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This chapter includes the following articles.

Myanmar's government continues to reshape investment framework

Myanmar's government continues to reshape investment framework

The governments effort to update and streamline its foreign and domestic investment laws has finally
been achieved with the enactment of the Myanmar Investment Law (MIL) in October 2016. Apart from
extending automatic investment protections to citizen and foreign investments, which cover a range of
asset classes including shares and property, the MIL also introduces a new regulatory mechanism
allowing investors to enjoy additional investment benefits, such as the capacity to enter into long-term
leases of land and enjoy tax and Customs exemptions, namely the so-called Myanmar Investment
Commission (MIC) Endorsement.

Unlike an investment permit (or MIC Permit), which will continue to be required for certain restricted
investment categories outlined in the MIL, the MIC Endorsement is intended to provide a more speedy
recourse to secure investment benefits that were not available under the previous foreign and domestic
investment laws.

In addition to the MIL, which was passed towards the end of the year, several key pieces of legislation
were also adopted in 2016 which showcase the Myanmar governments efforts to further modernise the
countrys commercial and legal framework. These include the Arbitration Law, the Financial Institutions
Law, the Mobile Financial Services Regulations, the Condominium Law and the updated laws on labour
and employment.

What follows is a discussion of the current legal and regulatory framework in Myanmar, which takes into
account the foregoing legal and regulatory changes as they affect investment facilitation and protection in
the country.

Vehicles for investment

Foreign investors who wish to undertake specific business activities in Myanmar may rely on the foreign
investment framework available under the Companies Act (1914), the MIL and the Special Economic
Zone (SEZ) Law of 2014. Through these laws, foreign investors may choose to establish a foreign branch
office in Myanmar, incorporate a private limited company, apply for and secure an investment permit or
endorsement from the MIC, or apply for and secure an investment permit from the relevant Myanmar
SEZ Management Committee, which is also known as a SEZ permit.

Entities under the companies act (1914)

Under Myanmar law, a branch office is considered an extension of its foreign parent company and is a
non-resident entity for the purposes of Myanmar taxation. It is authorised to engage in revenue-generating
activities in Myanmar that are related to the primary business of its foreign parent company.
The registration of a branch office is also necessary for foreign investors who wish to establish a
representative office in Myanmar, as there is no separate concept of a representative office under existing
Myanmar law, except for foreign banks, which are permitted by the Directorate of Investment and
Company Administration (DICA) to establish a representative office in the country.

For these bank representative offices, the provisions of the Financial Institutions Law of Myanmar
(FILM) of 2016 require the formal registration of the representative office with the DICA, but also
prescribe a separate prior approval to be sought from the Central Bank of Myanmar (CBM). In both cases
that is, branch offices which are to serve as representative offices of foreign businesses or formal
representative offices of banks the scope of business is limited to non-revenue generating activities.
Such undertakings include marketing, liaison services and market research.

On the other hand, and unlike a branch office, a private limited company has a juridical personality
separate from its shareholders, and is considered a resident entity for the purposes of Myanmar taxation.
Furthermore, this private limited company may be incorporated as a wholly owned subsidiary of a foreign
parent or be partly held by local Myanmar ownership. Moreover, this private limited company may
engage in and provide a myriad of activities and services, although care must be taken to ensure that the
scope of business thus applied for and undertaken does not require an MIC Permit.

Both branch offices and private limited companies are required to secure a Form of Permit, previously
known as a Permit to Trade, as a precondition of their commencement of business. The Permit to Trade
enumerates the business scope that the branch or company is permitted to conduct in Myanmar and is
considered to be the general business licence of the branch or company. Furthermore, the minimum
investment capital for both a branch office and a private limited company is $50,000. The minimum
investment capital may vary however, depending on the specific rules and regulations of the relevant
regulating authority.

What is notable regarding the passage of the MIL is that entities registered under the Companies Act
(1914), even without having obtained any additional permits or approvals from the MIC, would already
be covered by the investment protections. These investment protections include equality of treatment
between domestic and foreign investments; and non-nationalisation or non-expropriation (subject to
certain conditions and payment of appropriate compensation).

