Myanmar Legal Services look at the current issues and challenges in the country’s finance sector

A couple of years ago, Myanmar’s local banking sector was primitive. Few individuals had personal bank accounts. The local banking sector did not provide financial services required to support major project financings. Until the opening of foreign bank branch offices in 2015, foreign investors usually borrowed from banks offshore and then lent funds to their Myanmar subsidiaries. Currently, there are four state-owned banks, 23 privately owned banks and 44 representative offices of foreign banks.

The Central Bank of Myanmar Law, 2013 established the Central Bank as an autonomous institution under the Ministry of Finance, to act as the licensing authority and regulator of all banks in Myanmar. They have licensed nine foreign banks to each establish a branch and engage in some limited lending and other activities. There is a proposed new Bank and financial Institutions Bill to replace the Financial Institutions Law of Myanmar 1990, which will govern the whole banking and finance sector.

Until April 1 2012, there were dual exchange rates, which posed problems for accounting, termination of taxable income, etc. A new floating foreign exchange regime was adopted in April 2012. The Foreign Exchange Management Law 2012 requires prior approval by the Central Bank of Myanmar for remittances. Approval by the Myanmar Investment Commission is also necessary for companies operating under the Foreign Investment Law.

There is no PPP (public-private partnership)-enabling legislation governing contracts between a public sector regulator and a private party, in which the private party provides a public service or project, and assumes substantial financial, technical and operational risk.

Myanma Insurance Corporation, the sole state-owned insurance organisation, has issued a number of licenses to Myanmar companies. It is not clear whether standard cover for CAR, delay in start-up and business interruption is available, nor what rules apply to reinsurance by foreign insurance companies.

A Securities and Exchange Commission Law 2013 provides for a Securities and Exchange Commission (SEC) and Rules. The members of the Commission were announced and are drafting some rules in advance of the proposed October 2015 launching of the Yangon Stock Exchange. An invitation to apply for a range of securities licenses was recently issued on short notice and with a short time frame, but response was very limited.

Forms of security

A number of forms of security are available under the Burma Code, the British colonial law. However, in practice few are recognised. Most forms of security must be registered, and MIC and Central Bank approvals must be obtained for offshore security. As a general rule, foreigners are prohibited from owning or taking any interest in immoveable property.

Forms of security over immovable property

• Registered or equitable mortgage or a charge.
• Seven types of mortgages are provided for, with varying enforcement processes.

Forms of security over moveable property

• Mortgages,
• Charges,
• Transfer of actionable claims, floating charges.

Other forms of security

• Negative pledge,
• Guarantees,
• Charge on shares,
• Offshore security.

Issues in project financings in Myanmar

• Different types of land. There are 11 types of land.
• Different laws applicable to land. There are at least 17 laws applicable to land.
• Different rules applicable to each state, region and self-administered areas.
• The Environmental Conservation Act was enacted in March 2012. Some implementing rules have been announced. No Myanmar bank has adopted the Equator Principles.
• Restrictions on rights of foreigners. Until recently, mortgages of immovable property were not available in project financings if a lender was a foreign financial institution. However, under the Foreign Investment Law 2012 and new Myanmar Special Economic Zone Law 2014, the restrictions on rights of foreigners were relaxed.
• Myanmar has acceded to the New York Convention of Enforcement of Foreign Arbitration Awards, but must enact a new arbitration law to provide for enforcement of foreign arbitration awards by Myanmar courts. There is a draft pending approval, based in part on the UNCITRAL Model Law.

Security package for Myanmar project financing

• On-Shore Security Agreement: fixed charge on specific project assets (including project documents), and a floating charge on all other assets (including inventory and receivables) located in Myanmar.
• Off-Shore Security Agreement: fixed charge on specific project assets (including project documents) and a floating charge on all other assets (including inventory and receivable) located outside Myanmar.
• Assignments of cash balances in designated bank accounts.
• Written waiver of rights of set-off.
• Agreement by shareholders to contribute equity, guarantee repayment, assign all amounts owing to it, pledge of equity interests, negative covenants re transferring shares and creating liens, and consent to arbitration.
• Indemnity against certain costs.
• Agreement by government counterparty not to sell any interest it may own in borrower or create any lien.
• Designation of Lenders as “loss payee” under insurances.
• Myanmar government guarantees of performance by Myanmar government counterparties.
• Other security to be agreed.

