1. Constitutional Amendment Bill to be discussed when parliament resumes session
The 12th parliament session resumed on 11 May 2015. A senior member of the Constitutional Amendment Implementation Committee confirmed that the long-awaited constitutional amendment bill, along with amendments to the National Education Law and a constitutional referendum bill, will be debated during the session. The committee submitted its draft amendment bill to parliament in January, proposing changes to 210 sections of the constitution, including section 59(f), which bars opposition leader Daw Aung San Suu Kyi from being eligible for presidency. However, the bill has not yet been tabled for debate by Pyidaungsu Hluttaw Speaker Thura U Shwe Mann and members of parliament have supported this decision, saying no significant changes to the 2008 constitution can be made until an agreement is reached between Myanmar’s main political players, especially since the military has a veto over the proposed constitutional change through its hold of 25% of seats in parliament. Six-way talks between President U Thein Sein, Commander-in-Chief Senior General Min Aung Hlaing, Thura U Shwe Mann, Amyotha Hluttaw Speaker U Khin Aung Myint, Daw Aung San Suu Kyi and U Aye Maung of the Rakhine National Party, representing ethnic minorities, were held on 10 April 2015. During the talk, the points that were agreed on were the framework and format of the meeting as well as the holding of the next dialogue.
2. Foreign investment in Myanmar doubles in 2014-15
Foreign direct investment (FDI) in Burma reached a record US$8 billion during the 2014-2015 fiscal year, more than doubling the FDI compared to the year before, according to the Myanmar Investment Commission (MIC). Aung Naing Oo, director-general of the Directorate of Investment and Company Administration (DICA) said the MIC is predicting that FDI into the country will reach a total of around US$6 billion during the next fiscal year.
The DICA figures indicate that the top five sectors attracting the most FDI were oil and gas (US$3.2 billion), transport and telecommunication (US$1.6 billion), manufacturing (US$1.5 billion), real estate (US$780 million) and hotels and tourism (US$357 million). The DICA figures also indicate that Singapore-listed companies were the largest investors in 2014-2015 with US$4.2 billion, Hong Kong-based firms were the second-largest with US$850 million and China-registered companies were the third-largest with US$516 million.
3. Parliament aims to enact the Banks and Financial Institutions Law this year
It has been reported that the Myanmar parliament aims to enact the Banks and Financial Institutions Law later this year, in advance of the 2015 general election. The government began drafting the law in 2013 and it was discussed for the first time in parliament in November 2014. However, the length and complexity of the draft law, in addition to the election preparations, has so far delayed it from being pushed through parliament. The law was drafted with technical assistance from the World Bank and aims to bring the Myanmar banking and finance sector in line with modern financial complexity and international standards of good governance. However, the draft law has met a degree of controversy with opponents arguing that it does not suit the realities of the banking landscape in the country and gives too much power to the Central Bank of Myanmar at the expense of smaller local banks.
4. Union Tax Law – Lower tax rates for non-residents
The Union Tax Law came into effect on 2 April 2015 with retroactive effect from 1 April 2015. The key changes include: (i) a reduction in corporate income tax rate for non-residents from 35% to 25%; (ii) a reduction of capital gains tax for non-residents from 35% to 25%; (iii) introduction of progressive personal income tax for non-residents with rates from 0% to 25% instead of a flat rate of 35%; and (iv) introduction of a flat 10% rate on income for lease of land or rental of property.
5. World Bank and Myanmar Government announce US$2.8bn Country Partnership Framework focussing on infrastructure and SMEs
The World Bank and the Government of Myanmar have announced their 2015-2017 Country Partnership Framework (CPF). Pursuant to the terms of the CPF: (i) the World Bank will provide up to US$1.6 billion in credits, loans and grants, as well as technical assistance and knowledge from the International Development Association (IDA), the bank’s fund for the poorest countries; (ii) Myanmar will receive up to US$1 billion in investments and US$20 million in technical assistance from the International Finance Corporation (IFC), the private sector arm of the World Bank Group; and (iii) private lenders and investors in Myanmar will benefit from political risk insurance offered by the bank’s Multilateral Investment Guarantee Agency (MIGA).
The CPF strategy will focus on increasing economic opportunities and access to basic services such as healthcare, reducing vulnerabilities, and empowering poor rural communities to participate in the economy and the governance of the country. The World Bank said it also aims to increase the number of people, micro-enterprises, and small and medium enterprises using financial services by 200,000, and to facilitate financing of up to US$40 million by 2017, and to help the government mobilise US$150 million in private investment by creating a business environment conducive to private sector investment.
6. Competition Law Insight – A growing trend
The Competition Law No 9/2015 was enacted on 24 February 2015 and serves, amongst other things, to prohibit anticompetitive agreements and abuse of market of market power. The Competition Law will also introduce a merger control regime and regulate unfair trade practices. Further regulations to implement the Competition law are expected to be published sometime this month.