It is also worthwhile to mention that the Companies Act (1914) is currently in the process of being
amended, which could result in a change being made to the definition of citizen-owned companies. The
proposed amendments to the Companies Act (1914), which are expected to be approved by the end of the
first half of 2017, would allow foreign shareholdings in locally owned companies. MIC PERMIT:
Foreign investors who wish to engage in certain so-called restricted categories will need to apply for a
MIC Permit pursuant to the MIL. These restricted categories are: (a) business activities which are
strategic for Myanmar; (b) capital intensive ventures; (c) projects which have the potential to negatively
affect the environment of local communities; (d) business activities that will use state-owned land and
buildings; or (e) business activities that are designated by the government to require the submission of a
proposal to the MIC.

It is unclear at present what exact business activities will be included under the restricted categories,
although it is expected that the MIC will issue implementing rules and notifications which will provide
further details by spring 2017.
At present, Notification No. 26/2016, which is implemented under the previous foreign investment law,
which enumerates prohibited and restricted activities and may, therefore, provide some guidance on what
business activities may be considered covered by the restricted categories outlined within the MIL.

MIC endoresement under the MIL

For foreign investors who seek to engage in non-restricted activities but who wish to be permitted to enter
into long-term leases of land and apply for additional benefits and exemptions, the MIL introduces a new
form of approval by way of an MIC Endorsement. Although the framework for this approval has been
outlined in the MIL, the procedural details of its application and approval have yet to be forthcoming
through the issuance of corresponding implementing rules, which are to be released by the end of the first
quarter of 2017. The expectation, in any event, is that the application process for an MIC Endorsement
will be less stringent than an application for an MIC Permit, which is required for restricted activities.

Guarantees under the MIL

The MIL expands the scope of investor protections by providing guarantees to non-restricted enterprises.
Hence, all investments, be they local or foreign, are entitled to the basic guarantees of non-nationalisation
or non-expropriation, and foreign investors are granted the right to transfer funds overseas.

Along with this expansion, however, the MIL has adopted a more restrictive legal framework for the
granting of fiscal benefits and concessions, particularly relating to income tax holidays. In particular,
while the previous foreign investment law provided an automatic five-year income tax holiday to grantees
of MIC Permits, the MIL has removed this automatic concession. Instead, investors must apply separately
to the MIC, either through an MIC Endorsement (for non-restricted business activities) or an MIC Permit
(for restricted activities) to enjoy income tax holidays.

In this regard, the MIL empowers the MIC to issue a notification dividing Myanmar into three
geographical zones for purposes of identifying the duration of the income tax relief that may be granted,
all with the view to providing exemptions only to those areas of the country which are generally
considered underserved in terms of investments. Thus, for least developed zones, the MIC may grant
seven consecutive years of income tax holidays, for moderately developed zones five consecutive years
of income tax holidays and for adequately developed zones the MIC may grant three consecutive years
of income tax holidays.

Investment permit under SEZ law

Foreign investors may also wish to locate to a SEZ and for this they will need to apply for a SEZ Permit.
Foreign investors granted a SEZ Permit generally enjoy certain benefits and guarantees under the SEZ
Law. The benefits or guarantees available will depend on whether the foreign investor is located in a free-
zone area, categorised as a free-zone business, located in a promotion zone area or categorised as a
promotion zone business. The above terms are all defined under the SEZ Law.

For free-zone businesses, the benefits include an exemption from income tax for the first seven years
from commencement of commercial operations, the opportunity to lease and develop land for a period not
exceeding 50 years (renewable for 25 years), the ability to engage in import and export activities in
Myanmar and a mechanism for the repatriation of capital and profits. Promotion zone businesses, on the
other hand, are granted an exemption from income tax for the first five years from the commencement of
commercial operations, with the same period given for lease of land within the SEZ. Benefits also include
limited exemption from Customs duties and other taxes, and a mechanism for the repatriation of capital
and profits.

Three SEZs have been established in Myanmar to date: (1) Thilawa SEZ (TSEZ) located south-east of
Yangon, (2) Dawei SEZ in the southern part of Myanmar; and (3) Kyauk Phyu SEZ situated in the
western part of the country in the Rakhine State. Among these, only TSEZ has commenced operations in
its Zone A. The developer and the management committee have taken preparatory steps for the
development of Zone B which, it has been proposed, will include 262 ha of industrial area and 267 ha of
logistics area as well as another 169 ha for use as residential and commercial areas.