ASEAN Integration 2015

Below is an outline of the impact of ASEAN Integration on Myanmar.


• Cross-border energy projects (Yadana, Zawtika and Shwe pipelines)
• Cross-border infrastructure (bridges)
• Proposed cross-border infrastructure (transmission lines, Dawei east-west road/rail links)

Regional challenges

• No single regulator; no set of laws and regulations
• Four existing bi-lateral investment treaties with ASEAN countries: Lao PDR, Philippines, Thailand, Vietnam; evolving to ACIA

Myanmar challenges

• Completion of Final Phase of the progressive reduction/elimination of investment restrictions and impediments in 2015 (2014 for ASEAN-8)
• Compliance with non-tariff barriers in 2015 to 2018 (with flexibility) (2010 for ASEAN-5, and 2012 for Philippines)
• Next general elections November 2015
• Incomplete legal and regulatory regime, lack of experience, certainty and capacity in the judicial and regulatory processes
• Evolving currency exchange regime (major reform April 2012)
• Limited accommodation, telecommunications, office space, infrastructure
• Chronic electricity shortages
• Limited internet connectivity
• Corruption and cronyism
• Frequent, unannounced and unwritten policy changes
• Weak educational system
• Sanctions and AML/CFT deficiencies identified by FATF. In February 2015, FATF recognized Myanmar’s commitment to improving AML/CFT deficiencies but cited insufficient progress.

Khin Cho Kyi


Myanmar Legal Services


About the author

Khin Cho Kyi is a seasoned and skillful practitioner with over 30 years of legal experience in the public sector as well as in private practice in Myanmar. Over the course of her legal career she has developed an extensive network of professional relationships in Myanmar and internationally. She has acted as legal advisor for many private Myanmar and international corporate entities as well as multilateral international foundations and financial institutions, foreign embassies, law firms, etc.

Admitted to practice, 1976, Divisional Court; admitted as Advocate of the Supreme Court, Myanmar Bar Council, 1977; University of Yangon, (B.A., Law, 1973; LL.B., 1974; LL.M., 1982); Lecturing tutor in Department of Law, University of Yangon, 1977-1984; Judicial Officer, Supreme Court, 1984-1989; Judge 1989-1995; Advocate, Lucy Wayne and Associates, 1995-1997, Managing Director, Myanmar Legal Services Limited, 1997-present.


Nwe Nwe Kyaw Myint


Myanmar Legal Services


About the author

University of Yangon, (B.A. Law; LL.B., LL.M.); Office of the Council of State (Junior Officer) 1980-1982; Law Officer Grade (4), 1982-1986; Law Officer Grade- (3), Attorney General’s Office 1986-1997; practicing lawyer as Advocate of the Supreme Court, 1997-present.


Thaw Dar Sein


Myanmar Legal Services


About the author

LL.B., (1984); LL.M., (1992) from Yangon University, M.A. (2004) from Hiroshima University, Postgraduate Diploma in International Humanitarian Law (2007) from NALSAR University of Law. Served at the Supreme Court of the Union up to the position of the Deputy Director, including the post of Judicial Officer Grade 4, Juvenile Judge, Deputy District Judge, and Assistant Director, 1985- August 2014.


Jutharat Anuktanakul


Myanmar Legal Services


About the author

Jutharat Anuktanakul has been working with C&T since 1996. Her principal areas of practice are corporate law, mergers and acquisitions, BOI laws, IEAT laws. She represents a number of private companies, both domestic and international clients, in foreign investment, corporate mergers and acquisitions, registrations, obtaining permits and licenses.

Jutharat obtained her LL.B. from Thammasat University (1996); Graduate Diploma in Business Law, Thammasat University (1998), and LL.M. from Southern Methodist University (2013). She is a member to Lawyer Council of Thailand and an extraordinary member of the Thai Bar Association.

Jutharat splits her time between Bangkok and our affiliate office, Myanmar Legal Services, in Yangon.