All visa applicants are advised that names containing multinational characters or diacritical marks unique to foreign alphabets/symbols/keyboard character sets shall be encoded in the simplified forms as recommended by ICAO, using a subset of OCR-B characters from ISO 1073-2 as follows:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

0 1 2 3 4 5 6 7 8 9 <

The use of diacritical marks may be useful to distinguish names. ICAO however, informed that such characters are not permitted in the Machine Readable Zone (MRZ) of visas and other machine readable travel documents. The use of diacritical marks in the MRZ would confuse machine-reading equipment, resulting in less accurate database searches and slower immigration clearance for travellers.

http://www.icao.int/publications/Documents/9303_p3_cons_en.pdf