Trading restrictions

Even with the registration of a private limited company or the granting of an MIC Permit or MIC
Endorsement, foreigners are, as a general rule, restricted from engaging in any kind of trading activities.
There is no specific definition of what constitutes trading activities for purposes of this restriction,
although it is generally understood that these include the importation of goods for the purposes of resale
and the procurement of local goods for the purposes of resale.

Nonetheless, Myanmar authorities have routinely applied policy exceptions, thereby permitting foreigners
to engage in trading activities. The policies have been separately issued and applied by the MIC for
entities operating under an MIC Permit (or an MIC Endorsement), the TSEZ Management Committee for
TSEZ and the Ministry of Commerce (MoC) for foreign-invested companies registered under the
Companies Act (1914) but without any other additional investment approvals.

The MIC for its part has generally given permission to foreign companies operating with a MIC Permit
(and it is expected, under an MIC Endorsement) to sell and distribute products they have manufactured, in
whole or in part, in Myanmar.

The TSEZ Management Committee has issued Instruction 2/2015, providing for guidelines by which
locators to TSEZ may engage in trading activities. Under this instruction, businesses in the so-called
promotion zone of TSEZ may engage in retail trading activities inside TSEZ, as well as wholesale
trading activities both inside and outside of the TSEZ. Businesses in the so-called free zone, on the other
hand, are not allowed to engage in any retail trading activities, but are permitted to engage in wholesale
trading activities inside and outside of TSEZ, provided that the aggregate value of these wholesale trading
activities constitutes no more than a quarter of the total value of the free-zone businesses annual sales.

At the same time, and notwithstanding the ability of such businesses to engage in the foregoing trading
activities, the TSEZ Management Committee has also defined a certain class of specified products,
which may not be sold in the retail or wholesale sector. The instruction had not yet provided a definitive
list of these specified products at the time of press, although it does already include four-wheel vehicles or
motorcycles.

Meanwhile, the MoC, through Notification Nos. 19/2015, 20/2015, 96/2015 and 56/2016 has permitted
foreigners, without obtaining separate investment or other approvals apart from the registration of a
private limited company under the Companies Act (1914), to engage in the trading of certain goods
subject to the terms and conditions provided therein. Notification Nos. 19/2015 and 20/2015 set out the
rules and regulations under which foreigners may enter into a joint venture with a Myanmar citizen and
open a car showroom for the purpose of engaging in direct distribution activities of the motor vehicles in
Myanmar.
Meanwhile, Notification No. 96/2016 relaxes the trading restrictions on the sale of certain agricultural
products and health care equipment. Under the notification, foreign businesses are permitted to establish a
private limited company under a joint venture with Myanmar citizens, for the specific purpose of
importing and on-selling fertilisers, insemination seeds, pesticides and hospital equipment in the domestic
market.

Finally, in July 2016 the MoC issued Notification No. 56/2016 allowing foreign joint venture companies
to trade construction materials with the objective of enabling domestic construction firms to utilise better
quality construction materials.

Alternative trading/retail structures

If the foreigners proposed business activity is not among those covered by the exemptions previously
discussed for the trading of particular products and goods in Myanmar, foreigners may nonetheless
participate in the retail market in Myanmar by entering into contractual structures, such as licensing and
distributorship arrangements with qualified Myanmar entities which are 100% Myanmar-owned. Under
these alternative structures, the qualified Myanmar-owned entity will be responsible for importing the
goods for its own account, and shall directly engage in the distribution and sale of the foreigners goods.
The participation of the foreign partner will thus be limited to entering into the contractual arrangement
for licensing or distribution. At the same time, the foreigner may consider entering into service
arrangements with a qualified Myanmar entity to assist in marketing activities to promote the sale of its
goods; however, the terms and conditions of the proposed arrangement must be negotiated at arms length
in order to avoid any impression that the foreign investor is indirectly engaging in trading activities in
Myanmar.

Dealings with land

There is, at present, no single piece of legislation that governs land ownership and land use in Myanmar.
Instead, there exists a patchwork of laws that mainly relate to the type of land regulated, from forest land,
farm land, fallow land and industrial land, to name only a few. Myanmar law does recognise freehold
rights, which are reserved exclusively for Myanmar nationals. These are applied to ancestral lands,
which were granted when Myanmar was under British colonial rule.

