Creating collateral security packages

Types of collateral

What types of collateral and security interests are available?


Project finance in Myanmar has developed relatively recently, after the registration of branch offices by foreign banks in 2015. Myanmar banks did not have the capacity to provide the services required to support major project financings, and very few individuals had bank accounts. The Central Bank of Myanmar (CBM) had not developed the regulatory framework for foreign banks to provide foreign financing.

Myanmar legislation includes 13 volumes of codified laws from the period 1818 to 1954 (the Burma Code), the Burma (Myanmar) Courts Manual, and numerous special laws, notifications, rules, regulations and orders enacted from time to time.

Since 2011, more than 300 laws have been enacted, a number of which are intended to promote investment into Myanmar. Such laws include the Myanmar Investment Law 2016 (MIL) (under which both foreign and domestic investors may apply for incentives) and the Myanmar Special Economic Zone Law 2014 (MSEZL).

Prior to 2015, there was no branch or subsidiary of a foreign commercial bank in Myanmar. Preliminary approval was given in 2014 to nine foreign banks to open branch offices. As at July 2019, 13 foreign bank branches are operating. There are four state-owned banks, 24 privately owned banks and 51 representative offices of foreign banks.

There is no law prescribing what securities are enforceable under loan agreements. There is no consensus among law firms in Yangon.

Forms of security over immovable property

The following list of securities may be applicable to immovable property:

  • registered or equitable mortgage or a charge, if the land is transferable. Six types of mortgages are provided for, with varying enforcement processes. In practice, the ‘mortgage by deposit of title deed’ or ‘simple mortgage’ are typically used;
  • assignment of land lease agreements; and
  • Onshore Security Agent Agreement (if mortgagee is a foreigner).
Forms of security over movable property

The following list of securities may be enforceable under the Contract Act, the Myanmar Registration Act, the Myanmar Stamp Act, the Transfer of Property Act, etc.

  • Security Assignment Agreement (a combination of mortgage, charge and floating or fixed charge);
  • mortgages;
  • charges (eg, a charge over accounts);
  • transfer of actionable claims (eg, assignment of insurance, assignment of PPA);
  • floating charges; and
  • pledges with possession with pledgee.

Other forms of security include the following:

  • a negative pledge (within the loan agreement);
  • guarantees;
  • a charge on shares (share pledge agreement); and
  • offshore security, including guarantees, equity support agreements, assignments of foreign bank accounts.

There is no single universal or similar security interest over all present and future assets of a company.

The new Myanmar Companies Law (2017) (MCL) came into force on 1 August 2018, replacing the Myanmar Companies Act (1914). The MCL does not expressly provide for the pledge of shares. Most Myanmar companies have no share register book, but are required to have one since 1 August 2018 under the new MCL.

As a general rule, foreigners are prohibited from owning or taking any interest in immovable property. Foreigners may not own land in Myanmar. Foreigners may lease land for one year, renewable. Under the MIL, investors may apply for lease land or buildings up to an initial period of 50 years, plus two 10-year extensions.

If a lease of land is to be mortgaged to a foreigner, it must be held by a Myanmar bank as a security agent on behalf of the foreign bank or investor, and be approved by the Myanmar Investment Commission (MIC).

To enforce security or guarantees in court, if the security or guarantee is in English or another foreign language, a Myanmar translation certified by a notary public will be required at the time of initiating a court process.

Collateral perfecting

How is a security interest in each type of collateral perfected and how is its priority established? Are any fees, taxes or other charges payable to perfect a security interest and, if so, are there lawful techniques to minimise them? May a corporate entity, in the capacity of agent or trustee, hold collateral on behalf of the project lenders as the secured party? Is it necessary for the security agent and trustee to hold any licences to hold or enforce such security?

Collateral security interests are subject to stamp duty (prior to or on date of signing) and registration fees, with an exception made in some cases for security documents retained offshore, or with a government regulator.

