Legal system

How would you explain your jurisdiction’s legal system to an investor?

Myanmar has a hybrid legal system comprising colonial-era statutes that codified English common law, modern legislation developed by itself, and customary laws, in particular of the family and inheritance.

Certain common law equitable principles are also available in Myanmar under the Specific Relief Act of 1877. For example, injunctions are available in particular circumstances, such as where compensation would not afford an adequate remedy.

The position regarding equitable rules more broadly is less clear because, unlike England, Myanmar never had courts of equity. However, section 13(3) of the Burma Laws Act 1908 requires the courts to make their decisions ‘according to justice, equity and good conscience’ in the absence of any other applicable law. While there are few recent recorded cases regarding the application of this provision, and it is not possible to test how it would be applied by a court today, on the face of it, it gives the courts a very broad discretion.

Note more broadly that Myanmar has a developing legal system, and lacks clear precedents to confirm the legal position in many areas. Since the country opened to foreign investment in 2011, the Myanmar government has been developing its understanding of, and administrative practices regarding, its laws, in parallel with reforming and updating such laws. As a result, the guidelines and regulatory practices of Myanmar government agencies may conflict with the terms of the law itself.

Contract law

Myanmar’s contract law is based on English common law, as codified in the 1872 Contract Act. Under this law, a contract will be valid if freely made by competent parties, for a lawful consideration and object, whether it has been reduced to writing or not. Where a contract has been reduced to writing, however, under Myanmar’s 1872 Evidence Act generally only the written agreement is admissible to prove its terms.

Property law

It is generally understood that the national legislature has the right to legislate in relation to property in Myanmar. This is because Myanmar’s 2008 Constitution does not specifically allocate responsibility for this to any level of government. However, according to article 98 of the Constitution, legislative powers not enumerated in Schedules 1, 2 and 3 (which set out the legislative competence of the national, regional and state legislatures, and leading bodies of self-administered areas or divisions) are vested in the national legislature. Clause 6(h) of Schedule 2 also emphasises the national legislature’s role by providing that regional and state legislatures can legislate with respect to housing estates and buildings in their jurisdiction, provided that they are consistent with national laws. Article 37(a) of the Constitution also states that the Myanmar state is the ultimate owner of all lands and natural resources in Myanmar.

In terms of the forms of private property rights, a limited amount of freehold land exists in parts of Yangon and Mandalay. Given the scarcity of freehold land in Myanmar, generally the most secure form of land tenure available is ‘grant land’, which is leasehold land owned by the Myanmar government and leased to private parties on a long-term basis. Although technically grant land is leasehold land, it is widely considered to be analogous to freehold land in Myanmar, as there is a high expectation that upon the expiry of the leasehold interest in such land, it will be automatically rolled over.

Because the main form of land available in Myanmar is grant land, where we refer to transfers of land in this chapter, we refer to assignments of the leasehold interest, or sublease (such agreements are referred to collectively as Transfer Agreements).

While in some countries, such as Japan, buildings can be owned separately from the land on which they are built, in Myanmar, similar to other common law countries, buildings and other fixtures on land are regarded as forming part of the land on which they are built, and in principle cannot be owned separately. The 2016 Condominium Law described in question 18 is an exception to this.

For completeness, there are also a number of specific-use land categories, such as farmland, which is used for agricultural purposes, or vacant, fallow and virgin land, which is abandoned farmland or wild land. It is possible to obtain a reclassification of certain specific-use lands to enable a landowner (or purchaser) to use such land for a different activity. For example, farmland can be used for a purpose other than farming with permission from the government under the Farmland Law of 2012.

Land records

Does your jurisdiction have a system for registration or recording of ownership, leasehold and security interests in real estate? Must interests be registered or recorded?

Instruments that create or assign rights to immovable property valued above around US$65, and leases of immovable property for a term of more than one year, or fixing an annual rent, must be registered under the 2018 Registration of Instruments Law, unless they relate to a land grant from the Myanmar government. Failure to register such instruments will affect their validity. Note that this is not a system for registering title to land and does not guarantee title.

Mortgages and charges over a company’s property must also be filed with the companies registrar, the Directorate of Investment and Company Administration (DICA), under the 2017 Myanmar Companies Law (MCL), within 28 days of creation. Failure to do so will affect their enforceability against a liquidator or creditor of the mortgagor or chargor.

State and regional development committees (such as the Yangon City Development Committee (YCDC)), or the Ministry of Agriculture, Livestock and Irrigation where no such committee exists, also maintain a Register of Holdings to allow the government to determine the person responsible for paying land taxes and charges. Changes in the ownership of the land holder are required to be recorded in this register. While not its purpose, in practice, entries in the Register of Holdings are considered strong evidence of ownership, in part because it is more reliable and up to date than the records kept under the Registration of Instruments Law.

