MYANMAR

Financial Action Task Force (FATF) Adds Myanmar to "Blacklist"

The Financial Action Task Force ("FATF") has added Myanmar to a group of high-risk countries, known as the "blacklist", citing its failure to make enough progress in addressing illicit financial flows. Myanmar joins North Korea and Iran, which have been on the high-risk list since 2020. However, while North Korea and Iran are subject to a FATF call to apply countermeasures, Myanmar is subject to a FATF call to apply enhanced due diligence measures.

For more information, click here to read our Legal Update.

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MyCO no Longer Allows Application of Company Extracts

Commencing 26 September 2022, the Directorate of Investment and Company Administration (DICA) is no longer accepting applications from third parties to receive company extracts on the Myanmar Companies Online ("MyCO") website. Only personnel authorised by the particular company will be able to apply for company extracts.

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Immigration Law: DICA Announces Recommendation Policy for Foreign Visa Extensions

The Directorate of Investment and Company Administration ("DICA") has announced its recommendation policy regarding extensions for foreigner visas which took effect from 14 September 2022. The announcement states that companies intending to issue a letter of recommendation to extend a foreigner’s visa must meet certain requirements which include the following:

1. The company must have been registered with DICA for at least one year;
2. The application for extension must be lodged with DICA at least 90-120 days before the expiration of the foreigner’s current visa;
3. Companies that were previously suspended or struck-off are not able to issue recommendations. They may only do so after one year of compliance of the Myanmar Companies Law 2017 (MCL);
4. Inform DICA of any change of local address of the foreigner; and
5. Submit supporting documents. Examples include a CV Form of the foreigner, tax returns/audit reports, previous income tax payments (if the foreigner requests a further extension of visa), Employment Contract, Terms of Reference and job description of the employee’s duties, and evidence of kinship of the relevant foreigner.

Resident foreigners who fail to obtain the permit will risk imprisonment of a term which may be between six months to five years, or with a fine of minimum of Myanmar Kyats (MMK) 1,500, or both.

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Insolvency Law Update

The Directorate of Investment and Company Administration (DICA) issued an announcement regarding the liquidation of companies with effect from 1 September 2022 in accordance with the Myanmar Insolvency Law 2020 (MIL). Based on the announcement, Form W-01 (Notice of appointment of liquidator for company/body corporate) and Form W-09 (Liquidator’s final account of winding up of a company/body corporate) are now to be used to register and submit winding up applications through Myanmar Companies Online (MyCO).

Ongoing company liquidation cases can still use J Forms (Forms relating to winding up), but going forward W Forms will be used for the winding up of a company.

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Central Bank of Myanmar (CBM) Updates

Change of Official Exchange Rate

On 5 August 2022, CBM increased the official reference exchange rate of Myanmar Kyat ("MMK") to US Dollars, from the previous rate of MMK 1,850 per US$1 to MMK 2,100 per US$1.  

Relaxation of Conversion Requirement for Export Earnings

On 5 August 2022, CBM issued Notification No. 36/2022 ("Notification 36") clarifying its foreign currency conversion requirement for exporters. Notification 36 specifies that only 65% of income received from exportation is required to be converted to MMK within one day.

On 16 August 2022, CBM further issued Letter No. FE-1/PaKa/1956  instructing authorised dealer banks ("AD Banks") to purchase 65%  of the export balance to comply with the conversion requirement. The remaining 35% of the export balance is to be converted into MMK if exporters do not use it within 30 days. The 35% of the export balance may also be used by the exporter, transferred to non-AD entities or sold to AD Banks, for which the approval from the Foreign Exchange Supervisory Committee (FESC) must be sought. In fact, Letter No. FE-1/PaKa/2071 which was issued on 26 August 2022 requires the AD Banks to report how the 35% of export earnings are used.

In addition, Letter No. FE-1/PaKa/1957 issued on the same day provides instructions stating among others that entities exempted from Notification 12/2022 are able to freely utilise 100% of their foreign currency earnings. The Notification No. 12/2022 dated 3 April 2022 states foreign currency account holders can no longer hold their foreign currency for more than one day.

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CBM Allows Foreign Entities to Own Non-Bank Financial Institutions

On 13 July 2022, the Central Bank of Myanmar ("CBM") issued Directive No. 8/2022 ("Directive") allowing 100% foreign ownership of the non-bank financial institutions ("NBFIs"). This applies to both NBFIs operating in a Joint Venture (JV) with a Myanmar entity or 100% foreign owned NBFIs. The Directive also prescribes the requirements for a Foreign Financial Institution ("FFI") when establishing an NBFI, as well as the requirements an FFI must meet when entering into an NBFI JV.

Apart from the standard requirements of providing documentation such as financial statements, business plans and Board of Directors’ resolutions, some of the key factors that must be satisfied to operate an NBFI is that the investor must be a financial institution that has been operating for a minimum of three years and that the wholly-owned NBFI must have a minimum capital of at least US$10 million, along with documentation evidencing the transfer of capital contribution from any offshore banks to domestic banks. Once the requirements are met, CBM will issue a registration certificate allowing the FFI to operate an NBFI. The estimated timeline to be notified of the approval or rejection of the application is six months.

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