The year 2019 marked the continuation of several policy shifts brought about by the 2017 Myanmar Companies Law (MCL). The authorities have begun to issue new policies in order to allow foreigners to invest in sectors that were otherwise reserved for Myanmar citizens, such as banking and trading in listed companies. Among the most notable changes of the MCL was the updated definition of a “foreign company” to denote an overseas corporation, foreign person or a combination of the two that directly or indirectly owns or controls an interest of more than 35% of issued share capital of a body that is incorporated in Myanmar. Previously, a company was considered as foreign if just one share was held by a foreign citizen.
These shifts are evident in the new notification issued by the Securities and Exchange Commission of Myanmar (SECM), which specifically allows foreigners to trade shares in companies listed on the Yangon Stock Exchange (YSX). The Central Bank of Myanmar (CBM) followed suit, allowing up to 35% foreign equity ownership in banks, although it retains approval rights.
The country also saw the enactment of new laws on intellectual property (IP), with the introduction of a formal registration process for each IP right, which will contribute to the increased protection of IP. Furthermore, there have been several updates to various laws and regulations that promote liberalisation measures aimed at fostering a friendlier business climate in the country. These include changes in the financial rules and regulations for retail trading, insurance and consumer protection.
Foreign Interest in Banks
The CBM issued Regulation No. 1 of 2019 on January 29, 2019, which allows foreigners to hold direct equity interest in a bank of up to 35% of its total issued share capital. Prior to this date, only Myanmar citizens were allowed to hold shares in banks. This was a consequence of the CBM policy requiring banks to be wholly owned by Myanmar citizens.
The notification states that banks wishing to accept foreign investment shall submit the details of the arrangement to the CBM. This does not override the requirement for CBM approval found in the Financial Institutions Law of Myanmar, which mandates that a person who intends to acquire a “substantial interest” in a bank (that is, a direct or indirect interest of more than 10% of the capital or voting rights of the bank) must first secure CBM approval. Interests not meeting this 10% threshold theoretically do not require prior CBM approval, but the CBM must nonetheless be notified.
At present, there is only one Myanmar-owned bank that has received approval from the CBM to allow a foreigner to hold equity interest.
Financial Rules & Regulations
The issuance of CBM Instruction No. 6 of 2018 allowed foreign bank branches to provide financing and other banking services to local businesses. Previously, foreign bank branches were only allowed to provide banking services to foreign investors and joint ventures, as well as undertake export financing and related banking services in favour of local companies.
While, as yet, “other banking services” have not been clearly defined, this is still a welcome move, as it allows local investors to access more financing options, and stimulates Myanmar’s financial markets by providing local banks with competition in the form of foreign banks.
The recent Mobile Financial Services (MFS) Regulations should widen access to financial services by providing an alternative platform that allows customers to deposit, withdraw or transfer money through their mobile accounts. The MFS Regulations allow both mobile network operators, duly licensed under the Telecommunications Law of 2013, and non-bank financial institutions (NBFIs) to provide mobile financial services by obtaining the required registration from the CBM. NBFIs and microfinance institutions (MFIs) that are licensed under the Financial Institutions Law of 2016 and the Microfinance Business Law of 2011, respectively, and which collectively provide services that range from small, unsecured loans to motor vehicle financing, are also gaining wider acceptance and use. However, because of the large number of MFIs operating, it has become difficult to obtain a licence. Investors may therefore be inclined to explore the acquisition of existing MFIs as opposed to electing to start from the ground up. At the same time, foreigners are yet to formally be issued licences from the CBM to allow them to directly engage in NBFI activities, and as such, foreigners have had to enter into alternative contractual arrangements with licensed Myanmar-owned NBFI companies – pending a change in the CBM’s regulatory policies.
