Rules and regulations are further opening the economy

Considered by many as the last economic frontier, Myanmar has been the object of much investor interest, especially following further liberalisation of its foreign investment regime through the passage of the Myanmar Foreign Investment Law in 2012. As of October 2014, Myanmar registered an estimated $40.16bn of foreign direct investment (FDI) and has permitted foreign investments totalling an estimated $50.22bn. This is not surprising, considering the investment opportunities in virtually all areas of commerce and industry, from manufacturing to real estate, energy and power, telecoms and natural resource extraction.

FDI

While the delicate transition towards greater openness and democratisation has caused some to take a wait-and-see attitude, large multi-national conglomerates have decided to make the push and claim firstmover advantage in this nation of 51.4m consumers. Firms like Unilever, Coca-Cola, Ford Motors, Mitsubishi, Colgate-Palmolive, Hilton Worldwide, Ooredoo and Telenor have established business presences in Myanmar with major investments, and the McKinsey Global Institute has estimated that by 2030, Myanmar could receive as much as $100bn in FDI, around double the currently estimated FDI inflow.

The government, for its part, has been very active in fostering an environment conducive to FDI. Apart from updating and liberalising the legal regime for investment, it has allowed foreign participation in activities previously reserved to state entities, such as oil and gas exploration and telecommunications.

Helping Banking

Further, the Myanmar government has continued to enact measures to improve and develop the banking and financial sectors in the nation, including the floating of the country’s currency (the Myanmar kyat) in April 2012, the passing of a new Central Bank of Myanmar Law (2013), which grants some independence to the country’s central bank, the promulgation of the Securities Exchange Law (2013) in anticipation of the projected launch of the country’s first stock exchange in late 2015 and the promulgation of the Myanmar Special Economic Zone Law (2014), which aims to further boost investor interest in the country. Drafts of the Competition Law and the Arbitration Law have also been published for public comment. Recently, the Central Bank of Myanmar gave preliminary approval to nine foreign banks to conduct limited business in Myanmar, including commercial lending operations to foreign corporations and local banks. The Central Bank has also continued to liberalise foreign exchange controls, enabling locals and foreigners to deal with foreign currency more freely.

The process of opening and modernising a long-isolated economy is no easy task, and there will surely be some bumps along the road to a system fully integrated into regional and global markets. While acknowledging these obstacles, we can confidently say that Myanmar is assertively pursuing the necessary policies to allow for greater integration and is firmly committed to the process of reengagement.

What follows is an overview of the foreign investment environment of Myanmar, as well as a discussion of the legal and regulatory framework that underpins the foreign investment system as a whole.

Legal System

Myanmar’s legal system draws from a combination of colonial-era English common law, traditional Myanmar customary law and modern legislation. The result is a collection of rules and regulations spanning from the late 19th century through today that overlap, and at times, offer contradictory or incomplete guidance. As the country continues down the path of modernisation, so too does its legal system, as more comprehensive legislation is brought forward to supplant, supplement and clarify the existing legal regime that has governed for the past century.

In 2010, the Union Judiciary Law was adopted to set out the structure and operating guidelines for courts in the nation. The hierarchy of the courts system begins with the Supreme Court at the top, followed by the High Courts of the Regions and States, the District Courts and Courts of Self-Administered Divisions and Zones, and at the bottom, the Township Courts and other courts specially constituted by law. A separate system of Courts Martial has exclusive jurisdiction with regards to matters involving military personnel. The Supreme Court holds jurisdiction over cases involving treaties, regional disputes, piracy and other matters as determined by law, while a separate Constitutional Tribunal is responsible for constitutional disputes and vetting laws passed by Parliament. Two classes of attorneys make up the legal practice in Myanmar: advocates who may practice in any court, and high-grade pleaders who are restricted from practice in the Supreme Court but may handle matters in subordinate courts.

The past 60 years have seen several shifts in Myanmar law-making. Until 1954, the Burma Code was the primary source of law throughout Myanmar, though after a coup in 1962, drafting of new legislation stalled. From 1962 through 1988, when a military regime took power until the enactment of a new constitution in 2008, only a handful of laws were passed to manage the country’s economic affairs and keep pace with the slow import of new technologies. Since the enactment of the new constitution, the new government has worked rapidly to bring Myanmar up to international standards with a burst of legislative activity. Among these laws, the 2012 Foreign Investment Law has had the most immediate effect on business and the economy.

