INSIGHTS THIS MONTH (April, 2017)

27
Apr
2017

HIGHLIGHT OF THIS MONTH
From Our Corporate M&A Team

Myanmar Dramatically Cuts List of 92 Activities Requiring a Local Partner Down to 22

In a move to expand the potential opportunities for foreign investors, the list of activities a foreign investor is allowed to carry out in Myanmar only under a joint venture (“JV”) with a Myanmar citizen or company, has been cut significantly. Read more.
 
 
IN THIS ISSUE
Government Advisory

Government Guarantees for PPP Projects in Myanmar

On Friday March 31st 2017 the VDB Loi and Latham & Watkins hosted an event entitled “Government Guarantees for Public Private Projects in Myanmar” in Nay Pyi Taw, Myanmar. In attendance were H.E. Kyaw Win, Union Minister of Planning and Finance, U Aung Nai Oo, Director General DICA, U Win Khant, Permanent Secretary Ministry of Planning and Transport and communications and other government officials from MOEE, DICA and the Department of Budget. Read more…
 

From our Disputes Team

Should Myanmar Join the International Convention for the Settlement of Investment Disputes?

In an investment dispute between a foreign investor and the Government of the Union of Myanmar, there are several institutions and rules which can be used. According to UNCTAD data, of the 739 known investment dispute proceedings to date, 480 are administered by ICSID, the International Centre for the Settlement of Investment Disputes, 88 by the Permanent Court of Arbitration, 67 had no institution and the remaining 50-odd cases were spread out over the other institutions. Read more…
 

From our Energy Team

A New Energy Landscape for Myanmar?

Myanmar may be on the verge of a completely new energy landscape offering exciting opportunities as well as challenges for international investors. In coming months a new energy master plan is expected to be revealed for the Yangon Region – which accounts for almost half of all electricity produced across the country. Read more…
 

From our Infrastructure, Real Estate and Construction Team

“Building Yangon” seminar held in Yangon on 4 April 2017

Despite being enacted last year, the Condominium Law has still not had subordinate legislation released under it to make the registration of condominiums possible. As we anticipate the formation of a Committee to hear condominium applications and the release of the Condominium Law Rules, it is timely to consider infrastructure and construction projects in Yangon generally. Read more…
 

 
NEW MYANMAR LAWS AND REGULATIONS THIS MONTH
  • Myanmar Investment Rules (Notification 35/2017 of MOPF)
    These Rules are issued under Myanmar Investment Law (2016). The Rules consists of 25 chapters indicating types of investment for which MIC permit is required, a range of application processes (such as investment screening application process, proposal submission and assessment process, endorsement application process, tax incentive application and screening process, land rights authorization application process), formation of Proposal Assessment Team (PAT) and committees (State or Regional Committee and Investor Assistance Committee), duties of Investment Monitoring Division, investor disputes, investor responsibilities, transfer or funds, insurance, administrative penalties and transitional and miscellaneous provisions.
     
  • MIC’s Notification No. 15/2017 (List of Restricted Investment Activities)
    This notification classifies investment activities into four categories: (A) Investment activities allowed to be carried out only by the Union, (B) Investment activities that are not allowed to be carried out by foreign investors, (C) Investment activities allowed only in the form of a joint venture with any citizen owned entity or any Myanmar citizen, (D) Investment activities to be carried out with the approval of the relevant ministries. In this notification, the “industrial code” is also included for each investment activity. The MIC’s Notification No.26/2016 (Classification of Business Activities) is repealed by this notification.
     
  • Myanmar Companies Law (Draft)
    This Law contains 8 parts (32 chapters) covering a wide range of company matters relating to a company’s capital, management, administration and governance, offers of securities to the public.
    Furthermore includes mortgages and charges granted by a company, financial reporting and audit of a company, arbitration, compromise with creditors and members and buy-out rights, winding-up process, registrar, registration office, registration of documents, power of inspection and fees and removal of companies from the register, legal proceedings and offences and miscellaneous provisions.
     
  • Occupational Safety and Health Law (Draft)
    This Law intends for the effective implementation of occupational safety and health measures in every workplace, determination of duties of employers and employees in order to mitigate occupational accidents and health issues, determination of preventive measures in order to mitigate and prevent occipital accidents and health issues and creation of healthy working environment. This Law is composed of 17 chapters including business activities which this Law applies to, responsibilities of employers and employees and informing, inspecting and reporting process of accidents, hazard, occupational poisoning and disease.
     
  • FY 2017-2018 Union Tax Law (Draft)
    On 1 March 2017, the Union Tax Law 2017 was passed. It will take effect from 1 April 2017. Several changes were made to the proposed new measures for commercial tax and special goods tax reported on 3 March 2017. The proposed measures were largely adopted except for the following:

    1. Commercial tax
      • Changes to the list of exempt goods and services
      • A further reduction in the rate on the sale of gold from 3% to 1%
    2. Special goods tax
      • Rate changes for cheroots, cigars, pipe tobacco, betel chewing preparation and vehicles with an engine capacity between 2001cc and 4000cc
      • A reduction in the number of goods subject to special goods tax from 20 to 17

  • Law Amending Legal Translation Commission Law
    The objective of the Legal Translation Commission Law is to translate all the existing laws from English into Burmese and to coin Burmese words for some legal terminologies. Section 4 of this law is amended in the amending Law which is about appointment of 9 people.
     