In early 2019 CBM Instruction No. 5 of 2019 introduced the Reference Exchange Rate of Myanmar as a market-based weighted average rate. Under the previous system, the CBM used the previous business day’s weighted average rate to set a reference rate in the morning. This created misalignment from the current market exchange rate, especially after holidays. The new system will be computed by assigning weights to the average rates of executed interbank foreign exchange transactions among authorised dealer (AD) banks, and to the average rate of transactions between AD banks and their customers – including spot transactions executed by AD banks – in the daily foreign exchange market from 9.00am to 3.00pm. The daily Reference Exchange Rate is then to be published at 4.00pm on every working day. This system helps to smooth excessive short-term volatility of the exchange rate.
Beneficial Ownership Information
On November 15, 2019 the Directorate of Investment and Company Administration (DICA) issued Directive No. 17 of 2019 on the Disclosure of Beneficial Ownership Information (the Directive). Effective from January 1, 2020, the objective of the Directive is to improve the transparency and accountability of the beneficial ownership of legal persons or legal arrangements, as well as prevent tax evasion, money laundering and terrorist financing. The Directive requires all legal persons or legal arrangements incorporated in Myanmar to comply with the disclosure provisions under the Directive.
A “legal person” is any entity other than a natural person that can establish a permanent customer relationship with a financial institution, or otherwise own property. “Companies, corporations, joint ventures, corporate bodies, foundations, partnerships, associations and other relevantly similar entities” are specifically included. Meanwhile, “legal arrangements” are defined as “express trusts or other similar legal arrangements”. The Directive, in turn, defines a “beneficial owner” as any individual who meets the following conditions:
• Holding directly or indirectly more than 5% of the shares and/or voting rights [of a legal person];
• Has the right, directly or indirectly, to appoint and remove the majority of the board; or
• Has the right to exercise, or actually exercises, significant influence or control over the public or private company or corporate entity. Legal persons and arrangements that fall under the jurisdiction of the Directive are required to obtain and keep up-to-date information on their beneficial ownership and submit such information in a timely manner to DICA and the Internal Revenue Department. This includes cooperating with competent authorities to determine the beneficial owner. The reporting obligation is to be accomplished through the submission of online forms – which are yet to be published by DICA. Records of such information need to be maintained for at least five years.
Those who may be at risk of violence or intimidation owing to the exposure of their beneficial ownership information on the online register can apply to DICA to request that only basic information be shown to the public, although other beneficial ownership information will still be accessible by competent authorities.
Anti-Money Laundering Order
The President’s Office issued the Anti-Money Laundering (AML) Order No. 45 of 2019 in November 2019, through which the government reinforces the previously established AML and counter-terrorism financing measures of 2014. Previously, the AML Law provided for the establishment of the Central Body for AML and the Financial Intelligence Unit (FIU).
The AML Order provides further definitions as to the various functions and duties of the Central Body for AML and the FIU. Notably, the AML Order provides a more detailed description of the roles of the four major participants in the AML framework: key institutions, such as the Central Body for AML and the FIU; reporting organisations, mainly banks and financial institutions; competent authorities; and other stakeholders.
The AML Order expands the functions and duties of the Central Body and the FIU formed under the AML Law. Section 3 of the AML Order added 22 more offences in addition to the ones delineated in the AML Law. The additional offences attempt to cover other areas of financial crimes, such as offences relating to terrorism and financing of terrorism; offences relating to trafficking humans and migrant smuggling; offences relating to counterfeit money and goods; and corruption and fraud.
In addition, the AML Order expands the duties of the FIU to include the scrutiny of transaction records submitted by reporting organisations; the conduct of operational analyses, which focus on individual cases and specific targets, activities or transactions; and the undertaking of strategic analyses to identify and tackle trends in money laundering and financing of terrorism. The AML Order specifically states that the FIU shall be independent and autonomous. It also contains provisions for the FIU to collaborate with the Bureau of Special Investigations (BSI). The duties of the BSI were expanded to include the investigation of offences relating to money laundering and terrorism financing, as well as the power to employ tools of interception and investigation, including special investigation techniques.