Registration and recording

What are the legal requirements for registration or recording conveyances, leases and real estate security interests?

The Registration of Instruments Law and MCL both apply nationally. Registration under the Registration of Instruments Law generally requires presentation of the stamped registrable instrument. Registration under the MCL may be made by filing the required particulars of the mortgage or charge with the DICA.

The stamp duty applicable to land lease agreements will typically be around 2 per cent of the average annual rent. The stamp duty applicable to mortgage instruments can range from 0.5 per cent to 6 per cent in Yangon or 4 per cent elsewhere, depending on the type of mortgage and whether possession of the mortgaged property is given or agreed to be given. The application of the Stamp Act is not settled in all cases and it is not prohibited to self-assess a lower level of stamp duty where the interpretation is unclear. However, if the self-assessed amount is later found to not be the correct amount by a court, in order for the incorrectly stamped document to be admitted in evidence, it will be necessary to pay the original duty payable together with penalties at the rate of 10 times the original duty payable.

Foreign owners and tenants

What are the requirements for non-resident entities and individuals to own or lease real estate in your jurisdiction? What other factors should a foreign investor take into account in considering an investment in your jurisdiction?

The Myanmar government is in the process of reforming the right of foreign companies to acquire interests in real estate in Myanmar.

In the past, in practice, it was not possible for foreign citizens or companies with any foreign shareholding to acquire interests in property under the 1987 Transfer of Immovable Property Restriction Law (TIPRL). The TIPRL prohibits the transfer of immovable property to, or its acquisition or lease for more than one year by, foreign citizens, or ‘foreign-owned companies’, defined as companies that are not 50 per cent or more owned or controlled by Myanmar citizens. However, the Myanmar government’s practice was to interpret this definition more narrowly with reference to the 1914 Myanmar Companies Act (MCA), which defined a ‘foreign company’ as a company with any foreign shareholding.

As a result, typically, foreign investors have to date relied on the 2016 Myanmar Investment Law (MIL) to acquire interests in land. Under the MIL, foreign investors can enter into a long-term lease of land for an initial term of 50 years with two renewals of up to 10 years each, by obtaining an endorsement and land rights authorisation from the Myanmar Investment Commission (MIC).

Following the repeal of the MCA and its replacement by the MCL on 1 August 2018, companies with up to 35 per cent foreign investment are expected to be permitted to acquire interests in land. This is because, unlike the MCA, the MCL defines a ‘foreign company’ as a company with more than 35 per cent foreign shareholding.

In addition, section 464 of the MCL states that the MCL’s provisions relating to foreign companies do not affect the operation of the TIPRL. We understand from senior DICA officials that the rationale for this provision is to make clear that the definition of ‘foreign company’ for the purposes of the TIPRL should not be interpreted with reference to the MCL. The DICA has informed us that it will publish a notification clarifying this. We therefore expect that the restrictions on the ownership or lease of real property under the TIPRL will be applied only to companies in which a foreign citizen owns 50 per cent or more of the shares.

Exchange control

If a non-resident invests in a property in your jurisdiction, are there exchange control issues?

Cross-border remittances of funds to or from Myanmar are governed by the 2012 Foreign Exchange Management Law (FEML). Under the FEML, remittances are classified as ordinary transactions (for example, short-term operational remittances or fees) or capital transactions (for example, loans or business investments). Generally, prior approval is required from the Central Bank of Myanmar (CBM) for capital transactions, but not ordinary transactions. However, the definitions of both categories in the FEML are unclear and the CBM’s practice is inconsistent, so in practice it is necessary to confirm with the CBM how to deal with each foreign remittance.

The rules under the FEML require prior CBM approval for disbursements of foreign loans in Myanmar. The CBM announced in July 2016 in relation to this approval requirement that it would take into consideration matters relevant to the borrower, including the capital amount already brought into Myanmar, the terms of the loan agreement and the debt-to-equity ratio. It is not necessary to obtain CBM approval for each subsequent remittance repaying the loan principal or interest.

Legal liability

What types of liability does an owner or tenant of, or a lender on, real estate face? Is there a standard of strict liability and can there be liability to subsequent owners and tenants including foreclosing lenders? What about tort liability?

Currently, only limited forms of liability apply to occupiers or holders of interests in real estate.

Tort law is not well developed in Myanmar and there are few reported cases. For example, some senior Myanmar lawyers question whether the concept of negligence exists under Myanmar law, and in practice, cases of death or personal injury are generally only the subject of criminal proceedings. As Myanmar’s economy and legal system develop, it is possible that civil proceedings for damages may become more common.

