Viewpoint: Cheah Swee Gim

A series of exhilarating changes took place in Myanmar in 2016, from the installation of a new democratic government in April 2016 with Daw Aung San Suu Kyi at the helm to the lifting of two decades of economic and financial sanctions by the US. Changes are not just taking place in the political sphere. The legal landscape is also keeping pace, with game-changing legal reforms promulgated in 2016. The Myanmar Investment Law, which was passed on October 18, 2016, consolidates the Myanmar Foreign Investment Law and the Myanmar Citizens Investment Law into one overarching piece of legislation, placing Myanmar citizen investors and foreign investors on an equal footing. This long-awaited law guarantees that foreign investors will be treated no less favourably than Myanmar citizen investors, and aims to streamline the foreign investment process by limiting the need for investment approval to investments in sectors that are strategic to the government or specifically listed as restricted, or large capital intensive investment projects, or projects that could have a significant impact on the environment and the local community, or projects that involve investments in businesses or activities that use state-owned land and/or buildings. Investments in other sectors and business activities no longer require investment approval. Nevertheless, to ensure the responsible use of land – Myanmar’s most valuable resource – foreign invested companies are obliged to seek the endorsement of the Myanmar Investment Commission to secure long-term leases over land or buildings. Whilst the need for such endorsements will to an extent limit the ease and expediency with which land-related investments can proceed, it is anticipated that the endorsement process will be placed on a simpler track than the investment approval process. It has long been recognised that Myanmar’s growth has been impeded by the weakness of its financial laws and regulations. Another notable legal reform that occurred in 2016 is the enactment of the Financial Institutions Law of Myanmar. This provides more detailed and stringent standards for financial institutions operating in Myanmar to ensure their stability and robustness. The same law also contemplates the acquisition of interests in financial institutions, as well as mergers between banks – subject to relevant regulatory consent being secured – thereby creating the potential for healthy competition.

Other laws that are anticipated include a new Myanmar Companies Act and a whole suite of intellectual property laws. The new Myanmar Companies Act will revamp the Myanmar Companies Act of 1914 to bring the country’s corporate law concepts up to date with international best practice. In addition, laws for design, patents, trademarks and copyright are expected to improve intellectual property rights protection. Although there is still much to be done in terms of legal and regulatory reform, such as issuing detailed regulations to implement laws that have been passed, it is clear that the new Myanmar government places great importance on the rule of law. It is also quite apparent that it is looking towards creating a sustainable and responsible investment environment, and will not be persuaded to adopt quick fixes.

The significant and continuing legal reforms in Myanmar, coupled with the lifting of economic and financial sanctions, sparks hope and confidence in foreign and local investors alike. It is also heartening to see the growth of small and medium-sized enterprises in Myanmar. The willingness to invest in Myanmar’s future contrasts starkly with the cautious wait-and-see attitude that was prevalent in 2015, brought on by the then-forthcoming first free general elections. Now more than ever, Myanmar’s doors are open to the rest of the world. Whilst there are risks and uncertainties to be encountered, steadfast and responsible investors can expect to benefit greatly by taking firm steps across Asia’s last economic frontier.