The Stamp Duty Act provides for 65 categories of documents. A loan agreement has been interpreted to fall under ‘bond’, 0.5 per cent with no ceiling, and a 10x penalty for late stamping. Stamp duty rates on most other documents are nominal. In the case of a document in Myanmar, stamp duty must be affixed prior to or on date of signing. In the case of a document signed abroad, stamp duty must be paid within three months of being brought into Myanmar; notarisation, consularisation and proof of date of import of document are recommended.

The Directorate of Investment and Company Administration (DICA) introduced online processes for registration of companies and other business. The MCL provides which documents are required to be registered at DICA, to be done within 28 days of being signed (if signed in Myanmar) or within 28 days of import of document (if all parties sign offshore).

The Registration Act 1909 provided that certain financing documents be registered at the Office of Registration of Deeds (ORD). Such documents included mortgages over immovable property. A new Registration Act was enacted on 20 March 2018, and became effective in March 2019. It makes registration mandatory for security documents, such as mortgages and assignments relating to immovable property, with certain exemptions.

Each item of collateral needs to be individually identified in each security document. There is no recent precedent on enforcement of security documents.

There are concepts of agent and trust in the Burma Code, but they are little used, in practice. See question 1 regarding the need for a Myanmar bank to act as security agent for foreigners in immovable property.

There is no parallel debt clause concept.

Assuring absence of liens

How can a creditor assure itself as to the absence of liens with priority to the creditor’s lien?

Liens are not centrally recorded. Searches are difficult, and require a board resolution of the Myanmar company to search for records at DICA, ORD, land records offices, etc.

Prior to 1 August 2018, most Myanmar companies had no share register books, making it difficult to track pledges of shares. Share register books are now required but current practice is not known.

Searches of records at DICA have become faster and more efficient since the introduction of an online filing system on 1 August 2018. We are not informed which items (other than name directors, shareholders and registration certificates) will be available to search online; currently, other information is not open for searches.

A release of a security interest requires consent of the secured party, and in most cases registration with the same regulators with which the security was registered, (eg, DICA, ORD, land records offices). The MCL provides forms to file security deeds for registration, and to release such deeds.

Enforcing collateral rights

Outside the context of a bankruptcy proceeding, what steps should a project lender take to enforce its rights as a secured party over the collateral?

Myanmar is not a litigious jurisdiction and the Myanmar court system is not transparent. There are few precedents regarding enforcement of collateral. The steps to initiate a case to enforce collateral include filing a civil suit at the court of competent jurisdiction for recovery of debts under the Civil Procedure Code.

After obtaining a decree, an application must be filed to the court that passed the decree for enforcement of the decree or order. Execution may be effected either against the person or property or both, of the judgment debtor.

A Myanmar court will not accept jurisdiction over a contract governed by foreign law, but will accept jurisdiction to enforce a foreign judgment and a foreign arbitration award (subject to conditions).

Enforcing collateral rights following bankruptcy

How does a bankruptcy proceeding in respect of the project company affect the ability of a project lender to enforce its rights as a secured party over the collateral? Are there any preference periods, clawback rights or other preferential creditors’ rights with respect to the collateral? What entities are excluded from bankruptcy proceedings and what legislation applies to them? What processes other than court proceedings are available to seize the assets of the project company in an enforcement?

See the new Myanmar Companies Law (2017) Part 5 - Winding Up, sections 292 to 412. Three modes of winding up are prescribed: by the court, voluntary, or subject to supervision of the court. There is a new bill on Insolvency Law pending, which, when enacted in 2019, will repeal the Rangoon Insolvency Act (1909), the Burma Insolvency Act (1920) and Part 5 of the MCL.

The new law has been drafted with input from the Asian Development Bank (ADB). It is based on common law precedents, but reflects modern international best practice. It will address both corporate and personal insolvency, including specific provisions for micro and small to medium-sized enterprises. They will have the option of liquidating or opting for rehabilitation proceedings. The draft law includes adoption of the model law on cross boarder insolvency.