The 2012 Environmental Conservation Law (ECL) requires the occupier of a premises that causes pollution to monitor, control, manage and reduce or eliminate such pollution or waste. While untested, this appears to impose strict liability as it does not appear to require proof of fault or negligence.

Protection against liability

How can owners protect themselves from liability and what types of insurance can they obtain?

Myanmar’s insurance sector is in the early stages of its development. No foreign insurer had been awarded a licence under the Insurance Business Law of 1996 to undertake an insurance business in Myanmar (outside of special economic zones under Notification 2/2017 of the Insurance Business Regulatory Board of Myanmar) until this year. Under a liberalisation of the sector announced by the Ministry of Planning and Finance (MOPF) on 2 January 2019, the MOPF announced on 5 April 2019 that five foreign life insurers had been selected as preferred applicants to receive a licence to operate a wholly foreign-owned life insurance business in Myanmar, subject to fulfilment of applicable pre-licensing conditions. It further announced on 31 July 2019 that three foreign-local joint venture candidates had been provisionally approved to conduct a life insurance business, and a further three had been provisionally approved to conduct a non-life insurance business in Myanmar. Myanmar’s insurance sector is expected to develop rapidly with the introduction of foreign expertise and capital, and provide more robust protection for landowners in future.

Investors can protect themselves against liabilities that accrue prior to the acquisition of interests in land by undertaking due diligence and incorporating strict covenants on the part of the transferor or lessor.

Choice of law

How is the governing law of a transaction involving properties in two jurisdictions chosen? What are the conflict of laws rules in your jurisdiction? Are contractual choice of law provisions enforceable?

Generally, Myanmar law will apply to disputes relating to the proprietary rights in respect of a parcel of land, such as the recovery of title or enforcement of mortgage. However, it is possible, subject to any mandatory rules, for the parties to choose a law other than Myanmar law to govern contractual claims in respect of such property.


Which courts or other tribunals have subject-matter jurisdiction over real estate disputes? Which parties must be joined to a claim before it can proceed? What is required for out-of-jurisdiction service? Must a party be qualified to do business in your jurisdiction to enforce remedies in your jurisdiction?

Section 16 of Myanmar’s Code of Civil Procedure provides that only the court in whose jurisdiction a parcel of land is located has jurisdiction to adjudicate proprietary rights in respect of such land, such as the recovery of title or enforcement of a mortgage. However, if relief may be obtained by a personal remedy (eg, for breach of a contract of sale), a suit may be instituted in the court with jurisdiction over the location of the property, or the respondent’s place of residence, business or employment.

There are no requirements for specific parties to be joined to a claim in Myanmar.

Service of process may be effected outside of Myanmar under rule 25 of order 5 of the first schedule to the Code of Civil Procedure by posting the summons to the respondent’s overseas residential address.

Under section 43 of the MCL, foreign companies are not permitted to carry on business in Myanmar unless they are registered under the MCL. However, this does not necessarily bar such companies enforcing remedies, and under section 43(b)(i) of the MCL, foreign companies will not be deemed to be carrying on business merely by becoming a party to, or settling, legal proceedings, claims or disputes.

Commercial versus residential property

How do the laws in your jurisdiction regarding real estate ownership, tenancy and financing, or the enforcement of those interests in real estate, differ between commercial and residential properties?

In general, there is no difference between commercial and residential properties except for certain protections for residential properties based on the Urban Rent Control Act of 1960, which sets out limits on the ability of landlords to increase the rent on, or forfeit, leases of properties, and also provides protections for squatters. For example, the permission of the inspector appointed under this law is required to increase the rent. While technically applicable to all urban lease agreements, in practice, it is only applied to residential tenancies.

Planning and land use

How does your jurisdiction control or limit development, construction, or use of real estate or protect existing structures? Is there a planning process or zoning regime in place for real estate?

Construction works require permission in Myanmar from township level development committees (such as the YCDC). It is generally understood that where no development committee has jurisdiction, permission will be required from the township office of the General Administration Department of the Ministry of the Office of the Union Government.

The permitting process involves two stages. A building permit will first be given for the construction of the works, and a building completion certificate will be issued after inspection of the completed works. Generally, the building permit’s terms and conditions will require construction to be completed within one year.

Planning and zoning regulations are not well established in Myanmar. The YCDC has developed a draft zoning scheme for Yangon, which it applies but has not yet finalised or published. On 5 June 2019, a bill for an Urban and Regional Development Planning Law was tabled in the Union legislature. However, this law has not yet been enacted.