Vehicles Foreign Investment

Foreign investors who wish to undertake specific business activities may rely on the foreign investment framework available under the Companies Act and the Foreign Investment Law. Through these laws, foreign investors may choose to establish a foreign branch office in Myanmar, incorporate a private limited company or apply for and secure an investment permit from the Myanmar Investment Commission (MIC Permit).

Entities Under The Companies Act

A branch office under Myanmar law is considered an extension of its foreign parent company and is a non-resident entity for purposes of taxation. It is authorised to engage in revenue-generating activities 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 law. The scope of business of these branch offices would thereby be limited to non-revenue generating activities such as marketing, liaison services and market research.

On the other hand, and unlike a branch office, a private limited company has a juridical personal separate from its shareholders, and is considered a resident entity for purposes of taxation. Furthermore, this private limited company may be incorporated as a wholly owned subsidiary of a foreign parent, or may be partly held by local 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 are not among those that require an MIC Permit.

Both branch offices and private limited companies are required to secure a “Permit to Trade” as a precondition to their commencement of business. This permit 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.

Applicants seeking the registration of a branch or private limited company may also seek the issuance of a temporary registration certificate, which, once issued by the Companies Registration Office, will permit the applicant to operate the business entity while its corresponding application is pending evaluation and approval. The issuance of a temporary registration certificate, however, does not guarantee the eventual approval of the application for registration, and should the application be subsequently rejected, the applicant will thereby be unable to continue business operations. In any event, any such branch or private limited company allowed to operate in Myanmar does not generally enjoy the concessions and benefits extended to foreign investors under the Myanmar Foreign Investment Law. For this, the foreign investor must secure an MIC Permit from the commission.

MIC Permit

While foreign investors establishing a private limited company in Myanmar are generally free to apply for an investment permit from the MIC, existing government regulations and policies have appeared to limit the activities for which an investment permit would be available. These include investments in industrial, manufacturing or real estate development activities, investments in activities reserved for the state and state-owned economic enterprises (such as telecoms, natural resources, and oil and gas enterprises), and investments requiring the long-term use of land. Most recently, the MIC issued Notification No. 49/2014, replacing its earlier Notification No. 1/2013. The new notification, similar to its predecessor, enumerates specific economic activities that are generally prohibited for foreign investment, those that must be undertaken through a joint venture with Myanmar nationals, and those that require compliance with certain conditions by the applying foreign investor.

Foreign Investment Limitations

The production and exploration of jade and gem stones, for example, are among the activities prohibited for foreign investment, while the manufacture and marketing of grain products, confectionary products, malt liquors and purified drinking water must be undertaken through a joint venture with Myanmar nationals. Meanwhile, the importation and distribution of petroleum products, as well as the exploration and production of petroleum and petroleum products, requires a joint venture with the Ministry of Energy.

In addition to Notification No. 49/2014, the MIC has also issued Notification No. 50/2014, which enumerates business activities that require environmental impact assessments, and Notification No. 51/2014, which excludes certain business activities from exemption from Customs duties and commercial taxes. Among the business activities enumerated under Notification No. 51/2014 are the restaurant, food and beverages business, rental of vehicles, machinery and equipment, and the construction and sale of buildings.

These latest notifications further refine and clarify previously ambiguous areas of foreign investment and demonstrate the MIC’s desire to create a more stable and investment-friendly environment under the Myanmar Foreign Investment Law.

Key Factors

At the same time, as mandated by the law, the MIC will also evaluate all investment permit applications according to certain key factors, which include whether the investment will result in a significant level of domestic labour, whether the economic activities will involve the importation and use of heavy equipment or advanced technology, the value that the economic activity will add to the domestic economy and the degree to which the economic activity will uplift the living standards of domestic citizens.

MIC Permit applications that do not sufficiently meet these factors will not likely be granted, and although a foreign investor whose application for an MIC Permit has been denied may nonetheless attempt to establish a private limited company with the Companies Registration Office. The Companies Registration Office may similarly deny such application if in its view the applicant’s intended activities are such that they may only be carried out with the approval of the Myanmar Investment Commission.