In the winding up of an insolvent company the same rules shall apply and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable and to valuation of annuities and future contingent liabilities as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent. (section 390, MCL)

In winding-up the following shall be paid in priority to all other debts: (section 391, MCL):

  • all revenue, taxes, cesses and rates, whether payable to the government or to a local authority;
  • all wages or salaries of any clerk or servant in respect of service rendered to the company within the previous two months;
  • all wages of any labourer or worker whether payable for the time or piecework, in respect of services rendered to the company within the previous two months;
  • compensation payable under the Workmen’s Compensation Act or other applicable law in respect of the death or disablement of any officer or employee of the company;
  • all sums due to any employee from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of employees maintained by the company; and
  • the expenses of any investigation held.

The foregoing debts shall rank as follows:

  • equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportion; and
  • so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge.

There is a risk if the debts of the borrower, security provider or guarantor to the lenders exceed the recoverable assets of the company. Lenders can reduce risks by securing security interests (ie, ‘a charge, lien, mortgage or pledge or any other form of security interest prescribed or recognised under the MCL or other applicable law.’ section 1 of the MCL (xxxv)). For information as to mortgages, charges, etc., see sections 229-253 of the MCL.

According to the MCL, no entities are excluded from bankruptcy proceedings.

Foreign exchange and withholding tax issues

Restrictions, controls, fees and taxes

What are the restrictions, controls, fees, taxes or other charges on foreign currency exchange?

Regulatory approvals are required by foreign lenders wishing to make loans, including the approval of CBM and MIC.

The Foreign Exchange Management Law 2012 regulates current account payments (which do not require CBM approval) and capital account payments (which require prior approval from CBM).

The Financial Institutions Law No. 20/2016 was enacted in January 2016. This provided specific rules on risk management requirements, Basel III compliance, anti-money laundering issues and prudential requirements. The rules lay out a wide range of guidelines for commercial, state-owned, private and foreign banks. There are also rules for non-bank financial institutions, and rules governing development banks, although such entities do not yet exist in Myanmar.

Each form of security or guarantee must be properly stamped and registered. There is no blanket approval available.

There are two key investment laws in Myanmar.

Myanmar Investment Law (2016)

The new MIL combined and replaced the Myanmar Citizens Investment Law 2013 and Foreign Investment Law 2012.

Assuming the project falls under the MIL, there will be a number of obligations to be satisfied to secure the tax and non-tax incentives available to a particular project. There is no standard package of incentives; they depend upon the nature of the business, investment, location, etc.

Drafted in consultation with the International Finance Corporation, the new Myanmar Investment Law (2016, Notification No. 4) was enacted on 18 October 2016. Implementing rules were passed on 30 March 2017 by Notification No. 35/2017 by the Ministry of Planning and Finance.

There are two types of MIC approval, depending on the nature of the investment; either approval by way of a ‘MIC permit’ or approval by way of MIC endorsement (which is expected over time to be a simpler process than under the former investment regime).

See question 15 for information regarding tax holidays and incentives.

The basic prohibition that foreign invested companies cannot lease immovables for more than one year still applies, with the following exceptions:

A lease of up to 50 years, with option for two 10-year extensions, may be granted to MIC permit holders and MIC endorsement holders.

Longer lease terms may be granted in ‘less developed and remote regions’, per details in MIC Notification No. 10/2010.

Remittance of funds

The MIL clarifies the categories of funds that may be remitted offshore, provided that the company remitting the funds has complied with all tax obligations in respect of the funds transferred.

Expropriation guarantee

The MIL contains an express guarantee against expropriation, as well as nationalisation, with exceptions set out in the law, including for public interest.


Foreign investors have more hiring flexibility, since the required local employee hiring ratios of the former Foreign Investment Law have been abolished. The MIL retains provisions on the recruitment and capacity building of local employees.

Myanmar Special Economic Zone Law (2014)

On 23 January 2014 the MSEZL was enacted, and applies to all SEZs. It provides for a Central Body, Central Working Body and a Managerial Committee for each SEZ.

A SEZ may have several zones: Free, Business Development, Promotion and other Zones.

Investors within an SEZ are offered the incentives described in question 15.

