Welcome to the latest edition of BLP’s monthly Myanmar update. We have distilled the latest Myanmar news into this ‘speed read’. Please get in touch for more information.

1. Yangon Stock Exchange (YSX) announces listing criteria

The YSX has published the minimum standards required for a company to attempt an initial public offering (IPO). A total of 17 criteria have been listed by YSX and several of the key provisions are set out below:

  1. the company must have at least 100 shareholders;
  2. the company must have at least Kyat 500 million paid up capital on the date of application;
  3. the company shall have at least two years of profit up to the date of application (although the two years do not need to be consecutive); and
  4. the company shall fulfil its tax duties in accordance with the existing tax laws of Myanmar.

Commentators in Yangon have suggested that the criteria do not go far enough to protect investors, highlighting in particular the absence of rules setting out a minimum percentage of the company which should stay in public hands and specific public disclosure requirements. However, given that only the minimum standards have been published so far, it is possible that the YSX will continue to build on these rules to provide any further necessary protections.

Several companies have already announced their intention to list ahead of the YSX’s expected launch in early December this year, although how many meet the relevant requirements in time remains to be seen. Please see here for a complete list of the YSX listing criteria.

2. General election update

The last couple of weeks have witnessed several significant events in the lead up to the landmark general election, which is due to take place on 8 November 2015:

  1. Parties announce their preliminary candidate lists. Myanmar’s two main political parties, the ruling Union Solidarity and Development Party (USDP) and the opposition National League for Democracy (NLD), have each nominated more than 1,000 candidates in the general election. The total number of candidates who have registered for the election stands at 6,189.
  2. Political parties realign. Aung San Suu Kyi has announced that the NLD will work with Shwe Mann (the ousted chairman of the USDP) in the lead up to the general election. The move comes following the dramatic removal of Shwe Mann from his position by President Thein Sein on Wednesday 12 August 2015. Shwe Mann had attracted criticism from members of the USDP for backing Aung San Suu Kyi’s campaign for constitutional reform.
  3. Discussion of recall bill postponed. Parliament has agreed to suspend discussion of the controversial bill until after the general election. The bill sets out the provisions for removing a legislator from office, and if it is voted in then lawmakers will lost their seats if (a) 1% of their constituents sign a petition to recall them and (b) the election commission found this complain justified.

For more on the general election and constitutional reform, please see the previous postcard from July.

3. Myanmar moves towards first ever credit ratings

Myanmar has appointed advisers to help develop its first credit rating. None of the big three international credit rating agencies (Fitch, Moody’s and Standard & Poor’s) have currently assigned Myanmar a rating, which is used by professional investors as a benchmark of a country’s ability to repay debt. Myanmar’s first credit rating is therefore of high importance in improving its outreach to investors and contributing to the wider economic development of the country.

It remains unclear when the first credit ratings will be achieved, although the process can take up to a year. The timeline is expected to hinge on how long it takes the government to provide the relevant data and information to the rating agencies.

Once a credit rating is secured, it is understood that the Central Bank of Myanmar wishes to issue bonds to underwrite a number of infrastructure projects which have been delayed.

4. Myanmar Oil and Gas Enterprise (MOGE) invites local and foreign companies to submit proposals for the development of a new offshore supply base

MOGE has requested local and international private companies to submit proposals for the development of a new offshore supply base, which is needed to support the growing oil and gas business in Myanmar offshore.

52 companies expressed interest in developing the new Myanmar supply bases from a wide range of countries including Australia, Brunei, China, Indonesia, Japan, Malaysia, the Netherlands, Saudi Arabia, Singapore, Thailand, the U.K., the U.S. and Vietnam. Interested private companies were invited to meet with MOGE between May and June 2015 in order to discuss the opportunity, and now interested parties have been given three months to submit their proposals. MOGE will decide on the selected parties later this year or in early 2016.

MOGE has not decided on the number or the location of the offshore supply bases, but potential locations include Yangon, Dawei in Tanintharyi Region, Pathein in Ayeyarwady Region, Malawmyine in Mon State and Sittwe or Kyaukphyu in Rakhine State. Companies will be required to provide their own land for the new supply base and it is likely that international firms will therefore have to team up with local partners.

5. Myanmar government seeks fourth and final telecom operator from local companies

The Myanmar government has invited local companies to place their bids to become the country’s fourth telecoms operator. The companies are required to submit their expressions of interest by 24 August 2015 and a decision is expected to be made ahead of the general election in November. The initial licence will be valid for 15 years.

The Ministry of Communications and Information Technology announced that the final licence will target bids from local companies in joint venture arrangements with foreign firms, although local companies will not be given the opportunity to choose their overseas counterparts. Interested parties will also need at least 3 billion kyats (c.$US2.5 million) in order to demonstrate that they have adequate financial capabilities and capital reserves.

Licences are already held by Telenor and Ooredoo, which started offering mobile phone services in Myanmar in 2014. A third license is held by MPT, a joint venture between the telecoms ministry and Japanese-owned KDDI Group.

6. Directorate of Investment and Company Administration (DICA) issues notification for Myanmar registered companies

DICA has issued a notification requesting that all companies registered under the Myanmar Companies Act 1914 and Special Company Act 1950 (including companies with current or expired registration certificates) update DICA of whether the company is currently active and carrying on business by 14 September 2015. Companies should contact DICA’s main office or a branch office by email, phone, fax or post. Companies which do not provide notice are advised that DICA may take appropriate action in accordance with the Myanmar Companies Act 1914. For full details of how to contact DICA, please see here.