Government appropriation of real estate

Does your jurisdiction have a legal regime for compulsory purchase or condemnation of real estate? Do owners, tenants and lenders receive compensation for a compulsory appropriation?

On 19 August 2019, the Myanmar government enacted the Land Acquisition, Resettlement and Rehabilitation Law. This law will enter into force on a date to be announced by the President, and upon entering into force it will replace the existing legal regime for land acquisitions set out in the Land Acquisition Act of 1894. Under this law, Land Acquisition Implementation Bodies will be formed in each state and region and Nay Pyi Taw and these bodies will be responsible for compensating landowners for land acquisitions.

Under chapter XIV of the MIL, the Myanmar government has guaranteed not to nationalise investments unless:

  • it is required for a public purpose;
  • it is non-discriminatory;
  • it is in accordance with law; and
  • there is provision of prompt, fair and adequate compensation, which is generally equal to the market value of the investment.

However, it is not yet clear what level of protection these requirements provide in practice.


Are there any circumstances when real estate can be forfeited to or seized by the government for illegal activities or for any other legal reason without compensation?

Lease agreements in Myanmar, including for grant land, typically require the lessee not to engage in illegal conduct on the property, and therefore are liable to forfeiture without compensation if such terms are breached.

Bankruptcy and insolvency

Briefly describe the bankruptcy and insolvency system in your jurisdiction.

Currently, companies may be liquidated under the MCL upon insolvency, while for personal bankruptcies, the Burma Insolvency Act and Yangon Insolvency Act are technically applicable, but have not been used in practice.

Myanmar is currently in the process of reforming its insolvency and bankruptcy laws with assistance from the Asia Development Bank, and it is expected that following this reform, the bankruptcy and insolvency systems in Myanmar will be more clearly ascertainable.

Investment vehicles

Investment entities

What legal forms can investment entities take in your jurisdiction? Which entities are not required to pay tax for transactions that pass through them (pass-through entities) and what entities best shield ultimate owners from liability?

A company limited by shares is the most common form of investment vehicle in Myanmar, particularly for foreign investors.

Pass-through entities are not common in Myanmar. While the Partnerships Act of 1932 is still technically in force, the DICA no longer permits registration of partnerships. Myanmar is in the process of developing a new partnerships law, with assistance from the Asia Development Bank, and partnerships may be possible once this law is implemented. Trusts are also technically registrable under the Trusts Act of 1882, but are very rare.

Foreign investors

What forms of entity do foreign investors customarily use in your jurisdiction?

See question 15.

Organisational formalities

What are the organisational formalities for creating and maintaining the above entities? What requirements does your jurisdiction impose on a foreign entity? Does failure to comply incur monetary or other penalties? What are the tax consequences for a foreign investor in the use of any particular type of entity, and which type is most advantageous?

A company may be incorporated in Myanmar by registering with the DICA, and branches of foreign companies may be registered as overseas companies with the DICA. Such companies and branches must comply with the reporting and filing requirements under the MCL. A failure to comply with the requirements of the MCL can result in fines for the company or branch and its directors, and a company may also be struck off the DICA’s register.

Note also that a company incorporated in Myanmar must have at least one Myanmar-resident director.

Myanmar-incorporated companies and branches of foreign companies will generally be liable for company income tax at the rate of 25 per cent. Myanmar-incorporated companies will be taxed on their worldwide income, while branches will only be taxed on their Myanmar-sourced income.

Acquisitions and leases

Ownership and occupancy

Describe the various categories of legal ownership, leasehold or other occupancy interests in real estate customarily used and recognised in your jurisdiction.

As described in question 1, the most common form of land in Myanmar is leasehold land. Such land is primarily in the form of grant land. In addition, the Myanmar government may also enter into specific lease agreements with investors to develop particular parcels of land under build-operate-transfer (BOT) lease agreements. A BOT lease is different from a grant in that usually there is no expectation of extension upon expiry of the term.

Condominium ownership is also possible under the 2016 Condominium Law and 2018 Condominium Rules. Under this law, condominiums may be built on land registered as ‘common land’. The owner of a condominium will have a proprietary interest in the condominium, and the right to benefit from common property. One important feature of condominiums is that foreigners can own up to 40 per cent of the total marketable area of a condominium development. On 14 September 2018, the Ministry of Construction issued Notification No. 227/2018 establishing the registrar under the Condominium Law in 11 states and regions (including Yangon and Mandalay) and Nay Pyi Taw, allowing condominiums to be registered and therefore constructed in most parts of Myanmar.

The government is also considering setting up a statutory regime to govern the rights of owners of flats in Yangon. MHM Yangon is advising on the establishment of this framework.


What are the typical pre-contractual steps?