The government, however, no longer grants such freehold interests, and as a result much of the land held
by private individuals in Myanmar is in the form of grants from the state or from other private persons.
Grant land exists mostly in large cities and towns, including Yangon and Mandalay, and the grant holder
is permitted to use the land for a stipulated period of time, the majority of which usually has a term of 60
to 90 years. Grant land is transferable and persons with leasehold interests in such lands may carve out
and divest lesser interests.

An important limitation on land use relevant to foreign investment is found in the Transfer of Immoveable
Property Restriction Act of 1987, which generally prohibits any sale, transfer or exchange of land to any
foreigner or foreign company. In addition, foreigners and foreign companies are only allowed to lease
land for a term not exceeding one year. Fortunately, the act allows exemptions from these prohibitions if
granted by the relevant government ministry, when extended to foreign governments, diplomatic missions
or other organisations of individuals. For purposes of foreign investment, such exemptions are secured
through an MIC Permit or MIC Endorsement under the MIL or through a SEZ Permit under the SEZ
Law, both of which allow foreign investors the right to lease land for a term of at least 50 years (for the
initial term).
Condominium law

In light of the limitation on land use by foreigners under the Transfer of Immoveable Property Restriction
Act of 1987, the enactment of the Condominium Law was highly anticipated, as it was viewed as a
vehicle by which foreigners could obtain rights over a specific type of immoveable property.

The Condominium Law appears to have carved out an exception to the current restriction on foreigners,
who are now permitted to purchase from the developer up to 40% of the housing units in a condominium,
provided that the source of funds for the purchase of the condominium units comes from abroad. While
formally passed, however, the formal registration of condominiums covered by the law has yet to proceed
pending issuance of the corresponding implementing regulations.

To qualify as a condominium, the law provides that it must be a high-rise building with six floors or
more, constructed as a collectively owned building on collectively owned land registered under the law,
and includes common property and housing units for the use of collective owners. The land on which the
condominium is built should be at least 20,000 sq feet, and collectively owned and registered as such with
the Office of the Registry of Deeds and Assurances. Land intended to be registered as collectively owned
should be: (1) of a type which may be utilised for housing development under prevailing laws; (2) capable
of being transferred; and (3) in accordance with the specification prescribed by relevant authorities for
urban planning.

Government-reserved sectors

While most economic activities are generally open for investment under Myanmars liberalised foreign
investment regime, there are specific sectors that have been traditionally reserved for the Myanmar
government and its state-owned enterprises. These include, among others, the exploration, extraction and
sale of petroleum and natural gas; postal and telecoms services; pilotage and air navigation services;
power generation and distribution; and the cultivation and conservation of forest plantations.

Under relevant legislation (including the recently issued MIC Notification No. 26/2016), however, the
government has the discretion of allowing non-government persons, including foreigners, to participate in
some of these otherwise reserved sectors, either through a joint venture with the government or under
specified requirements and conditions. Approval for foreign engagement in these reserved sectors usually
proceeds from a recommendation given by the relevant ministry or government-owned entity which has
been granted jurisdiction over the reserved sector, as well as an investment permit from the MIC.

Strengthening financial institutions

The past two years witnessed the liberalisation of the Myanmar banking industry, with the CBM
conducting two rounds of licensing to foreign bank branches in October 2014 and March 2016.
Previously, foreign banks were only allowed to operate in Myanmar through representative offices.
Currently, duly licensed foreign banking institutions are allowed to perform limited commercial banking
activities, such as foreign currency corporate banking to foreign-owned business entities registered in
Myanmar. There are now 13 foreign banks that have been granted banking licences to engage in these
limited commercial banking activities.

The governments efforts to develop the banking industry and the rest of its financial institutions
continues with the issuance of the FILM (2016) early in the year. The FILM prescribes stricter and more
definitive capital funds and reserve funds, and the acquisition of significant ownership requirements. In
particular, the FILM imposes a paid-up capital requirement of a minimum of $20m for banks incorporated
in Myanmar, and not less than the equivalent of $75m for branches or subsidiaries of foreign banks,
whereas the old law did not specify definitive amounts. Additionally, the FILM includes provisions
relating to the acquisition of interests in financial institutions and contemplates not only potential
acquisitions but also sanctions mergers between banks, subject to relevant regulatory consents being
secured.