  • Water Tax and Embankment Law
    Determination of tax rates for water tax and embankment tax
    Any person who enjoys irrigable water for agricultural purpose from the dam, lake, canal, drain, sluice gate constructed and maintained by the government or who enjoys protection from flood with embankments, drainages and sluices shall pay tax according to the financial year as follows:

    1. 1950 MMK per acre if fully irrigated from land preparation to heading stage at the paddy cultivation areas; 900 MMK per acre if irrigated only for land preparation (or) transplanting (or) seedling (or) reproduction (or) heading (or) partial irrigation; 900 MMK per acre for other crops;
    2. 500 MMK per acre for enjoying areas protected from flood;

    If any cultivated land is inclusive both for items (a) and (b), the water tax is the same rate as in item (a).

  • MIC’s Notification 10/2017
    This notification specifies districts and townships in less developed regions as Zone 1, moderate developed regions as zone 2 and developed regions as zone 3 for the purpose of tax exemption and relief as described in section 75 (a) of Myanmar Investment Law.
     
  • MIC’s Notification 11/2017
    Myanmar Investment Commission has prescribed the investment capital amount up to USD 5 million or MMK 6 billion for State and Regional Investment Committees for issuance of endorsement order.
     
  • MIC’s Notification 13/2017
    This notification lists the sectors the government promotes for foreign investment. Tax incentives for these sectors are available, but they also depend on the project location. The list includes: Agriculture and its related services (except cultivation and production of tobacco and virginia), Plantation and conservation of forest, and other businesses with forest, Livestock production, breeding and production of fishery products, and its related services, Manufacturing (Except manufacturing of cigarette, liqueur, beer, and other harmful products to health), Establishment of industrial zones, City development activities, Construction of road, bridge and railway line, Supply and transport services, Production of renewable energy, Telecommunication businesses, Education services, Health services, Information technology services, Hotel and tourism, Science research development business and many others.
     
 
RECENT VDB LOI WORK
  • VDB Loi secures MIC permit for 300MW solar project: Our Energy team has helped the developer of a large solar project obtain its MIC permit. The firm also assisted with land rights documentation, EPC and financing, and earlier assisted with the Power Purchase Agreement.
     
  • Oil and gas block assignment: Our Energy team is assisting an oil and gas operator with the assignment of its interest in a Myanmar oil and gas block. Our team will help draft transaction documents, advise on tax and regulatory implications, and will assist the operator with obtaining all necessary Government approvals.
     
  • Assisting gas utility exploring its market entry: Our Energy team assists a foreign gas and power utility with its exploration of a possible market entry in Myanmar. Our assistance covers advice on the market structure, regulations, price and tax mechanisms, Government policy and infrastructure plans.
     
  • Loan by IFI for agri-processing: VDB Loi’s Banking Finance team is acting for an international financial institution on providing a small cap loan for a borrower in the agri-processing sector. Our team will conduct a due diligence, review loan documentation, advise on a suitable security package and generally advise on the project.
     
 
OUR UPCOMING EVENTS
  • BREAKFAST BRIEFING: Legal and Tax Update

    04 May, 2017, Phnom Penh, Cambodia
    Cambodia’s tax and regulatory environment is changing rapidly. The General Department of Taxation is being reformed, and recent investments in people and training are having a noticeable impact on the way in which tax audits are being conducted. VDB Loi’s professional experts will provide an overview and practical insights into the impact of the latest tax and regulatory changes on your business.
    Click here to request an invite.
     
  • Myanmar Ports, Fuel Terminals, Storage and FSRUs: Case Studies, Lessons Learned for Developers and Lenders
    08 May, 2017, Singapore
    Terminals and ports are right at the centre of Myanmar’s explosive demand for electricity and petroleum products . The LNG supply and terminal tender announced by the Government and to be managed by the IFC is one of several illustrations of how this recently unlocked market offers new and exciting opportunities. In a context where fuel import has only recently been liberalized, deploying infrastructure to facilitate import, storage and distribution may be the ultimate local advantage.

    In this highly practical panel discussion, speakers will share their experience with Myanmar port terminal and fuel projects.

    Click here to request an invite.
     

 
WHAT OTHERS SAY ABOUT US
International publisher Chambers and Partners placed VDB Loi in a leading position among law firms in Myanmar, highlighting our “broad-based offering, consistently praised for its practicality”. Here are some of the things our clients told the researchers:
  • “We have been impressed with VDB | Loi for their service-mindedness, eye for detail, and notably their sense of the Myanmar realities.”

     
  • “VDB really know the minutiae, but also the way that things really work in practice. We feel that they can predict the authority’s reactions well. They are commercial and can offer suggestions and options, and can admit when it is unclear how things will turn out. They are my first port of call.”

     
  • “Edwin Vanderbruggen is very good at dealing with very difficult issues; he can push things through, make things work.”
 
HOW IS OUR APPROACH DIFFERENT?
These 3 core values are why our clients choose us. Read about it here:

 
SEE OUR PROGRESS IN 2016
We wish you a prosperous and productive 2017! Check out the impressive progress our practice made last year:

  • An astounding 25% to 33% of the approved (MIC) investments in Myanmar obtained MIC permits through VDB Loi.
     
  • We were involved in 5 out of 7 power projects signed in 2016!
     
  • We created exclusively dedicated practice teams as well as launched new ones, such as Disputes and Energy.
     
  • We obtained licenses, permits and helped set up financial institutions, telecom operators, security firms, and airlines.
     
  • We built on our expertise acting for the Government in the petroleum products sector, our Energy Team was the obvious choice for additional engagements in fuel and fuel infrastructure in 2016.
     
  • We continue to have the confidence of the Government who engages us in a number of transactions in energy, transport, and telecom.

You can download the full report here

 
 
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