There are numerous additional responsibilities and measures for reporting organisations. These include conducting due diligence at the appropriate time according to the specific products, services and risks involved.
The AML Order further provides a more detailed procedure regarding how and when the due diligence shall be conducted. In addition, reporting organisations are prohibited from maintaining anonymous accounts and/or accounts in obviously fictitious names. Reporting organisations shall also report to the FIU when the money or property transaction is equal to or exceeds the threshold value stipulated by the Central Body for AML.
Furthermore, the AML Order supplements Section 19(d) of the AML Law concerning due diligence on beneficial owners, so as to identify such beneficial owners with precision and ascertain their involvement, if any, in money laundering or terrorist financing schemes. Reporting organisations are also instructed to have integrated appropriate risk management systems to determine whether a customer or a beneficial owner is a domestic or foreign politically exposed person, or internationally politically exposed person. The AML Order further provides specific instructions on how to proceed in dealing with such politically exposed persons.
In addition to the above, reporting organisations are also required to undertake measures to ensure customer due diligence (CDD) with respect to the politically exposed persons, their family members and their close associates. Reporting organisations shall also identify and assess any money laundering and terrorist financing risks that arise from new and existing products, and take necessary actions to manage and mitigate such risks. For reporting organisations, the AML Order also contains measures to be conducted in addition to the regular CDD procedure before entering into cross-border correspondent banking and other similar relationships, as well as measures to be followed for group-level compliance and when opening foreign branches.
The AML Order highlights the role of competent authorities and how they are expected to coordinate in dealing with financial crimes. Section 24 of the AML Order provides the competent authorities with the power to conduct both on- and off-site supervisory activities to ensure compliance obligations.
It also paves the way for the authorities to develop and implement their own appropriate financial, fitness and proprietary requirements, while registering, licensing or issuing permissions to reporting organisations. It confers on the authorities certain punitive powers in relation to any non-compliance by the reporting organisations.
Lastly, the AML Order imposes responsibilities for other stakeholders such as notaries, legal professionals and accountants that engage in transactions for their customer or on their behalf. They are required to cooperate with the FIU when the FIU requests information, save for information subjected to confidentiality or special legal privileges.
As part of efforts to combat money laundering and the financing of terrorism, the CBM has issued Directive No. 18 of 2019 on CDD Measures (the new CDD Directive), replacing the previous Directive No. 21 of 2015 on CDD Measures issued by the CBM on October 2, 2015. The new CDD Directive was issued specifically for banks. The directives on CDD measures for other financial institutions are yet to be published by the CBM. Until then, all such institutions are required to abide by the new CDD Directive.
As required by the AML Law, all banks and financial institutions are required to develop adequate measures and controls for the prevention and reduction of legal and operational risks, and other risks identified in the new CDD Directive that may result from money laundering and terrorism financing. These measures and controls should address requirements including:
• The risk assessment of customers and transactions;
• The identification and verification of customers, including their beneficial owners;
• The maintenance and monitoring of records of information on Customs and transactions; and
• The reporting to the FIU of transactions. In conducting risk assessments, banks should take into account the following:
• Customer risks;
• Country or geographic region risks;
• Products and services risks; and/or
• Delivery channel risks. They shall also ensure that they know the true identity of their customers, including beneficial owners (lawyers or trustees), and should take relevant identification documents for all customers – both natural and legal persons.
Under the new CDD Directive, there are two types of CDD measure: Enhanced CDD measures and Simplified CDD measures. Enhanced CDD measures are applicable where high-risk customers are involved, such as in the case of politically exposed persons and non-regular customers whose transaction amount is equal to or above $15,000 or its equivalent in any other currencies. Simplified CDD measures are applied to customers identified as low risk through a documented risk assessment.
Banks are required to gather and maintain customers’ and beneficial owners’ information throughout the course of the business relationship, ensuring to undertake the proper update and review procedures. Moreover, they should adopt an ongoing monitoring system for customer transactions. Banks may rely on third parties that include a person other than the bank and financial institution to perform CDD requirements, but those third parties shall not be based in a country with money laundering and terrorism financing risks.