Benefits & Guarantees

Foreign investors granted an MIC Permit are generally permitted to enjoy certain benefits and guarantees under the Myanmar Foreign Investment Law that are not otherwise available to foreign investors registering business entities without such MIC Permit. These include an exemption from income tax for five consecutive years from the start of commercial operations, the opportunity to lease and develop land for a period not exceeding 50 years ( renewable for two terms of 10 years each), the ability to engage in import and export activities in Myanmar, and a mechanism for repatriation of capital and profits. The Foreign Investment Law also expressly provides that grantees of an MIC Permit will not be nationalised during the term of their investment. While there is no specific rule on the minimum investment threshold for the grant of an MIC Permit under the Foreign Investment Law, the MIC has generally looked to a minimum investment amount of at least $500,000.

The Directorate of Investment and Company Administration regularly provides information on the investment permit applications that have been granted by the MIC. As of mid-November 2014, a total of 278 MIC Permits had been issued pursuant to the Myanmar Foreign Investment Law.

Trading Restrictions

Even with the registration of a private limited company or the grant of an MIC Permit under the Myanmar Foreign Investment Law, foreigners are nonetheless and, 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 purposes of resale and the procurement of local goods for purposes of resale.

Recent government issuances, however, have appeared to relax this long-standing trading restriction. Notably, Notification No. 49/2014 does not contain any restrictions or conditions with regard to wholesale or retail trade in Myanmar, unlike its predecessor, Notification 1/2013— which may imply that wholesale or retail trading activities may be undertaken with 100% foreign investment. However, current government policy as of publishing still restricts foreign private limited companies without any MIC Permit or branches of foreign entities from undertaking any trading activities or including such activities as part of the business scope in their Permits to Trade.

Nonetheless, policy exceptions have been routinely applied by the MIC on a case-by-case basis, whereby foreign companies operating through an MIC Permit have been permitted to sell and distribute products that such foreign investor has manufactured, in whole or in part, in Myanmar. Additionally, The Myanmar Investment Commission has also been known to allow the sale of specific types of products where such a sale is necessary and ancillary to the provision of a service that the foreign company is permitted to conduct.

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 that are reserved exclusively for Myanmar nationals. These are known as “ancestral lands,” which were granted at the time Myanmar was under British colonial rule.

The Myanmar government, however, no longer grants such freehold interests, and as a result, much of the land held by private individuals in Myanmar are 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, usually a term of about 60 to 90 years. Grant land is transferrable, and persons with leasehold interests in such lands may additionally 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. Foreigners and foreign companies are also only allowed to lease land for a term not exceeding one year.

Fortunately, the Property Restriction Act allows exemptions from these prohibitions if granted by relevant government ministries, when extended to foreign governments, diplomatic missions or other organisations of individuals. For purposes of foreign investment, such exemption is secured through an MIC Permit under the Myanmar Foreign Investment Law, which allows foreign investors the right to lease land for a term of at least 50 years (renewable for two terms of 10 years each).

Another challenge for foreign investors dealing with land in Myanmar is securing their right to long-term leases (as approved by the Myanmar Investment Commission) under Myanmar law. Until very recently, the Office of the Register of Deeds did not accept long-term foreign leases for registration. However, there appears to have been a recent change in policy as the Office of the Register of Deeds is now receptive to the registration of such foreign long-term leases. This does not only provide additional comfort for foreign investors seeking to secure their rights to land, but is also a welcome development that hopefully progresses into a wider range of registrable instruments (including mortgages and other security rights).

Real Estate Projects

Foreign investors intending to engage in real estate development projects such as the construction, development and sales or leases of residential apartments or condominiums or sales of commercial or office buildings must generally enter into a joint venture with a Myanmar national, apart, of course, from securing an MIC Permit for the long-term use of land. It is usual, therefore, that in applying for an MIC Permit for a real estate development project, the foreign investor enters into a joint venture with a Myanmar national that has rights over a particular parcel of land for development. The Myanmar national may contribute the land to the joint venture company that will undertake the real estate development project.

As an exception to this joint venture requirement, the Myanmar Investment Commission has, in the past, clarified that if the construction, development and operation of an office or commercial building are made under a build-operate-and-transfer scheme with the owner of the land, the operating company undertaking the investment activity in Myanmar may be wholly owned by the foreign investor. The Myanmar Investment Commission has also exempted several hotels from the joint venture requirement.