Also notable under the FILM is the recognition and regulation of so-called non-bank financial
institutions, which comprise financing activities, as well as leasing, factoring, credit-card and money
service businesses. Implementing rules are pending issuance from the CBM, although a number of foreign
finance companies have proceeded to submit applications for a non-bank financial institution licence by
first registering a representative office with the CBM and the DICA.

Apart from significant changes made to the regulatory framework for banks and non-bank financial
institutions, the passage of the Mobile Financial Services (MFS) Regulations has opened the door to
wider access to financial services. The regulations provide an alternative platform which allows
customers to deposit, withdraw or transfer money through their mobile accounts. The MFS Regulations
allow both mobile network operators, duly licensed under the Telecommunications Law (2013), and non-
bank financial institutions to provide mobile financial services by obtaining the required registration from
the CBM.

Dealings with foreign currency

The promulgation of the Foreign Exchange Management Law (FEML) in 2012 has significantly
liberalised the ability of both locals and foreigners to deal with foreign currency in Myanmar, although
the law requires all foreign exchange transactions to occur through banks which have been authorised by
the CBM to deal in foreign exchange. As such, foreign investors are now permitted to open foreign
currency accounts in authorised banks in Myanmar, maintain foreign currency accounts overseas and
remit foreign exchange abroad, subject to the approval of the relevant government authorities.

With the enactment of the MIL, all foreign investors are able to transfer or remit abroad foreign currency
brought into Myanmar for purposes of the investment. This includes net profits, dividends received by
shareholders who brought foreign capital into Myanmar and amounts receivable upon liquidation of the
enterprise.

Apart from the remittance of foreign currency by foreign investors, the FEML also enumerates the
following foreign currency transactions called ordinary transferred payments, which, according to the
law, cannot be restricted:

Trading and services, and payments for short-term bank loans;

Interest payable on a loan, and net profit accrued from investments;
Repayments of a loan in instalments, or depreciations for direct investments; or
Remittance of money earned locally or abroad for family living.

Notwithstanding such language, Myanmar banks still generally require the approval of the CBM for any
loan repayments of any shareholders and offshore loans. The practical effect is that foreign investors will
be required to obtain the prior approval of the CBM for any intended inward remittance of shareholders or
offshore loans and intended outward remittance of principal, interest and profits. The CBM in its
Notification No. 7/2014, otherwise known as the Foreign Exchange Management Regulations of 2014
(FEMR), affirms its role in approving any inward or outward remittances of foreign currency.
Under the FEMR, foreign investors remitting funds into Myanmar are required to present the document
reflecting that a remittance was made to a foreign exchange licensee to the CBM. This requirement
applies to all investors. In addition, internal residents obtaining offshore loans will need to request prior
permission from the CBM by presenting the loan agreement and other such documents as may be required
by the CBM. The FEMR expressly provides that internal residents, which include companies or branch
offices established under Myanmar law shall, when obtaining offshore loans, request prior permission
from the CBM.

Offshore loans

In July 2016 the CBM published its criteria in evaluating offshore loans. The criteria takes into
consideration the companys invested equity, its debt/equity ratio, among other things. The published
criteria are as follows: (1) whether the company concerned has invested equity or brought in capital of at
least $500,000; (2) whether the entity obtaining the offshore loan is a business entity which has regular
foreign income; (3) if the entity does not have foreign income, whether it has the ability to repay the loan
from local income and whether it has plans to protect against fluctuations of the exchange rate; (4)
whether the entity has brought in at least 80% of the equity amount mentioned in the MIC Permit; (5)
whether the debt/equity ratio is within the stipulated range of between 3:1 and 4:1; (6) whether the loan-
related terms and conditions concerning the company are sufficient and valid; and (7) whether the
repayment tenure of the loan agreement is medium term or long term and whether the repayment schedule
is appropriate to the loan agreement.

In March 2016 the CBM issued Directive No. 2/2016 liberalising Directive No. 13/2013 and FEMD-
15/2012, and enabling privately owned banks holding authorised dealer licences to participate in the
trading of foreign currencies. The directive also removes the restriction on government departments,
government organisations, state-owned enterprises and joint ventures with the shares of the state-owned
enterprises that required direct permission from the Ministry of Finance and Revenue (now the Ministry
of National Planning and Finance) to open current accounts in foreign currencies at privately owned
banks.