In forming cross-border correspondent banking relationships or other similar relationships, banks must ensure that a foreign bank is not a shell bank and must gather required information of that bank as mentioned in the new CDD Directive.
With regard to cross-border wire or electronic transfers, banks must collect the required information prescribed by the new CDD Directive and must obtain the originator’s account number or unique transaction reference number for traceability of the transactions in the case of both cross-border and domestic wire or electronic transfers. Any cross-border transfer in excess of $10,000 or any domestic transfer in excess of MMK100m ($65,200), or the amount determined by the Central Body for AML, is to be reported to the FIU.
Banks must report suspicious transactions or attempted transactions to the FIU within no more than three working days. If the amount of the transaction exceeds the amount defined by the Central Body, the bank shall report to the FIU within 24 hours if it is situated in an urban centre or within three days if it is situated in a remote district. For the violation of the provisions of the new CDD Directive, any bank will be subject to the penalties provided in Section 37 and Chapter XI of the AML Law.
Until May 9, 2018, and save for narrow exceptions allowed to companies manufacturing products under an investment permit from the MIC, the conducting of any trade activities, particularly covering retail activities, was reserved for Myanmar citizens and companies owned by Myanmar citizens.
Under Notification No. 25 of 2018 signed on May 9, the Ministry of Commerce (MoC) further liberalised the conducting of certain enumerated trade activities, effectively allowing foreigners granted a licence under the said notification to directly engage, in their own name, in retail and wholesale activities of certain goods and products in Myanmar. This paves the way for 100% foreign-owned companies and joint ventures to register as wholesale and retail businesses and conduct trade activities.
Notification No. 25 of 2018 states that 100% foreign companies, joint ventures between local and foreign investors, and local investors would be able to conduct wholesale and retail trade of all types of commodities (except prohibited items). The MoC also issued a list of 24 general product categories that may be traded by 100% foreign-owned companies and joint ventures, as follows:
• Consumer goods, including clothing, watches and cosmetics;
• Foodstuff and agricultural products (except as prohibited elsewhere), marine products, animal products, ready-made goods, non-alcoholic beverages and domestically manufactured alcoholic beverages;
• Household goods, including lacquerware and glassware;
• Pharmaceuticals and hospital equipment;
• Animal feeds and veterinary medicine;
• Sports equipment;
• Telecommunications equipment;
• Construction materials and equipment;
• Electrical records;
• Chemicals for industrial production;
• Seeds, agricultural inputs and equipment for use in agriculture;
• Agricultural machinery;
• Machines and related equipment;
• Motorcycles and related equipment;
• Motor vehicle spare parts and machinery spare parts;
• Home decoration materials, including flowers and plants;
• Souvenirs and hand-made goods; and
• Works of art, musical instruments and related equipment (excluding antiques).
In Notification No. 25 of 2018, the MoC specified the following minimum capital requirements (MCRs) for 100% foreign-owned companies and joint ventures, and clarified the timing of required capital injection and its detailed requirements and procedures for the registration of retail/wholesale trade business. Notably, the notification states that a joint venture with less than 20% Myanmar ownership is considered a 100% foreign-owned company and as such will have to comply with the minimum capital requirements for foreign-owned companies.