Condominium Law

Looking ahead, a draft of the long-awaited Condominium Law was published in mid-November 2013 in several newspapers in Myanmar. There is a general expectation that the new Condominium Law will offer an additional exception to the Transfer of Immoveable Property Restriction Act of 1987.

In current draft form, the Condominium Law restricts land allowed for construction of condominiums to those that are registered with the Ministry of Construction as so called “collectively-owned land”. Such land needs to have the following characteristics: first, it must be land that can be “utilised for housing development” under prevailing laws; and second, it must be land “for which ownership can be transferred”. Land less than one acre in size will also need special permission from the Ministry of Construction for registration.

Despite the foregoing restrictions, the Condominium Law, as currently drafted, will allow ownership and long-term leases of condominium units to foreign investors — in particular, foreigners will be allowed to own or hold a maximum of 40% of units from the sixth level and above of the condominium development. As such, the Condominium Law, if passed in the current form, will represent significant progress for land regulation in Myanmar and could result in major changes to the economic landscape.

Government-Reserved Sectors

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

Under relevant Myanmar legislature (including the recently issued Notification No. 49/2014), however, the government has the discretion of allowing non-governmental 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 sectors usually proceeds from a recommendation from the relevant ministry or government-owned entity granted jurisdiction over such reserved sector. For example, for investments relating to the exploration, extraction and sale of petroleum and natural gas, a joint venture with the Ministry of Energy is necessary to secure MIC Permit approval.

Openness

The discretion to allow foreigners to participate in otherwise state-reserved sectors was precisely exercised by the Myanmar government in the award of separate telecommunications licences to Telenor and Ooredoo, both foreign companies, for the development of Myanmar’s telecommunications sector. Oil and gas blocks have similarly been offered via government tenders to both local and foreign companies, with major players such as Shell, Exxon, ConocoPhilips and Chevron/Unocal shortlisted for possible awards for deepwater oil exploration opportunities. Companies awarded concessions will be required to enter into production-sharing agreements with the government of Myanmar and, in some cases, with a Myanmar local partner.

The government of Myanmar’s willingness to open these otherwise reserved sectors of the economy is, at least in part, an acknowledgment of the limitations of existing government resources in developing these crucial economic sectors. In addition, it is the recognition of the indispensable role that foreign investors can play in the development of the overall economy of the liberalising country. Therefore, other international investors who wish to enter into these otherwise government-reserved industries do have an available avenue through which to do so: there is a specific government approval process, which also involves an investment permit application with the MIC.

Intellectual Property Protection Schemes

undefined Current intellectual property protections in Myanmar are relatively weak, with a Copyright Act first promulgated in 1914 and no formal laws with respect to the protection of trademarks and patents. The currently applicable Copyright Act is limited in scope and only provides protections for original literary, dramatic and artistic works only if they are either first published in Myanmar or, if unpublished, are works of a citizen or a person otherwise inside of Myanmar at the time of creation. Copyrighted works from other nations are afforded no protection in Myanmar under this system, although a practice of registering aspects of a foreign work through trademark where possible has developed to provide some semblance of protection.

While Myanmar does not have any law specifically regulating trademarks and their registration, there has developed a de facto registration regime through existing legislation. Through the combined regulations of Section 18(F) of the Myanmar Registration Act of 1908 and Direction 13 issued by the Inspector General of Registration, parties may assert trademark ownership by filing a Declaration of Ownership with the Yangon Registration Office of the Settlement and Land Records Department (SLRD). In addition, trademark owners may also publish a “cautionary notice” in an English newspaper of general circulation, for the purposes of (i) notifying the public of trademark ownership, (ii) warning the public against infringement, and (iii) enhancing a trademark owner’s claim of ownership in case of court litigation. This publication of the notice is usually repeated every three years.

Registering a trademark with the SLRD and the publication of cautionary notices is not compulsory, though they may be presented as prima facie evidence of trademark ownership. Registration, therefore, is merely for evidentiary purposes. It does not, by itself, confer any proprietary rights in the mark. Instead, and as recognised by extant rulings of the Myanmar Supreme Court, prior use of the mark is the prevailing and definitive standard for trademark ownership. Thus, to establish a valid claim to a trademark, the claimant must show the use of the trademark in Myanmar.