Investment returns

What are the restrictions, controls, fees and taxes on remittances of investment returns (dividends and capital) or payments of principal, interest or premiums on loans or bonds to parties in other jurisdictions?

Restrictions on payments abroad or repatriation of capital by foreign investors include the registration of loan or equity investment by foreign investors with CBM and MIC (if applicable), payment of all Myanmar tax due, and withholding tax according to the applicable double tax treaty.

Foreign earnings

Must project companies repatriate foreign earnings? If so, must they be converted to local currency and what further restrictions exist over their use?

There is no requirement to repatriate foreign earnings. If foreign earnings are repatriated into Myanmar, they may be deposited in a foreign currency account, subject to approval of CBM.

May project companies establish and maintain foreign currency accounts in other jurisdictions and locally?

It is permissible for a project company to maintain offshore foreign currency accounts with consent of CBM.

Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

The Ministry of Finance and Planning issued Notification No. 47/2018 on 18 June 2018, which prescribes withholding tax rates. There is no withholding tax for interest paid to residents and resident foreigners, but there is 15 per cent for non-resident foreigners. Withholding tax on interest under most double tax treaties is generally 10 per cent (or 8 per cent on some loans from Singapore).

Myanmar is a party to eight double tax treaties with India, Laos, Malaysia, South Korea, Singapore, Thailand, the United Kingdom and Vietnam.

Myanmar is a party to 12 bilateral investment treaties with China, India, Japan, Laos, the Philippines, Thailand, Vietnam, South Korea, Kuwait, Indonesia, Israel and the United States, and the ASEAN Comprehensive Investment Agreement.

The Usurious Loan Act was enacted in 1918 and if the court has reasons to believe that the interest is excessive, the court may exercise the power to reopen the transaction and to create a new obligation. However, it is very rarely applied in practice.

Interest charged by foreign and Myanmar banks is subject to a ceiling of 10 per cent, with some exceptions between 8 per cent and 13 per cent (the ceiling on the CBM website). The Myanmar bank in question must be consulted.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

In the past, insurance had to be procured from the sole state-owned insurance organisation, Myanma Insurance Corporation.

Under the MIL and Myanmar Investment Rules 2017, an investor may procure insurance from any insurance company in Myanmar.

Recently, Myanma Insurance issued a number of licences to Myanmar companies. It is not clear whether standard cover for contractors’ all risks (CAR), delay in start-up and business interruption is available, nor what rules apply to reinsurance by foreign insurance companies.

The Myanmar Insurance Law, section 12(c) permits reinsurance in and outside of Myanmar. Myanma Insurance provides reinsurance cover, according to the Ministry of Planning and Finance.

Insurance policies over project assets are payable to foreign creditors, subject to the investments by foreign creditors having been properly approved and registered.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

Foreign employees must obtain visas and in some cases obtain ‘stay permits’.

Foreign investors have more hiring flexibility, since the required local employee hiring ratios of the former Foreign Investment Law have been abolished. The MIL retains provisions on recruitment and capacity building of local employees.

A Workplace Safety and Health Law was enacted on 15 March 2019, but will not come into force until issue of a notification. There are at least 16 labour laws. See Permanent Residence of Foreigner Rules issued on 18 September 2014.

Equipment restrictions

What restrictions exist on the importation of project equipment?

Import of goods is subject to customs duty. Import of certain project equipment may be subject to restrictions, but current contractors have found solutions in most cases assuming they received approval from MIC.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

The MIL contains an express guarantee against expropriation, as well as nationalisation, with exceptions set out in the law, including for public interest.

Fiscal treatment of foreign investment


What tax incentives or other incentives are provided preferentially to foreign investors or creditors? What taxes apply to foreign investments, loans, mortgages or other security documents, either for the purposes of effectiveness or registration?

Tax holidays and incentives are no longer automatic, and instead depend on the geographic location of the investment, the sector, and the MIC’s discretion.

Investors must apply to the MIC separately for any tax exemption. Tax exemption under the MIL will still be available, but instead granted to investors at the discretion of MIC and under the provisions of MIC Notification.

