Article summarises some of the key points set out in the Instruction.
Prior approval required
The Instruction states that banks must seek and obtain the approval of CBM at least 30 days before employing a foreigner. CBM sets out a maximum number of foreign employees a bank may employ, dependent on its size:
|
Type |
Market share |
Maximum number of foreign employees |
|
Large bank |
More than 5% |
25 |
|
Medium bank |
Between 1-5% |
15 |
|
Small bank |
Less than 1% |
8 |
To obtain approval from CBM, prescribed documentation must be provided, including evidence that the applicant bank has scrutinised and cleared the proposed foreign employee in relation to political involvement, criminal records and insolvency.
If the number of foreign employees in a bank currently exceeds the above parameters, the bank must submit a plan to CBM setting out its proposed steps to comply with the maximum number of foreign employees within 30 days of the date of the Instruction.
Restriction on positions open to foreigners
Foreign banks must not employ foreigners as its Chairman or Deputy Chairman. Where the Chief Executive Officer is a foreigner, the Deputy Chief Executive Officer must be a Myanmar citizen. A bank with foreigners on its Board of Directors must seek approval for their continued participation.
Foreigners may be Heads of Department (“HOD”) as long as they do not comprise more than 50% of the bank’s department heads. Where the HOD is a foreigner, the Deputy HOD must be a Myanmar citizen. The Instruction stipulates that foreigners appointed to the post of HOD must serve one year of probation, and be employed for a term of three years thereafter. This period can be extended, upon further application to CBM, for a further two years.
Obligation to train Myanmar counterparts
A bank’s foreign employees shall carry out their job scope with a Myanmar counterpart with a view to training the local employee in the relevant professional role and imparting the necessary knowledge. Banks are obligated to have in place a professional training plan in this regard with a view to being able to employ a Myanmar citizen in the future for the role undertaken by the foreign employee.
Reports to be provided to CBM
A bank is obligated to report a foreign employee’s travel outside of Myanmar to CBM. Such travel shall not be for more than three months, without special dispensation sought and received from CBM.
A bank shall take responsibility for the actions of its foreign employees and shall ensure they adhere to Myanmar’s laws. Any breach of Myanmar laws by a foreign employee should be reported to CBM and the person’s employment immediately terminated.
Penalties
The Instruction notes that non-compliance with its terms constitutes a breach of section 154 of the Financial Institutions Law, which provides for penalties for financial institutions, their directors, members, executive officers, shareholders, management, managers and staff such as warnings, fines, and orders including those restricting the operations of financial institutions and suspension or permanent termination from duties in the financial institutions.