There was at one time a Burma Patents and Designs Act. The law was, however, repealed in 1993 and has not been replaced with any legislation to protect either patents or industrial designs as of yet. Notwithstanding the lack of a proper patent protection scheme, patent or invention ownership may still be registered with the Register of Deeds. Through this system, a patent holder theoretically may apply for a perpetual injunction under section 54 of the Specific Relief Act against anyone who would violate their patent property rights. Nevertheless, the practice as outlined in theory, the lack of actual patent protection in law and uncertainty regarding the outcome of any request for injunctive relief from the courts results in an altogether unreliable patent protection scheme.

The current system could be politely described as “inadequate” for the purposes of protecting the valuable intellectual properties of major foreign investors; however, a new intellectual property regime presently being drafted is expected to result in re-tooled laws for copyrights, trademarks, patents and industrial designs. This massive upgrade is the result of nearly a decade of work inside Myanmar to develop laws strong enough to meet Myanmar’s WTO membership obligations, while flexible enough not to stifle development.

The Anti-Corruption Law

Myanmar’s latest Anti-Corruption Law came into effect in August 2013, replacing the outdated and underutilised Suppression of Corruption Act. Targeting in particular the bribery of public officials, the new law has established the Commission for the Eradication of Bribery and with the power to require asset reporting by certain officials on an annual basis. Members of the commission and public officials ordered by the commission are now required to prepare a list of assets and liabilities in their names as well as in their family members’ names to be submitted to the president’s office.

Other powers granted to the commission include the ability to seize evidence, freeze properties, investigate accounts in financial institutions, and confiscate money and properties as part of the corruption investigation process. Public officials found guilty under this new law can face imprisonment of up to 15 years and the confiscation of properties earned through corrupt behaviours. The Anti-Corruption Law also applies to non-public persons who have assisted public officials in corrupt dealings and activities.

Bilateral Innvestment Agreements

Apart from a fast developing foreign investment framework and to further bolster investor confidence in the domestic market, Myanmar has also entered into bilateral investment agreements with Japan, Korea, the Philippines, China, Laos, Vietnam, Thailand, Israel and India.

As a member of the Association of South-east Asian Nations (ASEAN), Myanmar is also a party to various multilateral agreements that aim to develop and enhance cross-border trade and investment among ASEAN member states. This includes the ASEAN Comprehensive Investment Agreement and the agreement to establish an ASEAN Economic Community in 2015.

Myanmar law also recognises various dispute resolution mechanisms, including domestic and international arbitration, to resolve investment and other disputes. Myanmar has, in fact, recently acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards which would allow Myanmar courts to recognise arbitral awards made in jurisdictions party to the same convention. Together with the existing Arbitration Act of Myanmar 1944, the ratification of the New York Convention is envisioned to give foreign investors an added measure of security in protecting their foreign investment in Myanmar. Although the government has yet to enact domestic laws to implement a framework capable of supporting the recognition and enforcement of foreign arbitral awards by the Myanmar courts, a draft Arbitration Law has already been circulated for public comments and is expected to be passed in the near future.

Special Economic Zones

The Myanmar government has established and is presently developing special economic zones in Dawei, Kyauk Phyo and Thilawa. These special economic zones are envisioned to provide port facilities and other infrastructure for cargo handling and related services, and, through the Special Economic Zone Law of 2011, provide a venue for foreign investors to locate their industrial business within the special economic zone. Among the incentives available for foreign investors in these special economic zones include income tax exemptions on the proceeds of export sales for the first five years from the day of commencement of production or service. This income tax exemption may be extended at a graduated rate for the next two five-year periods.

Recently, the Myanmar government and Myanmar Japan Thilawa Development Limited, the public-private joint venture in charge of constructing, managing and operating the Thilawa Special Economic Zone, held public consultations with interested parties, which paved the way for the issuance of rules and regulations for parties interested in establishing businesses there. The Thilawa Management Committee is now processing applications for the issuance of special economic zone permits for those wishing to locate in the Thilawa Special Economic Zone.