A new zoning system was introduced, pursuant to which investments in certain regions or zones (the locations and details are prescribed in MIC Notification No. 10/2017 dated 22 February 2017) granted different corporate income tax exemptions. Under the new zoning system:

  • Zone 1 (representing the least developed areas of Myanmar), will attract the greatest potential income tax holiday of up to seven years;
  • Zone 2 will attract an income tax holiday of up to five years; and
  • Zone 3 (representing the most developed areas of Myanmar) attracts a tax holiday of up to three years.

Tax exemptions granted will also depend on whether the project falls within a ‘promoted sector’, which is prescribed in MIC Notification No. 13/2017 dated 1 April 2017.

Investors within an SEZ are offered the following incentives:

  • 100 per cent foreign ownership.
  • The right to lease land for 50 years, with a 25-year renewable period.
  • Seven-year income tax exemption for businesses in Exemption Zones and for Exempted Businesses; five-year income tax exemption for Investment Businesses in Promotion Zones or other businesses in an SEZ; five-year income tax reduction of 50 per cent following any exemption period; the reduction can be extended for another five years for profits that are reinvested.
  • No customs duties in Free Zones and for materials and equipment used during construction and exemptions or relief for other imported materials or equipment.
  • Investors will pay customs on raw materials and goods used for production, but may apply for reimbursement if the finished goods are used in the SEZ.
  • The right to carry forward losses for five years after incurred.
  • Certain reliefs and exemptions from VAT and commercial tax.
  • The right to open foreign currency accounts with approved banks.

Government authorities

Relevant authorities

What are the relevant government agencies or departments with authority over projects in the typical project sectors? What is the nature and extent of their authority? What is the history of state ownership in these sectors?

Myanmar has a number of central and regional regulators. See question 20 and the following:

  • Petroleum: Ministry of Electricity & Energy (MoEE), Myanma Oil & Gas Enterprise (MoGE). (See Lexology GTDT Oil Regulation 2019 and Lexology GTDT Gas Regulation 2019).
  • Mining: Ministry of Natural Resources Environmental Conservation (MoNREC). (See Lexology GTDT Mining 2019).
  • Power projects: Ministry of Electricity and Energy, Myanma Electric Power Enterprise.
  • Manufacturing: Ministry of Industry: Private Industrial Enterprise Law (1990).

Regulation of natural resources


Who has title to natural resources? What rights may private parties acquire to these resources and what obligations does the holder have? May foreign parties acquire such rights?

The state owns the title to all natural resources, but there are numerous laws and practices under which private parties can acquire rights.

The State-Owned Enterprises Law (1989) provides that 12 activities may only be undertaken by a state-owned economic enterprise, or to joint ventures between the government and private parties.

Royalties and taxes

What royalties and taxes are payable on the extraction of natural resources, and are they revenue- or profit-based?

The following are payable on petroleum under the current forms of production sharing xontracts (PSC):

  • royalty: 12.5 per cent;
  • income tax: 25 per cent;
  • special goods tax: 8 per cent of gas;
  • bonuses (signature, production); and
  • production split: progressive per rate of production 60 per cent to 90 per cent.

The holder of a mineral production permit must pay royalties to the government according to the Myanmar Mining Law. The rates are as follows: 5 per cent, 3 per cent or 2 per cent, subject to types of minerals.

Dead rent

The holder of the permit shall pay dead rent for the land related to the permit in accordance with the rate specified. The rates are subject to the types of operation and minerals.

Income tax

Income tax rates depend on whether the join venture company is a ‘resident’ (ie, formed under Myanmar law) or a non-resident formed under a law other than Myanmar law, such as a ‘branch office’. For resident companies, the income tax is 25 per cent of profits. For non-resident companies, the income tax has been 25 per cent since April 2015. Foreign individuals engaged by special permission in a state-sponsored project, enterprise or undertaking are subject to income tax at a 20 per cent rate.

Export restrictions

What restrictions, fees or taxes exist on the export of natural resources?

Under PSC’s (2013) the domestic requirement for petroleum is a 20 per cent oil and 25 per cent gas of contractor’s share of profit tax on petroleum.

