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Rajah & Tann Regional Round-Up

your snapshot of key legal developments in Asia

Issue 1 - May/Jun/Jul 2013



MYANMAR

Setting Up an NGO in Myanmar

In the past few years, particularly after Cyclone Nargis in 2008, political shifts in Myanmar have resulted in the country being more receptive to civil society efforts.  This has encouraged many international organisations to set up and operate non-governmental organisations ("NGOs") to assist in the development and humanitarian efforts in the Golden Land.

NGOs in Myanmar have to register under the State Law and Order Restoration Council Law No. 6/88 of September 30 1988. The official "Guidelines for UN agencies, International Organizations, NGO/INGOs” ("Guidelines") issued by the Myanmar government provide that all international NGOs should officially register with the Ministry of Home Affairs and sign a basic cooperation agreement with the Union of Myanmar with respect to the proposed project.  All aid funds for the project should be channeled through the Myanmar Foreign Trade Bank. NGOs are required to inform the Ministry of National Planning and Economic Development, Ministry of Foreign Affairs, Ministry of Home Affairs and any other relevant Ministries when they open or close their offices.

At the moment, not many international NGOs have officially registered. Most of them operate under a framework agreement with the government of Myanmar, for example, by signing a Memorandum of Understanding or a Letter of Agreement with the relevant Ministry in charge of the sector in which they are operating.

In terms of funding, there are three alternative ways in which monies may be brought into Myanmar by an international NGO. Firstly, funds may be sent through the Myanmar Foreign Trade Bank, which is the official method of currency exchange. Secondly, foreign currency can be exchanged into kyat and brought into Myanmar as cash. The final method for funding relies on the informal banking system known as the "Hundi System". This is where an individual or organisation wires foreign currency to a Hundi dealer overseas who then converts the foreign currency to kyat at the market exchange rate and wires it to the intended recipient.

NGOs in Myanmar typically hire both foreign and local staff.  The Guidelines prescribe various official approvals and requirements for the appointment of NGO staff. All persons employed in and carrying out work in Myanmar will be protected by the employment laws in Myanmar. It would be prudent to have the employment contracts of these workers reviewed by a Myanmar-qualified lawyer.

The best approach to adopt in setting up and operating an NGO in Myanmar will to a large extent depend on the nature and objectives of the NGO. As more NGOs find their place and purpose in this new frontier, one can, at the same time, expect greater clarity, transparency and flexibility in the regulatory framework surrounding the registration and operations of NGOs.


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Banking Sector Developments

As part of a concerted effort on the part of the Myanmar government to modernise the country's developing financial sector, a number of recent major reforms have been made. Developments in the banking sector have been particularly noteworthy, as a relaxation in regulation and control seems to indicate the opening up of the industry to more international participation.

Myanmar President Thein Sein has signed a law giving the Central Bank of Myanmar (“CBM”) more autonomy from the Finance Ministry. There has not been any public announcement on the details of the new legislation including the date of its coming into operation, but a CBM bank official has stated that the new law would make the central bank an independent body.

Myanmar will have to adopt rules and regulations governing the country's central monetary authority within three months of the law coming into force.  Currently, foreign banks are not permitted to operate in Myanmar. However, the government has indicated that these regulations may provide foreign banks with opportunities to participate in Myanmar's banking industry, in order to attract foreign investment into the financial system. Deputy Finance Minister Maung Maung Thien has said that regulations allowing foreign banks to operate in Myanmar through joint ventures are being finalised. He also shared that the government is considering allowing foreign banks to buy stakes in local banks.

These reforms are part of a series of economic and political reforms advanced by President Thein Sein, who was appointed in March 2011 as first civilian president after nearly half a century of military rule.  These initiatives will pave the way for the development of the country’s burgeoning banking sector.  Last year, Myanmar re-organised its foreign exchange system to enhance trade and investment in the country.


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New York Convention Takes Effect

Myanmar deposited its instrument of accession to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention") with the Secretary General of the United Nations on 16 April 2013. The Convention took effect on 15 July 2013.

With the coming into operation of the Convention, foreign investors in Myanmar now have the option to use neutral arbitration forums outside Myanmar to resolve contractual disputes that may arise between them and their Myanmar counterparts. They will also be able to enforce international arbitration awards against assets and properties located in Myanmar.

Myanmar's decision to accede to the Convention is a welcome step towards opening up to the arbitration community and laying down a more transparent dispute resolution mechanism in the country.  The domestic laws to bring the Convention into force have not been passed by the legislature yet, although this is anticipated to take place within the next few months.  Although it remains to be seen how the provisions of the Convention will be incorporated into domestic law, and how the judiciary will deal with enforcement actions, Myanmar’s accession will offer some comfort to foreign parties looking to explore business opportunities in the country.


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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:

Chester Toh
Director
D +65 62320220
chester.toh@rajahtann.com

Jainil Bhandari
Director
D +65 62320601
jainil.bhandari@rajahtann.com

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