Newly incorporated 100% foreign-owned companies and joint ventures are required to inject 50% of the MCR amount prior to registration within 30 days from the date of applying for the registration of retail/wholesale business, 30% of the MCR is to be made by the end of the second year of operation as a retail/wholesale business and the final 20% of the MCR must be made before the end of the third year. For existing 100% foreign-owned companies and joint ventures wishing to conduct retail/wholesale business, the injection of at least 20% of the MCR should be done prior to registration or within a month from the date of submission of the application for registration, 30% of the MCR has to be made before the end of the first year of operation as a retail/wholesale business, 30% of the MCR has to be made before the end of the second year, and the final 20% of the MCR has to be made before the end of the third year. For existing 100% foreign-owned and joint venture companies that are already conducting trading in previously allowed commodities such as fertilisers, hospital equipment, pesticides, construction materials and seeds, they are required to submit evidence of existing investment already made to date from the commencement of operations to 30 days before the time of registration. They are allowed to remit additional capital within five years from the date of filing if their current invested capital is below the prescribed MCR under Notification No. 25 of 2018. The MOC requires evidence of remittances to show that the MCR has been met. Failure to do so would result in the eventual suspension of the exporter/importer registration required for the import of goods by the company. There is also a stipulated minimum floor space for firms to qualify. As of November 19, 2019, 19 wholly foreign-owned entities and 11 joint venture entities had been granted registrations to conduct retail and wholesale trading.
Insurance in Myanmar falls under the purview of the Ministry of Planning, Finance and Industry (MPFI) and its Financial Regulatory Department. In June 2012 the insurance sector was privatised and in the following September, 11 local companies were qualified to apply for an insurance business licence. As of end-2019 the Insurance Business Supervisory Board has licensed 11 local insurance companies to operate general insurance and life insurance businesses in Myanmar. Foreign Insurance Companies were previously only allowed to open representative offices, with an exception being insurance firms in the Thilawa Special Economic Zone.
On January 2, 2019 the MPFI issued Announcement No. 1 of 2019, allowing foreign insurance companies to operate in Myanmar. On January 18, 2019 the MPFI followed up with the issuance of:
• A request for proposals for licences to carry out 100% foreign-owned life insurance business for up to three licensees;
• An invitation for expression of interest to form a joint venture to carry out life insurance business for any number of licences (with up to 35% foreign participation but the same must have first opened a representative office); and
• An invitation for expression of interest to form a joint venture to carry out non-life insurance business for any number of licences (with up to 35% foreign participation but the same must have first opened a representative office). The preferred applicants had to comply with pre-licensing conditions stipulated by the MPFI and take all necessary measures to ensure the functional operation of life insurance business from the date of commencement of business operations of its wholly owned subsidiary. In late November 2019 the MPFI licensed five 100% foreign firms and six joint ventures to conduct business, with a slew of directives to be released into 2020 that will regulate activities such as bancassurance.
Share Trading on the YSX
The changes introduced in the MCL, particularly the change in the definition of a foreign company, paved the way for policy shifts in the treatment of public companies listed on the YSX. Prior to the July 12, 2019 shares of public companies listed on the YSX could only be traded between Myanmar citizens. This is a consequence of regulations prior to August 1, 2018 that stated public companies – the types of companies allowed to be listed on the exchange – were required to be wholly owned by Myanmar citizens.
After this, the SECM issued Notification No. 1 of 2019, which specifically allowed foreigners to trade shares in companies listed on the YSX. This was possible because of the change of definition of a Myanmar-owned company to one whose foreign shareholding does not exceed 35% of its issued share capital. While this has in theory granted foreigners the capacity to participate in the trading of listed shares on the YSX, the SECM nonetheless required the YSX to first undertake the following:
• Announce the date that foreigners may start trading shares of listed companies; and
• Issue the necessary regulations for foreigners to participate and invest, with the approval of the SECM. At the same time, a company listed on the YSX whose shares are proposed to be traded by foreigners on the exchange are also required to submit to the SECM the percentage of its issued shares that it will allow to be traded by non-Myanmar citizens. Until these implementing requirements have been satisfied, the ability for foreigners to participate in the trading of YSX-listed shares is tentative.