There are no taxes or fees to be paid in regards to mining products.

Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

Project documents need to be adapted to specific Myanmar laws and practices, including permits, licences and government approvals. See ‘due diligence issues’ below. With a few exceptions, project documents may be in English, be governed by foreign law and adopt international arbitration for dispute resolution.

There is no direct translation in Myanmar for the term ‘loan agreement’. Besides the absence of specific provisions on loan agreements in the Burma Code, there were issues to do with applicable stamp duty. The current Stamp Duty Act provides for 0.5 per cent stamp duty, and a 10x penalty for late affixing of duty stamps, under the category ‘bond’. Regulatory approvals are required for foreign loans from MIC (for MIC companies) and CBM. There is a 15 per cent withholding tax rate on interest on offshore loans.

Specific security documents are required, some of which may be governed by foreign law assuming one or more foreign shareholders, etc. Requirements for stamp duty and registration of each security document need to be determined.

Following the effective date of the MCL on 1 August 2018, all Myanmar companies had to register online with DICA.

Regulatory agencies: Under the 2008 Constitution, which became effective on 31 January 2011 (first convening of the new Union Assembly), the Myanmar Union government includes seven regions, seven states and five autonomous areas.

On 1 April 2016, the number of ministries was reduced from 36 to 20. Subsequently five additional ministries were established.

Foreign investors often deal with MIC and DICA in Yangon and government regulators in Nay Pyi Taw, but need to understand the local laws and regulations in one or more of the 19 states, regions or autonomous areas of Myanmar.

There are at least 11 types of land, and there often is a need to upgrade titles, as follows:

  • state-owned land;
  • freehold land;
  • grant land;
  • farm land;
  • religious land;
  • vacant land, fallow land and virgin land;
  • town land;
  • village land;
  • forest land;
  • cantonments; and
  • garden land.

There are at least 15 laws applicable to land, as follows:

  • the Transfer of Property Act 1882;
  • the Land Acquisition (Mines) Act 1885 (Repealed) by Law No. 19/12 the Law revoking the Land Acquisition (Mines) Act, on 1 November 2012;
  • the Upper Burma Land and Revenue Regulations 1889;
  • the Land Acquisition Act 1894, latest amendment issued on 13 July 2015;
  • the Code of Civil Procedure 1908;
  • the Water Power Act 1927;
  • the Disposal of Tenancies Law 1948;
  • the Transfer of Immovable Property Restriction Act 1987;
  • the Procedures Conferring the Right to Cultivate Land/Right to Utilise Land for Agriculture, Livestock Poultry Farming and Agriculture Purposes 1991;
  • the Forest Law 1992;
  • the Constitution 2008;
  • the Right to Use Land Notification 39/2011;
  • the Farm Land Law 2012 and its rules;
  • the Vacant, Fallow and Virgin Lands Management Law 2012;
  • the Ward and Village Tract Administration Law 2012; and
  • the Myanmar Investment Law 2016, section 50 and its rules.

In each project sector, and in each state, region and autonomous area, there may be numerous laws, rules, regulations, orders and directives to be identified and complied with.

There is an absence of environmental, health and safety law.

The Environmental Conservation Law was enacted in March 2012. Environmental Conservation Rules were issued in June 2014. No Myanmar bank has adopted the Equator Principles.

Due diligence issues include the following:

  • Who is the government counterparty?
  • What is the model form of concession/MoU/JVA with each government counterparty?
  • How will the new Arbitration Law No. 5/2016 (based on UNCITRAL Model Law) be used in practice?
  • What will be the choices of venue for dispute settlement by arbitration?
  • What are choices of governing law?
  • Will government guarantees of the performance of Myanmar counterparties be available?
  • How will acquisition of land for roads and transmission lines be facilitated?
  • What is the scope of business of the new branches of foreign banks which opened in 2015 and 2016?
  • In the case of foreign lenders, there is a requirement for mortgages of immovable properties owned by the borrower to be held by a Myanmar bank as security agent for foreign lenders. Land must be transferable to be mortgaged.
  • There was a requirement for existing companies and branches to re-register after 1 August 2018.
  • There are new forms of company documents under the new Companies Law (2017) effective 1 August 2018.
  • There is a change in fiscal year to 30 September, effective from 2020.

