Daw Khin Cho Kyi, Stefan Chapman and Barry D Penner of Myanmar Legal Services in Yangon look at the current state of Myanmar’s finance markets

Myanmar’s local banking sector is primitive. Few individuals have personal bank accounts. The local banking sector does not provide financial services required to support major project financings.  Foreign investors usually borrow from banks offshore and then loan funds to their Myanmar subsidiaries.

Currently, there are four state-owned banks, 20 privately owned banks and 42 representative offices of foreign banks. There is no branch or subsidiary of a foreign commercial bank in Myanmar. There are rumors in the market that there will be a tender of a limited number of branch licenses to foreign banks in 2014.

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. No clear regulations have been enacted to govern foreign currency transactions in and out of the country.  The Foreign Exchange management Law 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 PP-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.

Recently, Myanma Insurance Corporation, the sole state-owned insurance organisation, 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.

Forms of Security

A number of forms of security are available under the Burma Code, the British colonial law. However, in practice fees 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 at least ten types of land.

• Different laws applicable to land. There are at least 17 laws applicable to land.

• Different rules applicable to each sector.

• Absence of environmental health and safety laws. The Environmental Conservation Act was enacted in March 2012, but no implementing rules have been announced (as of May 2014).  No Myanmar bank has adopted the Equator Principles.

• Restrictions on rights of foreigners. Until recently, mortgages of immovable property may not be available in project financings if a lender is 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 may be relaxed.

• Myanmar as 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.

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 MOEP (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

• Chairmanship ASEAN 2014

• 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 2015

• Incomplete legal and regulatory regime, no independent judiciary

• Evolving currency exchange regime (major reform April 2012)

• Limited accommodation, telecommunications, office space, infrastructure

• Chronic electricity shortages

• Limited internet connectivity

• Primitive banking system

• Corruption and cronyism

• Frequent, unannounced and unwritten policy changes

• Weak educational system

• Sanctions and AML/CFT deficiencies identified by FATF (status confirmed February 14 2014 by FATF).


Daw Khin Cho Kyi

Managing director

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, (BA, Law, 1973; LLB, 1974; LLM, 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.


Stefan Chapman

International legal consultant

Chandler & Thong-ek Law Offices



About the author

Stefan Chapman is based out of the Bangkok office of associate firm, Chandler and Thong-ek and splits his time between Bangkok and Yangon. He specialises in projects and has recently represented lenders and sponsors on a number of hydropower and solar projects in Thailand and Lao. Stefan regularly advises foreign investors looking to invest in the region.

Admitted 2010, Supreme Court of New South Wales, Australia; University of New South Wales (B Econ 2009; LLB. 2009); Institute for Law and Finance; Johann Wolfgang Goethe-Universität, Frankfurt am Main (LLM 2012); associate, Chandler & Thong-ek Law Offices, 2010-present.


Barry D Penner

Senior counsel

Myanmar Legal Services



About the author

Barry Penner is former minister of environment for British Columbia, Canada (2005-2010), and attorney general (2011-2012)‎ LLB, University of Victoria; BA, Simon Fraser University (political science and economics)‎.  He is a member of Law Society of British Columbia, Canadian Bar Association, and the Association of International Petroleum Negotiators.

Prior to joining MLSL in June 2014, he has been working with Davis, helping lead the environmental practice and governmental strategy practice groups in Vancouver‎, Canada. His experience includes review of environmental assessments including major expansions to hydro-electric facilities, new wind-power projects, pipeline and port facilities for shipping; cross-border environmental and regulatory issues.‎