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On 7 October 2016, former US president, Barack Obama, signed an Executive Order terminating the existing US economic and financial sanctions administered by the Department of the Treasury's Office of Foreign Assets Control ("OFAC") against Myanmar. The lifting of US sanctions followed President Obama's visit to Myanmar and meeting with State Counsellor Daw Aung San Suu Kyi in September 2016, and the historic elections in November 2015 that resulted in the National League for Democracy winning a supermajority of the seats in the Myanmar Parliament. US companies are no longer subject to OFAC-administered restrictions regarding banking and financial transactions in Myanmar, and all individuals and entities previously blocked under the Burmese Sanctions Regulations (i.e. carrying the "BURMA" tag) have now been removed from OFAC's Specially Designated Nationals and Blocked Persons List, which paves the way for greater freedom for US and US-related companies to invest in Myanmar.
The long-awaited Myanmar Investment Law 2016 ("MIL") was finally enacted on 18 October 2016. The new MIL replaces the former Myanmar Citizens Investment Law 2013 and the Foreign Investment Law 2016 ("FIL"), and one of the key changes is the introduction of a new fast-track "Endorsement" route which allows investors in non-restricted industries to apply for various incentives at the Myanmar Investment Commission in relation to their intended investments.
Another noteworthy change is the introduction of a tiered tax incentive system where the maximum period of income tax exemption granted will depend on the location of the proposed investment (i.e. 7-year exemption for investments in the least developed zones and 3-year exemption for investments in more developed zones in Myanmar). Previously, a blanket 5-year income tax exemption was granted under the FIL. While the enactment of a consolidated MIL is certainly a step in the right direction, investors are eagerly awaiting the release of the implementing rules to accompany the new MIL, which will set out further details of how the MIL will be implemented, such as an updated list of restricted industries, the application process for the new fast-track "Endorsement" route and the designation of investment zones for the purposes of tax exemptions. The draft of the first set of implementing rules have been released and are expected to be finalised and enacted in the coming months.
As a matter of general policy, the Myanmar Ministry of Commerce ("MOC") does not allow foreign entities to engage in import and distribution or sale of finished products in Myanmar (i.e. trading). However, the Myanmar Government has been gradually introducing certain exceptions to this general rule as it looks to liberalise this trading ban. In August 2016, the MOC issued a list of goods exempted from import licensing requirements.
On 20 December 2016 the MOC issued two further notifications to further liberalise the trading ban. MOC Notification 85/2016 allows foreign joint venture companies to import 69 types of hospital equipment and 461 types of construction materials identified by their respective HS codes. MOC Notification 86/2016 added another 150 types of goods, including coffee, wood pulp and railway coaches, to the list of goods exempted from import licensing requirements.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Rajah & Tann
Myanmar Company Limited
Room No. 408(A), Prime Hill Business Square, No. 60,
Shwe Dagon Pagoda Road, Dagon Township,
Yangon, Myanmar
http://mm.rajahtannasia.com
Contacts: Chester TohDirectorD +65 62320220chester.toh@rajahtann.comJainil Bhandari DirectorD +65 62320601jainil.bhandari@rajahtann.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. |
This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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