Due diligence requirements and challenges include the following:

  • access to DICA records of Myanmar companies;
  • litigation searches;
  • title deed searches and determination whether the land is transferable;
  • limited electronic capacity of regulators;
  • translations (English and Myanmar);
  • failure to affix stamp duty (prior to or on date of document);
  • failure to register documents;
  • new regulatory practices after change of government 2016; and
  • qualifications in legal opinions on Myanmar law and practice.
Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

Financing and project agreements need to be registered with government authorities (DICA, ORD and land records offices) to be enforceable, with limited exceptions under the new Myanmar Registration Act For Immovable Property.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

A foreign or foreign arbitration award is enforceable by a Myanmar court without a retrial of the merits of the case (subject to conditions).

Myanmar acceded without reservations to become a contracting state of the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards, effective on 15 July 2013.

The Arbitration Law (2016) revoked the old Arbitration Act 1944, which did not recognise arbitration abroad. The new law is based on the UNCITRAL Model Law, and allows enforcement of foreign arbitration awards in Myanmar on certain conditions. Regulations under the Arbitration Law (2016) have not been issued.

Provisions on settlement of disputes by arbitration often provide for foreign arbitration, Singapore International Arbitration Centre (SIAC) arbitration in Singapore being a common resolution. Note that regulations under the new Arbitration Law (2016) have not been issued, and there is no recorded case of enforcement of a foreign arbitration award.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

Assuming one or more foreign shareholders, and no mandatory Myanmar law provision, project agreements are often subject to foreign law, (eg, English, Singapore, Thai).

Project contracts with Myanmar regulators are governed by Myanmar law. Myanmar law includes the laws of the Republic of the Union of Myanmar.

Financing agreements with foreign lenders and Myanmar branches of foreign banks are typically governed by foreign law.

Permits, licences and regulatory approvals, agreements regarding lease of land, procurement from government entities, and pledges of shares of Myanmar companies, are usually governed by Myanmar law.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

Disputes regarding project and financing documents governed by foreign law cannot be heard by a Myanmar court.

Environmental, health and safety laws

Applicable regulations

What laws or regulations apply to typical project sectors? What regulatory bodies administer those laws?

Until 2012, there was no specific law protecting the environment in Myanmar. The 2008 Constitution contains provisions guaranteeing the conservation of natural resources and the prevention of environmental degradation. However, environmental impact assessments were not required for any projects, governmental or private. A number of laws include short provisions prohibiting acts that adversely impact the environment.

Environmental protection generally falls under the aegis of the National Commission for Environmental Affairs (NCEA). The NCEA formulates the government’s environmental policy and sets environmental standards. However, significant budget and resource constraints have compromised the ability of the NCEA to serve its stated purposes. In addition, lack of legislative attention has resulted in few guidelines and little support for NCEA action.

To the extent that environmental regulations do exist, they are organised by sector dealing with mines, forestry and fisheries management separately, which leaves many gaps in the regulatory regime.

The Environmental Conservation Law 2012 was enacted in March 2012. Rules to implement the new Law were announced in 2014. The Environmental Impact Assessment Procedure was passed in 2015 and National Environmental Quality Emission Guideline was passed in 2015. To date, there is no new additional regulation relating to environmental impact.

One of the leading precedents in Myanmar for environmental and social programmes is the 63km long Yadana-Yetagun pipeline corridor through which three natural gas pipelines from Yadana, Yetagun and Zawtika transit to the Thai border for delivery of natural gas to PTT.


Project companies

Principal business structures

What are the principal business structures of project companies? What are the principal sources of financing available to project companies?