The most important pre-contractual step in Myanmar is due diligence, for the reasons described in question 25. Non-binding agreements are not common in Myanmar for transfers of property, but can be used. Non-binding instruments will not generally be enforceable. Whether a particular property is taken off the market during negotiation of the transfer instrument is subject to the decision of the parties.

Brokers are generally involved on behalf of sellers and purchasers in the acquisition and sale, but typically not the financing of real estate. There is no system of licensing of real estate brokers at this time. The sector is primarily self-regulated through industry associations such as the Myanmar Real Estate Services Association.

Contract of sale

What are typical provisions in a contract of sale?

Transfer Agreements are generally negotiated on a case-by-case basis, depending on the interests and sophistication of the parties involved. The majority of lease agreements in Myanmar are negotiated between individual parties, without the benefit of legal advice or any statutorily prescribed form of lease agreement.

Environmental clean-up

Who takes responsibility for a future environmental clean-up? Are clauses regarding long-term environmental liability and indemnity that survive the term of a contract common? What are typical general covenants? What remedies do the seller and buyer have for breach?

As noted in question 6, the ECL appears to require the occupier of a property to take responsibility for environmental clean-ups. As in other jurisdictions, however, it is possible for the Transfer Agreements to provide for one party to indemnify another for clean-ups over such period of time as the parties agree.

Lease covenants and representation

What are typical representations made by sellers of property regarding existing leases? What are typical covenants made by sellers of property concerning leases between contract date and closing date? Do they cover brokerage agreements and do they survive after property sale is completed? Are estoppel certificates from tenants customarily required as a condition to the obligation of the buyer to close under a contract of sale?

As noted in question 20, there are no typical representations and warranties with respect to Transfer Agreements, and these are transaction-specific and subject to negotiation. The scope of such provisions is subject to the negotiation of the parties, but note that under section 19 of the Contract Act, agreements will be voidable at the option of an innocent party who is induced to enter into a contract by a misrepresentation.

Estoppel certificates are not typically used in Myanmar.

Leases and real estate security instruments

Is a lease generally subordinate to a security instrument pursuant to the provisions of the lease? What are the legal consequences of a lease being superior in priority to a security instrument upon foreclosure? Do lenders typically require subordination and non-disturbance agreements from tenants? Are ground (or head) leases treated differently from other commercial leases?

There is no practice in Myanmar regarding the legal consequences of foreclosure on the security taken on a lease, reflecting Myanmar’s limited banking and finance sector.

Delivery of security deposits

What steps are taken to ensure delivery of tenant security deposits to a buyer? How common are security deposits under a lease? Do leases customarily have periodic rent resets or reviews?

Security deposits are commonly required to be paid in Myanmar, in the form of a deposit paid to the lessor. Section 10 of the Urban Rent Control Act permits lessors to demand a deposit of up to 10 per cent.

Whether leases provide a periodic rent reset depends on the structure of the lease agreement. Because of the restrictions under the TIPRL noted in question 4, the typical term of lease agreements executed by foreign citizens or foreign companies is one year, and the rent may be reviewed in renewing such agreement.

For lease agreements longer than one year, the parties may negotiate periodic rent resets.

Due diligence

What due diligence should be conducted before executing a contract? Is any due diligence customarily permitted or conducted after contract but before closing? What is the typical method of title searches and are they customary? How and to what extent may acquirers protect themselves against bad title? Discuss the priority among the various interests in the estate. Is it customary to obtain government confirmation, a zoning report or legal opinion regarding legal use and occupancy?

It is important to undertake careful examination of the title to land prior to entering into Transaction Agreements. The parties may choose to undertake such due diligence after execution but before closing, but this is not advisable given the importance of due diligence for transactions involving land in Myanmar. There is currently no insurance available in Myanmar to protect against bad title.

Due diligence comprises an examination of the transferor’s title documents, including the instruments registered under the Registration of Instruments Law and MCL described in question 2, as well as the extract from the Register of Holdings, and the original land grant certificate for grant land. A title document issued by the Myanmar government, such as the land grant certificate, is treated as strong evidence of title.

It is also important to undertake onsite due diligence, as the title documents and registration details may not reveal the identity of all persons who have rights to use the land, particularly customary rights that need to be respected due to historical reasons.

In addition to determining title, it is important to assess any restrictions on the right to use the land. For example, the terms of a land grant may restrict the use that can be made of the land by the lessee.

In relation to statutory priority, see question 2 regarding the effect of not registering instruments creating interests in property under the Registration of Instruments Law or MCL.

Structural and environmental reviews

Is it customary to arrange an engineering or environmental review? What are the typical requirements of such reviews? Is it customary to get representations or an indemnity? Is environmental insurance available?