Labour & Employment Law

There is no overarching labour legislation or employment code in Myanmar, and a significant portion of labour regulations are found in government notifications and sample employment contracts that are issued from time to time by relevant labour authorities. As a result, labour authorities are able to assert a fair amount of authority and control in terms of determining and deciding the applicable conditions for employment. Still, there are specific laws that provide some indication of the minimum employment standards in Myanmar.

Among these include the Shops and Establishments Act of 1951, which outlines the maximum hours of work for employees working in retail, commercial establishments, establishments for public entertainment and industrial establishments. The Leaves and Holidays Act of 1952 also mandates the provision of casual and earned leave days, and the manner by which they may be availed of by covered employees. All employees are similarly entitled to social security benefits under the Myanmar Social Security Act of 2012, where both the employer and the employee are required to remit monthly contributions. Employment disputes are also required to be resolved through employer-employee conciliation and arbitration under the Labour Dispute Settlement Law of 2012 (as amended in 2014).

Meanwhile, for foreign investors operating under an MIC Permit, the Myanmar Foreign Investment Law requires that all unskilled workers be Myanmar citizens. Engagement of foreign workers is allowed only for skilled work, provided that for the first two years of commercial operations, 25% of all skilled workers must be Myanmar citizens. This percentage increases by 25% every two years, such that by the end of the sixth year of commercial operations, 75% of skilled workers must be Myanmar citizens.

The MIC may extend the timeline for reaching these employment quotas in light of knowledge requirements for the industry involved, although there is no specific guidance on what constitutes skilled and unskilled work for purposes of such manpower requirements. For the foreign workers engaged under this MIC Permit, it will also be possible to apply for permits that will allow them to work and remain in Myanmar for the duration of their engagement.

Dealings With Foreign Curency

The promulgation of the Foreign Exchange Management Law in 2012 has significantly liberalised the ability of both locals and foreigners to deal with foreign currency in Myanmar, though the law requires all foreign exchange transactions to occur through banks that have been authorised by the Central Bank to deal in foreign exchange. As such, foreign investors may now open foreign currency accounts in authorised banks in Myanmar, maintain foreign currency accounts abroad, and remit foreign exchange abroad subject to the approval of relevant government authorities. For foreign investors operating under an MIC Permit, in particular, it is permissible with approval from the Myanmar Investment Commission and the Central Bank of Myanmar to transfer or remit abroad foreign currency brought into Myanmar for purposes of the investment. These amounts include net profits, dividends received by shareholders who had brought foreign capital into Myanmar, and amounts receivable upon liquidation of the enterprise.

Apart from the remittance of foreign currency by international investors operating under an MIC Permit, the Foreign Exchange Management Law also enumerates following foreign currency transactions called “ordinary transferred payments,” and which, according to the law, cannot be restricted, whether or not one is operating through an investment permit:

• Trading and services, and payments for short-term bank loans;
• Interests payable on loan, and net profit accrued from investments;
• Repayments of loan in installments, or depreciations for direct investments; and
• Remittance of money from local or abroad for family living.

Notwithstanding such language, Myanmar banks still generally require the approval of the Central Bank of Myanmar for any loan repayments of any shareholders’ and offshore loans, even for those companies that may not be operating under an MIC Permit. The practical effect is that foreign investors, whether operating under an MIC Permit or not, will be required to obtain the prior approval of the Central Bank of Myanmar for any intended inward remittance of shareholders’ or offshore loans and intended outward remittance of principal, interest and profits. Since the liberalisation of foreign exchange rules and regulations is still at its infancy stage, the exact procedure for such approvals from the Central Bank of Myanmar remains unclear, although basic requirements have fortunately been put forth by the Central Bank of Myanmar in its Notification No. 7/2014, which affirms the Central Bank of Myanmar’s role in approving any outward remittances of foreign currency by Myanmar banks.

Conclusion

The pace of change remains rapid with new legislation being passed at an accelerated rate. There are several major additions on the horizon for foreign investment, including a long-overdue re-draft of the nearly century-old Companies Act, which is expected to be completed by the middle of 2015. With the approval of the Securities Exchange Law in late July 2013, the country is also pressing ahead with plans to open a full-fledged stock exchange with a launch date in 2015. The legal framework for investment is being quickly modernised to keep pace with the flurry of new investment interest. As further investment pours into the country, there is an expectation that legal structures and regulatory professionalism will progress in kind.