As Myanmar seeks to establish a position in the global economy after years of isolation, its government is looking at the possibility of improving access to letters of credit (L/Cs) in its banking system.

But according to one official, it is not just up to Myanmar's government to decide whether or not to allow L/Cs a bigger role in the economy.

Sanctions

From 1962 to 2011, Myanmar was ruled by a military junta that suppressed almost all dissent and wielded absolute power.

This drew international criticism as well as sanctions which, amongst other things, barred the use of L/Cs in trading arrangements between Myanmar and the rest of the world.

Reforms

A nominally civilian government was installed in March 2011, since when several reforms have led to hopes that decades of international isolation could be coming to an end.

But Myanmar has a long way to go when it comes to cutting red tape in line with regional standards according to the World Bank.

External influences

In its recently published annual Doing Business in Myanmar at the end of last year, the country ranked the 182nd most difficult country, out of 189 countries, to do business in.

But according to director of the Ministry of Commerce's Directorate of Trade, U Than Aung Kyaw, the lack of modern business practices, L/Cs in particular, is not entirely the fault of Myanmar's government as its policies are shaped by existing sanctions abroad.

L/C considerations

"The government does not allow the L/C system because of continuing US sanctions on money transfers and issues related to tax avoidance," he said.

"The ministry will consider allowing L/Cs when Central Bank of Myanmar regulations have been finalised and the US permits money transfers with Myanmar," he added.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.