Engineering and environmental reviews are possible but not customary, given the lack of international standard service providers. As noted in question 7, only limited insurance is available in Myanmar at this time.

Review of leases

Do lawyers usually review leases or are they reviewed on the business side? What are the lease issues you point out to your clients?

For significant commercial transactions, leases will be reviewed both by lawyers in terms of legal issues, and clients in terms of business side interests. As noted in question 1, lease agreements are a primary method of transferring property interests in Myanmar.

The particular issues raised will depend on the type of transaction, the type of property and the clients’ interests. In particular, the longer the lease term, the greater the attention that will need to be paid to legal risks such as the title of the lessor, obtainment of any consents or approvals required from any person for the execution of the lease (including the MIC, as described in question 4), and the parties’ representations and warranties.

Lenders do not typically require management agreements to be subordinate to financing security instruments, reflecting Myanmar’s limited banking and finance sector.

Other agreements

What other agreements does a lawyer customarily review?

For significant commercial transactions, lawyers will typically review title documents and lease or sublease agreements, and the licences and other agreements required to use the property, as well as any encumbrances on the property.

Closing preparations

How does a lawyer customarily prepare for a closing of an acquisition, leasing or financing?

Closing of Transfer Agreements and finance agreements is similar to closing of other transactions and, as with the required deliverables and closing conditions, depends on the circumstances of the transaction.

Closing formalities

Is the closing of the transfer, leasing or financing done in person with all parties present? Is it necessary for any agency or representative of the government or specially licensed agent to be in attendance to approve or verify and confirm the transaction?

The conduct of closing is subject to the parties. There is no requirement for parties to be present, but they may choose to be present. There is no requirement for an agency or representative of the government or specially licensed agent to be present.

Contract breach

What are the remedies for breach of a contract to sell or finance real estate?

Remedies may be available under the particular Transfer Agreement or financing agreement itself for a breach of contract, or the Contract Act.

A failure to assign a lease agreement may also be enforceable by specific performance. The explanation to section 12 of the Specific Relief Act (1877) provides that the loss caused by a breach of a contract to transfer immovable property will be presumed not to be compensable by payment of damages, and may therefore be enforced by specific performance.

Breach of lease terms

What remedies are available to tenants and landlords for breach of the terms of the lease? Is there a customary procedure to evict a defaulting tenant and can a tenant claim damages from a landlord? Do general contract or special real estate rules apply? Are the remedies available to landlords different for commercial and residential leases?

Remedies for breach of lease terms such as forfeiture are generally provided in the lease agreement, and damages may also be available under the lease agreement or Contract Act. Lease agreements generally provide for the landlord to enter and take back the property upon default.

Technically, under section 12 of the Urban Rent Control Act, a lease may only be forfeited with the approval of the inspector appointed under that law, for certain prescribed reasons such as where the lessor wishes to construct buildings on the land or live in the premises. As noted in question 10, in practice, it is only applied to residential tenancies.


Secured lending

Discuss the types of real estate security instruments available to lenders in your jurisdiction. Who are the typical providers of real estate financing in your country? Are there any restrictions on who may provide financing?

Security is generally created in Myanmar in practice in the form of a mortgage by deposit of title documents, in which the title documents and any other relevant documents for the collateral property are delivered to the mortgagee or its local agent.

However, the Transfer of Property Act (TPA) provides for charges and five other types of mortgages.

Among Myanmar banks, the Construction Housing & Infrastructure Development Bank, which is a partially government-owned bank, is particularly active in providing loans to the housing and infrastructure sectors. However, Myanmar’s banking sector is still developing, and loan financing is generally obtained offshore. In terms of legal requirements for offshore lending in Myanmar, see question 37.

In terms of loan financing, on 15 January 2019 the CBM issued Directive No. 2/2019 permitting Myanmar banks to offer home loans for terms of more than three years, up to five per cent of their total loan portfolio, Previously, such loans could only be offered for terms of up to three years.

Leasehold financing

Is financing available for ground (or head) leases in your jurisdiction? How does the financing differ from financing for land ownership transactions?

In practice, there is no leasehold financing in Myanmar.

Form of security

What is the method of creating and perfecting a security interest in real estate?

In the case of any type of mortgage other than a mortgage by deposit of title documents, a written instrument signed by the mortgagor and attested by at least two witnesses must be executed under section 59 of the TPA.

Section 58(f) of the TPA provides that a mortgage may be created by deposit of the title documents, with the intent to create security over such documents. The TPA does not set out any formalities for the creation of mortgages by deposit of title deed; however, it would be advisable to document the intent to create security over such documents in writing, and stamp it under item 6 of the schedule to the Stamp Act.

