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.