The MoC enacted the 2019 Consumer Protection Law, which focuses on the duties of firms in their operations as follows:
• Providing clear and comprehensive information concerning the guarantees and respective conditions of a particular service or good;
• Ensuring honest and indiscriminate communication with the consumer;
• Abiding by the respective ethics and disciplines in performing economic activities;
• Providing guarantees with respect to the commercial transactions and productions of goods or services based on the standards of the respective government departments and associations;
• Providing testers for the goods, which need prior inspection regarding their quality;
• Refraining from the direct or implied sale of goods or services that may cause damage or harm to consumers;
• Taking responsibility as per the guarantee relating to goods or services in situations of inconsistency;
• Refraining from any acts or omissions, including threatening, writing or acting in a misleading manner whether via the public communication methods or other means;
• Informing by means of public communication methods or in any other way to the respective department and the consumers in time upon finding out about the respective hazard as to the products or services rendered; and
• Following the decision of the respective committees in settling disputes concerning goods or services.
Pursuant to Directive No. 1 of 2019, under Section 31 (b) of the Consumer Protection Law 2019, firms are required to provide information and instruction regarding the product in both Myanmar and English.
Recent developments in the 2016 Condominium Law offer additional exceptions to the Transfer of Immovable Property Restriction Act of 1987 prohibition on the foreign acquisition of land rights, by allowing foreigners to own up to 40% of the total sellable floor area in a registered condominium development. Prior to any sale or transfer of a condominium unit, the transferor must check with the Condominium Registrar and may only proceed if the transfer will not result in the 40% foreign ownership threshold being exceeded.
To qualify as a condominium development and for a real estate developer to receive a condominium business licence, the 2016 Condominium Law requires the following:
• The developer must construct the building on a so-called “collectively owned” parcel of land.
• The land must be registered through relevant authorities as a collectively owned piece of land.
• Prior to undertaking the condominium development project, the developer must obtain the approval of the Ministry of Construction in order to classify the building as a condominium.
• The collectively owned land on which the condominium would be built must be at least 20,000 sq feet in land area. The subsequent issuance of rules implementing the 2016 Condominium Law have further clarified the question of whether state-owned land – of which the majority of real estate developments in Myanmar are comprised of – is eligible for conversion into so-called collectively owned land, and in particular whether the many build-operate-and-transfer schemes under long-term leases from the Myanmar government and its various ministries and other leasehold and grant land arrangements may qualify as a condominium development. Under these rules, a developer is expressly permitted to develop a condominium on land which is state-owned or under the control of a Myanmar government department or organisation, but only with the relevant governmental authority’s approval. As such, it is thereby possible to register such land as collectively owned to satisfy the requirements of the Condominium Law.
The 2016 Condominium Law provides a mechanism for recognising ownership over a condominium unit and for the transfer of ownership of such a unit to subsequent owners. Notably, the “legal owner” is the person whose name is on the condominium registration certificate issued by the Condominium Registrar. Any transfer of ownership must be registered with the Condominium Registrar within 30 days, and the transfer must be notified to the condominium association’s executive committee within seven days of the transfer.
In an effort to modernise the tax regime, increase transparency and improve effectiveness of tax collection, the new Tax Administration Law (TAL) 2019 came into effect in October 2019. The objective of the TAL 2019 is to collect tax effectively, maintain consistency in the administration of various taxes, interpret the rights and obligations of the taxpayers and Internal Revenue Department (IRD) accurately, and to make the self-assessment system easier to use and more accessible for tax payers. The TAL 2019 is related to the following laws:
• Income tax;
• Commercial tax;
• Specific goods tax (SGT); and
• Any other tax laws under the director-general. Under the TAL 2019, general anti-avoidance rules have been included, which could help to strengthen tax legislation and compliance within the country. Under the TAL 2019, the statute of limitations for the assessment and reassessment has been changed from three to six years, and in cases of fraudulence or incorrect information, the period can extend to 12 years. In cases of dissatisfaction with the assessment or other decisions of the IRD, the taxpayer can now make an application for administrative review under the TAL 2019, rather than going straight to the appeal. The TAL2019 also allows the communication to be made electronically or through registered mail. Again, taxpayers are required to keep the accounts, receipts and vouchers undamaged for the period of seven years from the date of transaction.
