Summary: The United States of America’s (US) administration has announced wide-ranging revisions to US sanctions on Myanmar, in support of the significant political reforms made in Myanmar and to set out clear guidelines on commercial transactions which are not permitted. Investors may now be better placed to enter the emerging market and explore large-scale investment opportunities with Myanmar entities which have been taken off the SDN list.
Following on from the successful elections held in Myanmar, the United States of America’s (US) administration has announced wide-ranging revisions to US sanctions on Myanmar. These revisions are intended as a symbolic gesture of support by the US administration for the political reform in Myanmar as well as to set out clear guidelines on commercial transactions which are not permitted.
The revisions likely to be of interest of foreign investors include the issuance of new regulations by the US Treasury Department’s Office of Foreign Assets Control (OFAC) which permit transactions by US citizens residing in Myanmar; removal of sanctions against a number of state-owned enterprises and state-owned banks; and updates to the list of sanctioned Specially Designated Nationals (SDN).
Revisions to the sanctions
The new regulations by OFAC permit US citizens residing in Myanmar to enter into transactions such as rental agreements for property, purchase of goods and services for personal use. Further, OFAC has extended indefinitely the authorisation for export transactions involving Myanmar parties who were originally in General Licence 20 as well as implemented a new licence for transactions in relation to the transportation of goods within Myanmar.
In addition, OFAC has removed 7 state-owned enterprises (namely, Myanmar Timber Enterprise, Myanmar Pearl Enterprise, Myanmar Gem Enterprise, No. 1 Mining Enterprise, No. 2 Mining Enterprise, No. 3 Myanmar Enterprise, and Co-operative Export-Import Enterprise) and 3 state-owned banks (namely Myanma Economic Bank, Myanmar Foreign Trade Bank, and Myanma Investment and Commercial Bank) from the SDN list. In particular, the practical effect of removing Myanma Economic Bank from the list is that US individuals or companies may now provide services related to the Yangon Stock Exchange.
Aside from the aforesaid lifting of certain sanctions, OFAC has concurrently added to the SDN list 6 companies identified as having Steven Law and Asia World Co. Ltd. as an equal or majority shareholder. OFAC has also maintained the requirement for US investors in Myanmar to submit an annual report with the US State Department in accordance with the Responsible Investment Reporting Requirements. However, it is possible that the aggregate investment reporting threshold may be increased from US$500,000 to US$5 million.
These revisions to US sanctions on Myanmar are in line with the US administration’s support for the significant political reforms made in Myanmar.
With the likely greater ease of doing business in Myanmar arising from these revisions, US investors may now be better-placed to enter the emerging Myanmar market across the various industries. Moreover, US investors would also be able to explore large-scale investment opportunities with those Myanmar entities which have been taken off the SDN list.
That said, OFAC’s decision to maintain the SDN list—and in some cases, OFAC has even added new entities to the SDN list—suggests that US investors would be well-advised and prudent to maintain caution when entering into projects with Myanmar partners. Due diligence remains a key pre-requisite for any investments in Myanmar to avoid any unintended breaches of sanctions or laws with extra-territorial effects such as the U.K. Bribery Act or the U.S. Foreign Corrupt Practices Act.