Labour & employment law

While there is no overarching labour legislation or employment code in Myanmar, various labour laws are
in place providing the minimum standards for employment. In early 2016 the Myanmar government
updated several key labour laws and enacted the following: (1) the Shops and Establishment Law (SEL)
of 2016; (2) the Payment of Wages Law (PWL) of 2016; and (3) the amendment to the Factories Act. The
SEL prescribes the terms and conditions of work, the most significant of which is the permitted hours of
work and overtime. Under the SEL, workers in commercial establishments may not, subject to certain
exceptions, be required to work for (1) more than four consecutive hours without a rest period of 30
minutes; (2) more than eight hours in one day without payment of overtime; and (3) more than 48 hours a
week. The total number of hours of permitted overtime in a week is 12 hours, but in special cases it shall
not exceed 16 hours in a week. Employees are also prohibited from working after midnight. The rules on
overtime do not apply to managers as defined under the law.

The PWL provides for the standard definition of a wage and a list of permitted deductions. Under the
PWL, any form of remuneration and salary, including overtime payment or bonuses paid by the employer
for the employees performance, constitutes a wage. The definition of a wage does not include: (1)
temporary expense or special allowances for travelling; (2) temporary expenses of a pre-settlement made
between the parties; (3) social security entitlements; (4) contributions made for the employee under any
prevailing law; (5) accommodation and meal expenses, electricity bills, water bills and taxes; (6)
medical expenses and entertainment expenses; (7) severance pay and gratuity; (8) pension and
retirement gratuity; (9) other payments prescribed by the Ministry of Labour, Immigration and
Population, with the approval of Union Government by way of a notification, as not being applicable to
the wages stated in the PWL.

The PWL also provides for the list of permitted deductions, namely deductions for: (1) wages for
unworked days, except for paid-leave days and public holidays; (2) accommodation fees and ferry fares,
meal expenses, electricity bills and water bills, which are not included in the wages and are arranged by
the employer; (3) the employees income tax; (4) mistaken overpayments; (5) any advancement
payment, expense and savings for the employee, which have been requested by the employee or for any
contribution under the law; (6) pursuant to the decision of the court or the tribunal council or the
tribunal.

The PWL also permits deductions for loss or damage to property by the employee or deductions for an
employees breach of the fineable workplace rule. However, in order to avail of the deductions, the
employer must obtain prior permission from the labour department on the proposed deduction, and after
satisfying the other conditions and procedures provided in the PWL.

Finally, the amendments to the Factories Act clarify the scope of the law which, as amended, expressly
provides for persons employed as part of the manufacturing process as well as persons employed in a
clerical capacity in a place related to the manufacturing process. The amendment also provides for an
updated rule on the substitution of holidays for factory employees. Under the amendment, the substitution
of holidays shall only be valid if it is: (1) with the approval of the employee; (2) with prior permission
from the Factories and General Labour Laws Inspection Department at least three days in advance; and
(3) understood that the worker shall not work for more than 10 consecutive days without having a day off.

Alternative dispute resolution

Earlier this year the much-awaited Arbitration Law was passed, which provides for the legal framework
for the enforcement of foreign arbitral awards. Foreign arbitral awards may be recognised and enforced
under the Code of Civil Procedure in the same manner as a decree of the court. The Myanmar courts,
however, may refuse to recognise foreign arbitral awards based on the grounds provided under the law,
which include but are not limited to, the incapacity of the parties referred to in the arbitration agreement,
and the failure to give proper notice of the appointment of an arbitrator. The Arbitration Law therefore
serves as the municipal legislation enforcing the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, which was acceded to by Myanmar in 2013.

Yangon stock exchange

The Yangon Stock Exchange, which was inaugurated in December 2015, is continuing with the
processing of applications for the listing of public companies. To date, there are currently three listed
companies on the exchange, namely: First Myanmar Investment Company, Myanmar Thilawa SEZ
Holdings Public and Myanmar Citizens Bank.

The fourth company, First Private Bank, is scheduled to be list on 20 January 2017. To date, only
Myanmar citizens are permitted to invest in companies which are listed on the stock exchange. It is
possible, however, that additional legal mechanisms will be put in place once amendments to the
Companies Act (1914) are passed.