A foreign investor may incorporate a Myanmar subsidiary, or register a branch of a company incorporated outside Myanmar. A subsidiary may be wholly foreign owned or may be a joint venture including Myanmar shareholders. They were subject to procedures set out in the 1914 Myanmar Companies Act and instructions of DICA. These procedures were superseded on 1 August 2018. Existing companies and branch offices had to re-register within six months after 1 August 2018, with further extensions until 31 March 2019.

The MIL defines three types of foreign investments that may be eligible to obtain investment privileges: a 100 per cent foreign-owned company; a joint venture with a state-owned economic enterprise or a government organisation; and a foreign investor in a joint venture with a local investor. The minimum required foreign investment capital will depend on the business sector and as decided by the MIC on a case-by-case basis.

Public-private partnership legislation

Applicable legislation

Has PPP-enabling legislation been enacted and, if so, at what level of government and is the legislation industry-specific?

PPPs are not recognised in Myanmar law. There is no specific legislation regarding PPPs. Certain project financings bear some similarities to PPPs.

A notification was issued on 30 November 2018 by the office of the President concerning a PPP as Project Bank Notification. It is neither a law nor a regulation, and provides little guidance.

PPP - limitations

Legal limitations

What, if any, are the practical and legal limitations on PPP transactions?

Qualifications in legal opinions regarding Myanmar law and practice

There are many areas in Myanmar law that are not adequately dealt with and have not been the subject of judicial determination. Administrative interpretation or implementation of the laws of Myanmar is not always consistent or certain and may vary from case to case or with respect to the same facts. Furthermore, there are a number of new laws and regulations being introduced for which there is no prior point of reference. This significantly limits our ability to give definitive information.

While we may refer to policies, practices and customs in this chapter, these are only in relation to prevailing policies, customs and practices of which we are aware as at the date of writing. It is possible that there may be other policies, practices and customs or changes other than those known to us before the date of writing, and which may affect the information expressed.

A sample qualification may read as follows:

Myanmar law includes colonial British laws, codified under the Burma Code (unless specifically superseded, repealed or revoked), and hundreds of specific laws notifications and other secondary laws. However, it is not possible to provide unqualified opinions on the perfection and enforceability of the financing documents under Myanmar law due to limited precedents, unclear law and practice, and lack of experience, certainty and capacity in the judicial and regulatory processes.

PPP - transactions

Significant transactions

What have been the most significant PPP transactions completed to date in your jurisdiction?

Precedent project financings, including one or more government entities or regulators, among others, include the following:

  • Yadana gas pipeline;
  • Yetagun gas pipeline;
  • MICCL S&K copper mine (1997);
  • Shwe gas and oil pipelines (2010);
  • MPRL E&P office building (March 2014);
  • Kempinski Hotel, Yangon (November 2014) (now the Rosewood Yangon Hotel);
  • Myanmar Fiber Optic Communication Network (2015);
  • short-term and long-term loan project financings by Bangkok Bank (Yangon Branch); and
  • Myingyan gas-fired power plant (IFC, ADB and other foreign lenders).


Recent developments

In addition to the above, are there any emerging trends or ‘hot topics’ in project finance in your jurisdiction?

Key developments of the past year30 In addition to the above, are there any emerging trends or ‘hot topics’ in project finance in your jurisdiction?

The laws and practices governing investment in Myanmar continue to undergo rapid changes. The MCL came into force on 1 August 2018, replacing the Myanmar Companies Act (1914). DICA introduced online processes for registration of companies and other business. The new MCL defines a ‘foreign company’ as a company with more than 35 per cent foreign share ownership. A company with no more than 35 per cent foreign share ownership can obtain permits and licences that can be granted only to a Myanmar citizen; it is uncertain whether it can obtain ownership of immovable properties (subject to clarification of sections 228(b) and 464 of the MCL and the Transfer of Immovable Property Restriction Act of 1987).

Regarding oil and gas, there will be a second international bidding for 15 offshore blocks and 18 onshore blocks in 2019. A draft new petroleum law was issued in October 2018. This draft would govern the up-stream oil and gas sector.

See Doing Business in Myanmar dated 30 June 2019 by Myanmar Legal Services Ltd for background information in investing in Myanmar.