For the stamp duty applicable to mortgages, see question 3.

After stamping, the applicable instrument of mortgage is required to be registered under the Registration of Instruments Law and the MCL, as described in question 3.


Are third-party real estate appraisals required by lenders for their underwriting of loans? Are there government or industry standards for appraisals? Must appraisers have specific qualifications or required government or industry certifications? Who is required to order the appraisal?

Land appraisals are not required by law and generally are not used in Myanmar transactions. Valuations can be challenging in Myanmar given the lack of data on the value of properties and, outside major cities, the lack of comparable, proximate properties that can be used to estimate it. A number of internationally qualified land valuers do, however, operate in Myanmar.

Legal requirements

What would be the ramifications of a lender from another jurisdiction making a loan secured by collateral in your jurisdiction? What is the form of lien documents in your jurisdiction? What other issues would you note for your clients?

Generally, offshore lenders can now obtain security for loans in the same way as onshore lenders. Previously, under the MCA, the practice of the DICA was to refuse to register security in favour of offshore entities; however, section 228(a) of the MCL now expressly requires that the DICA register such security.

A number of local licensing and registration requirements may apply, however. Other than for intracompany loans, a licence is in principle required from the CBM under Chapter V of the 2016 Financial Institutions Law (FIL) to lend money in Myanmar in connection with taking security, as this will be considered a banking business. The CBM has advised us that this licensing requirement does not apply to entities located offshore; however, given the terms of the legislation, it would be advisable confirm this position with the CBM for each transaction.

In addition, an offshore entity is not permitted to carry on business in Myanmar without registering as an overseas corporation under the MCL. While lending money or creating security over property may not in itself amount to ‘carrying on business’ for the purposes of the MCL under section 43(b)(vi), this will depend on the circumstances of the offshore entity’s business in Myanmar.

Offshore lenders should also be aware of the implications of the restriction under the TIPRL described in question 4 on the enforcement of security. This can be navigated by using a local security agent, or including a power to sell the secured property in the instrument of mortgage. Section 69(1)(c) of the TPA permits the sale of secured properties without the intervention of the court in certain cities (including Yangon) where set out in the mortgage instrument.

Note also that a withholding tax of 15 per cent applies on interest payments to non-residents under Notification No. 47/2018 of the Ministry of Planning and Finance, which took effect on 1 July 2018. This rate can be reduced if the tax residence of the lender is party to a double taxation treaty with Myanmar. Under the double tax treaty with Singapore, the amount withheld on interest payments will be reduced to 8 per cent if the payment is to a bank or financial institution, or 10 per cent if it is to any other person.

Loan interest rates

How are interest rates on commercial and high-value property loans commonly set (with reference to LIBOR, central bank rates, etc)? What rate of interest is legally impermissible in your jurisdiction and what are the consequences if a loan exceeds the legally permissible rate?

As in other jurisdictions, interest rates for loans will be based on a profit margin above a bank’s lending costs, provided that the CBM requires banks to cap the interest rates on Myanmar kyat-denominated loans. The CBM also imposes a minimum rate on the interest rate on savings deposits, which affects the costs of lending of Myanmar deposit-taking institutions. While these rates were fixed at 13 per cent in the case of the cap on loans and 8 per cent in the case of the minimum rate on deposits, but following the implementation of Directive No. 1/2019 of the CBM on 1 February 2019, these rates have been revised to rates based on the CBM’s cash rate, and in the case of bank loans, whether (and what) collateral is given for the loan.

Loan default and enforcement

How are remedies against a debtor in default enforced in your jurisdiction? Is one action sufficient to realise all types of collateral? What is the time frame for foreclosure and in what circumstances can a lender bring a foreclosure proceeding? Are there restrictions on the types of legal actions that may be brought by lenders?

In theory, lenders may enforce their remedies through foreclosure, sale of the secured property or the appointment of a receiver. However, we are not aware of any examples of enforcement of security over immovable property in Myanmar by foreign lenders.

Loan deficiency claims

Are lenders entitled to recover a money judgment against the borrower or guarantor for any deficiency between the outstanding loan balance and the amount recovered in the foreclosure? Are there time limits on a lender seeking a deficiency judgment? Are there any limitations on the amount or method of calculation of the deficiency?

Whether lenders can recover against a borrower or its guarantors for shortfalls in the amount recovered in a foreclosure will depend on the loan documentation.

The statutory limitation period for suits depends on the type of instrument. Under item 132 of the first schedule to the 1908 Limitation Act, suits to recover sums secured by a charge (defined to include a mortgage by deposit of title documents) over immovable property must be instituted within 12 years of the date the sums become due.