Under the new Union Tax Law 2019, the corporate tax rate remains at 25% and newly incorporated small and medium-sized enterprises that have net profits up to MMK10m ($6520) during the first three years of business remain tax exempt.
Gemstones no longer fall under the SGT and are now subject to the Gems Tax in accordance with Section 38 of the Myanmar Gemstones Law 2019. The export of natural gas is now excluded from the SGT. Moreover, the list of exemptions from the commercial tax payment has been updated as follows:
• Ground nut oil;
• Dairy products;
• Raw cotton;
• Ingots of pure gold (gold bar, gold block and gold coins); raw/cut jade, rubies, sapphires; and jewellery sold at emporiums held by the government;
• Postal services rendered by the Myanmar Postal Corporation;
• Goods and services that are procured with funds provided by domestic and international organisations to the government, through donation or aid.
In addition, pursuant to the IRD Notification No. 47 of 2018 dated June 18, 2018, payments made by non-state-owned entities to Myanmar resident companies and individuals for goods and services performed in Myanmar under a contract or agreement no longer need to account for a 2% withholding tax.
However, payments by union government-level organisations, ministries, the Naypyidaw Council, state and regional governments, state-owned enterprises and municipalities to residents is still subject to a 2% withholding tax, while payments to non-residents is subject to a 2.5% withholding tax. Payment by non-state-owned entities to non-residents remains subject to a 2.5% withholding tax. The payment of interest on loans to non-residents is subject to a 15% withholding tax. The payment of royalties to non-residents is likewise subject to a 15% withholding tax, although they are eligible for benefits under certain tax treaties between Myanmar and the country of residence of the payee.
Per an IRD letter issued In May 2019, the new fiscal year for the Union Taxation Updates has changed from April 1-March 31, to October 1-September 31. Under the transitory provisions of the TAL, any legal proceeding, appeal or other prosecution started before the effective date shall be governed by the provisions of the relevant laws.
However, the IRD can collect tax from taxpayers for unsettled cases from the periods before the TAL was implemented. The rules, regulations, notifications, order, directives and procedures issued under the Income Tax Law, the Commercial Tax Law and the Specific Goods Tax Law shall be applicable until the required rules and procedures are issued for the TAL.
Labour & Employment
The new Occupational Safety and Health Law was enacted on March 15, 2019. Under this law, employers are required to take necessary measures in order to ensure the well-being of employees. Notable provisions include the requirement to employ an occupational safety and health officer and committees, assess potential risks at the workplace, provide necessary equipment for employees and arrange medical check-ups. There is no mention of this law to supersede any existing law.
The Payment of Wages Rules issued on December 12, 2018 provide procedures concerning the suspension of the payment of wages and the cutting of wages as fines for penalty purposes. In cases where the employer has to face difficulties due to unexpected situations including natural disasters, they are required to submit a form of suspension to the Factory and General Labour Laws Inspection Department (FGLLID) through respective township or district or factory departments. Similarly, in cutting wages as fines as a penalty, the employer is required to negotiate and confirm with the respective negotiation committee, as well as the general workman committee or that particular worker, and must also receive the prior request from the FGLLID.
Moreover, the Settlement of Labour Dispute Law issued on June 3, 2019 includes provisions concerning the composition and duties of the Coordinating Committee, Conciliation Body and Dispute Settlement Arbitration Body. The Leave and Holidays Rules were issued by the Ministry of Labour, Immigration and Population on the April 26, 2018, and provide procedural details for casual, annual, medical and maternity leave.
Despite facing international pressure on the socio-political front, the government continues to push for reforms in order to provide a more liberalised legal framework to improve its business climate for foreign investors. These liberalisation efforts build on the momentum of changes introduced in the previous years.
While rules and regulations to operationalise the new laws have yet to be formulated and implemented, the commitment to adapting to the changing the economic environment is now seen in the updated notifications and issuances of implementing government agencies. The challenge still lies with effectively communicating the national development agenda to union, state and regional actors with regard to how to embrace and effectively implement the changes embodied in the laws.
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