|
The Microfinance Business Supervisory Committee ("MBSC") recently issued Directive 1/2019 ("Directive"), which provides a new set of interest rates that must be followed by all microfinance institutions operating in Myanmar.
MBSC has amended the interest rates. A loan of K100 monthly will be charged K2.30 and the yearly maximum interest rate will be 28 percent. The previous rate was for K100 monthly at K2.50 and the yearly maximum interest rate is at 30pc. In comparison, the directive has decreased 2pc of the yearly interest rate.
Furthermore, the new interest rate on compulsory saving will be for K100 monthly, it will be charged K1.20. The annual minimum interest rate has been cut by 1pc to 14pc. The previous specification was that for K100 monthly, it will be K1.25 with the yearly minimum interest rate at 15pc.
Interest rate on voluntary saving remained the same. The Directive has designated that for K100 monthly, the amount charged will be K0.80 and the yearly minimum interest rate will be 10pc.
This Directive supersedes all other previous directives on interest rates on savings and loans that were issued in 2011, 2014 and 2016.
The Directive came into force on 1 June 2019, but it was only published on 5 June 2019. Microfinance institutions which conducted transactions in accordance with the previous interest rates from 1 June 2019 till 4 June 2019 would therefore be in default of this Directive. It is expected that, to provide clarity, the MBSC will issue additional guidance in relation to the transactions that were conducted after the coming into force of the Directive but before its publication on 5 June 2019.
On 7 May 2019, the Pyidaungsu Hluttaw (Myanmar Parliament) enacted the Gambling Law ("Law") allowing foreign investors to operate casinos in Myanmar. The Law defines "casino" as "any location or building registered in line with the stipulations with approval from the Union Government where only foreigners shall be allowed to gamble." It is further stipulated in section 23 of the Law that "the Union Government may screen and allow to establish and open Casinos in line with stipulations." The Law has not specified the foreign investment ratios, compliance requirements and required approvals / authorisation with respect to casino operations. However, it is expected that these will be spelt out in the implementing rules which will subsequently be released in connection with the Law. It is also not clear from the Law whether Myanmar citizens would be allowed to operate and invest in “casino” business, a gap which can be closed through the issuance of subsequent rules.
The enactment of the Law heralds a positive news for investors who intend to establish business presence in Myanamr through the "casino" business. However, given the inexperience and deficiencies currently embedded in Myanmar society, the Government needs to put in place well regulated mechanisms and systems to efficiently govern casino and gambling activities within the Union.
On 7 June 2019, the Tax Management Law (Pyidaungsu Hluttaw Law No. 20/2019) was enacted. It will be made effective in the coming financial year, i.e. 1 October 2019. This provides a unified tax procedure for "income tax, commercial tax, special goods tax and other types of taxes of which the Director General of the Inland Revenue Department is in charge according to a law". Important provisions of the new law include: taxpayers' right for tax clearance certificate, public and advance rulings, anti-avoidance provision, requirement for Myanmar-resident representative of companies for tax purposes, document retention period of 7 years and punishment for tax evasion up to 7 years imprisonment plus fine over the tax or MMK250,000.
Last year, the Ministry of Commerce ("MOC") liberalised foreign and joint venture companies ("JV Companies") to undertake wholesale and retail trading through MOC Notification 25/2018 and MOC Newsletter 3/2018. Prior to such liberalisation, foreign and JV Companies were allowed to undertake trading for 6 types of products including fertilisers, seeds, pesticides, hospital equipment, agricultural equipment and construction materials.
Although foreign companies and JV Companies undertaking trading in the 6 types of products were also required to apply for a wholesale / retail permit under Notification 25/2018, the MOC did not follow through with such requirement. Nonetheless, on 21 May 2019, the MOC issued Notification 23/2019 revoking trading privileges of all foreign and JV Companies undertaking trading in the 6 types of products and has required compliance with minimum investment requirements and application of the same within 90 days of the date of Notification (i.e. until 19 August 2019).
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.
|
|
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: Dr Min TheinManaging PartnerD +951 9345343F +951 9345348min.thein@rajahtann.comChester TohDirectorD +65 62320220chester.toh@rajahtann.comJainil Bhandari DirectorD +65 62320601jainil.bhandari@rajahtann.comRajah & 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. |
|
|