Protection of collateral

What actions can a lender take to protect its collateral until it has possession of the property?

Receiverships are recognised in section 69A of the TPA, and section 76 of the TPA provides for mortgagees to take possession of secured property; however, these provisions are not used in practice. As noted in question 39, we are not aware of any examples of the enforcement of security in Myanmar by foreign lenders.


May security documents provide for recourse to all of the assets of the borrower? Is recourse typically limited to the collateral and does that have significance in a bankruptcy or insolvency filing? Is personal recourse to guarantors limited to actions such as bankruptcy filing, sale of the mortgaged or hypothecated property or additional financing encumbering the mortgaged or hypothecated property or ownership interests in the borrower?

See question 40.

Cash management and reserves

Is it typical to require a cash management system and do lenders typically take reserves? For what purposes are reserves usually required?

The use of cash management systems or reserves depends on the particular transaction and parties.

Credit enhancements

What other types of credit enhancements are common? What about forms of guarantee?

Bank guarantees are the most commonly used form of credit enhancement in Myanmar transactions.

Loan covenants

What covenants are commonly required by the lender in loan documents?

International standard covenants, including financial covenants, will generally be required for loan documentation for transactions involving foreign lenders.

Financial covenants

What are typical financial covenants required by lenders?

See question 45.

Secured movable (personal) property

What are the requirements for creation and perfection of a security interest in movable (personal) property? Is a ‘control’ agreement necessary to perfect a security interest and, if so, what is required?

Security interests may be created in movable property by way of charge, pledge, or deposit of title documents (other than for marketable securities). As noted in question 2, security over a company’s movable property must be registered under the MCL. To create a pledge, the pledged chattels must be deposited with the pledgee.

With the assistance of the International Finance Corporation, the MOPF has commenced drafting a Secured Transactions Law, which Is intended to apply to the creation of security interests over movable property. However, this reform is still in its early stages of development.

Single purpose entity (SPE)

Do lenders require that each borrower be an SPE? What are the requirements to create and maintain an SPE? Is there a concept of an independent director of SPEs and, if so, what is the purpose? If the independent director is in place to prevent a bankruptcy or insolvency filing, has the concept been upheld?

Whether SPEs are used depends on the particular financing transaction, but such requirements are not common.

There is no requirement for independent directors in Myanmar, and while some public companies are considering appointing such directors, they are not commonly used.

Update and trends

International and national regulation

Are there any emerging trends, international regulatory schemes, national government or regulatory changes, or other hot topics in real estate regulation in your jurisdiction? (eg, transition to a new alternative benchmark rate upon cessation of LIBOR as benchmark rate?)

International and national regulation49 Are there any emerging trends, international regulatory schemes, national government or regulatory changes, or other hot topics in real estate regulation in your jurisdiction?

Over the past 12 months, Myanmar has continued the trend of liberalising barriers to foreign investment. As noted in question 7, Myanmar has undertaken a significant liberalisation of its insurance market.

Another important sector which has been a focus of reform is the banking sector. Under the FIL, a foreign bank may only sell its business or acquire a local bank’s business (or a substantial part of either) with the approval of the CBM. In addition, a person must obtain the CBM’s approval prior to acquiring (whether directly or indirectly) a ‘substantial interest’ in a bank (defined as 10 per cent or more of the shares in, or the capacity to control the management of, a bank). On 31 January 2019, the CBM issued Letter No. ma ba ba/baan si sit/1 (1/2019) to Myanmar banks requesting them to notify the CBM if they wish to accept foreign equity investment, which is permitted up to 35 per cent. On 17 June 2019, First Myanmar Investment Public Company Limited disclosed that the International Finance Corporation had converted the outstanding balance of a loan to Yoma Bank Limited into a 5 per cent equity stake, the first foreign equity investment in a Myanmar bank.

The liberalisation of the insurance and banking sectors in particular will have a wide-ranging impact on Myanmar’s economy. Permitting foreign capital and expertise to these sectors will help bolster market participants and improve financial services product offerings in Myanmar, allowing Myanmar citizens and businesses to better insure against risk and obtain finance for their business.

An important test will be whether Myanmar further liberalises restrictions on land use and ownership. Foreign participation in the real estate sector is essential to bolster foreign investment in Myanmar more broadly, given the importance of acquiring land to operating and financing investments across the economy. As noted in question 4, under the MCL, at a minimum, companies with up to 35 per cent foreign investment are expected to be permitted to acquire interests in land, while the DICA has informed us that companies with up to 50 per cent foreign shareholding will be permitted to acquire interests in land in Myanmar.