Conclusion

The year 2016 marked the transition from the outgoing military-backed Parliament to the current
administration, with a significant number of seats held by the party led by Daw Aung San Suu Kyi. The
beginning of this marked significant reforms at the institutional level, with the merging of several line
ministries to centralise the functions of related ministries, streamline operations and ensure harmony in its
decision-making.

Notwithstanding these institutional changes, the development of Myanmars legal framework is

unceasing. The governments commitment to reshaping the legal framework in order to enhance
investment facilitation in the country is notable. With the new rules in place, much awaits in the
enforcement and implementation of these laws. The next step, therefore, is for the line ministries and
agencies, which are being reorganised and streamlined, to implement these objectives.

Cheah Swee Gim, Director, Kelvin Chia Yangon, on changes to the legal landscape aimed at boosting
foreign investment: Viewpoint

Cheah Swee Gim, Director, Kelvin Chia Yangon, on changes to the legal landscape aimed at
boosting foreign investment: Viewpoint

Viewpoint: Cheah Swee Gim

A series of exhilarating changes took place in Myanmar in 2016, from the installation of a new
democratic government in April 2016 with Daw Aung San Suu Kyi at the helm to the lifting of two
decades of economic and financial sanctions by the US. Changes are not just taking place in the political
sphere. The legal landscape is also keeping pace, with game-changing legal reforms promulgated in 2016.
The Myanmar Investment Law, which was passed on October 18, 2016, consolidates the Myanmar
Foreign Investment Law and the Myanmar Citizens Investment Law into one overarching piece of
legislation, placing Myanmar citizen investors and foreign investors on an equal footing. This long-
awaited law guarantees that foreign investors will be treated no less favourably than Myanmar citizen
investors, and aims to streamline the foreign investment process by limiting the need for investment
approval to investments in sectors that are strategic to the government or specifically listed as restricted,
or large capital intensive investment projects, or projects that could have a significant impact on the
environment and the local community, or projects that involve investments in businesses or activities that
use state-owned land and/or buildings. Investments in other sectors and business activities no longer
require investment approval. Nevertheless, to ensure the responsible use of land Myanmars most
valuable resource foreign invested companies are obliged to seek the endorsement of the Myanmar
Investment Commission to secure long-term leases over land or buildings. Whilst the need for such
endorsements will to an extent limit the ease and expediency with which land-related investments can
proceed, it is anticipated that the endorsement process will be placed on a simpler track than the
investment approval process. It has long been recognised that Myanmars growth has been impeded by
the weakness of its financial laws and regulations. Another notable legal reform that occurred in 2016 is
the enactment of the Financial Institutions Law of Myanmar. This provides more detailed and stringent
standards for financial institutions operating in Myanmar to ensure their stability and robustness. The
same law also contemplates the acquisition of interests in financial institutions, as well as mergers
between banks subject to relevant regulatory consent being secured thereby creating the potential for
healthy competition.

Other laws that are anticipated include a new Myanmar Companies Act and a whole suite of intellectual
property laws. The new Myanmar Companies Act will revamp the Myanmar Companies Act of 1914 to
bring the countrys corporate law concepts up to date with international best practice. In addition, laws for
design, patents, trademarks and copyright are expected to improve intellectual property rights protection.
Although there is still much to be done in terms of legal and regulatory reform, such as issuing detailed
regulations to implement laws that have been passed, it is clear that the new Myanmar government places
great importance on the rule of law. It is also quite apparent that it is looking towards creating a
sustainable and responsible investment environment, and will not be persuaded to adopt quick fixes.

The significant and continuing legal reforms in Myanmar, coupled with the lifting of economic and
financial sanctions, sparks hope and confidence in foreign and local investors alike. It is also heartening to
see the growth of small and medium-sized enterprises in Myanmar. The willingness to invest in
Myanmars future contrasts starkly with the cautious wait-and-see attitude that was prevalent in 2015,
brought on by the then-forthcoming first free general elections. Now more than ever, Myanmars doors
are open to the rest of the world. Whilst there are risks and uncertainties to be encountered, steadfast and
responsible investors can expect to benefit greatly by taking firm steps across Asias last economic
frontier.