Myanmar PPP Policy Document - Revised PDF

Myanmar Public-Private Partnership
Policy Document
(including a Legal Review of PPP-related issues)
Draft for consultation
Ministry of Planning and Finance
Republic of the Union of Myanmar
2016
The Policy Document was developed under a United Nations Development Account project entitled “Building
capacity and facilitating private sector involvement for infrastructure development for less developed countries in
the Asia-Pacific region”, which focuses on four selected countries, including Myanmar, and is implemented by the
Transport Division, ESCAP. The Policy Document was developed with the assistance of two consultants: Mr. Edwin
Vanderbruggen from VDB Loi and Mr. Anthony Smith. The views expressed in this document are those of the
authors and do not necessarily reflect the views of the United Nations Secretariat.
Myanmar Public-Private Partnership Policy Document – Draft for consultation
A. INTRODUCTION
The Myanmar Public Private Partnerships Policy (PPP) Document seeks to provide clarity with regard to
the objectives and principles to support PPPs in the country and to develop an implementation roadmap
for supporting the emergence of PPP projects.
Through this policy document, the Government sets its vision and strategy for using PPPs as a means to
deliver public infrastructure services in Myanmar and addresses questions such as:
• What are the objectives of the PPP programme?
• Which sectors are targeted?
• What types of PPP are envisioned? and
• How does the Government plan to implement its strategy?
The document also demonstrates the strong political support for PPP in the country, which is needed for
the success of the Myanmar PPP programme.
B. POLICY FORMULATION
1. Objectives
The Government of the Union of Myanmar is committed to improving the level and the quality of
economic and social infrastructure services across the country and is seeking to develop a substantive
role for Public Private Partnership (PPPs) as a means for promoting private sector participation in the
provision of public infrastructure and public services.
2. Principles
In designing PPPs to deliver the objectives outlined above, the Government adheres to the following
principles:
• Value-for-Money considerations are central in the decision-making process of the Government

regarding PPPs to check whether a project is likely to bring more value if implemented as a PPP
rather than through the traditional procurement process. Private participation in infrastructure is
expected to create value-for-money in a number of ways, including:
- Mobilization of private financing
- Bringing private innovation, expertise and management to infrastructure
- Better project management, including project delivery on-time and on-budget
- Optimized (lifecycle) project design, investment, maintenance and operations
- Better customer orientation
- Better realization of commercial potential of infrastructure
- More efficient and cost-effective management of certain risks (such as construction risks)
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• The budget implications of PPP projects are carefully managed to ensure the sustainability of public
finance and the capacity of the Government to fulfil its long-term commitments;
• The interests of the end users, project affected persons, private and public sector entities and other
stakeholders are protected.
3. Definition
A Public-Private Partnership (PPP) is a contract between a public entity and a private partner according
to which the private partner delivers a public asset and/or a public service in accordance with the
following features:
• Project specifications focus on the end result - delivery of facilities or services at specified standards
- rather than the inputs or means of delivery;
• Government payments to the private party, where required, should be based on the delivery of
facilities or services consistent with performance standards that are clearly defined in the PPP
contract;
• User charges, where applied, are specified in the PPP contract or subject to credible regulation;
• Substantial and appropriate risks related to the provision of the public asset and/or the public
service are transferred to the private sector;
• The private partner is selected by utilizing open, transparent and competitive procurement
procedures. Unsolicited proposals should be subject to strict conditions to preserve the competitive
nature of the selection procedure (unsolicited proposals refer to projects proposed directly by the
private sector);
[Comment: These strict conditions could include, for instance, projects that do not require financial support
from the Government, that are provided with pre-feasibility studies and that are submitted to some
competitive pressure]
In the paragraph above, the following shall have the meanings assigned to them below:
• Private Partner: means an entity that has a majority non-governmental ownership.
• Public asset or public service: The asset/services being provided are traditionally provided by the
Government, as a sovereign function, to the people.
4. PPP Models
The PPP models supported by the Government could include:
• User fee based PPP – where a Private Partner builds and/or renovates a public asset by using its own
funds or funds it has raised, operates it within the period specified in the PPP contract and collects
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fees from users of the public asset or service, and transfers the asset upon the expiration of the PPP
Contract to the public entity in accordance with the conditions specified in the contract;
• Availability based PPP – where a Private Partner builds and/or renovates public assets by using its
own funds or funds it has raised, operates it within the period specified in the PPP contract and
receives regular performance-based payments from the public partner at regular intervals, and
transfers the asset upon the expiration of the PPP Contract to the public entity in accordance with
the conditions specified in the contract;
• Operating Concession, whereby the Private Partner has to operate a public asset and carry out
maintenance at its own risk, depending on revenue from users ‐ but the public entity remains the
owner of the public asset, and is responsible for investment in it.
5. Scope of PPPs in Myanmar
PPP in Myanmar should refer to projects that fit the definition of a PPP in section 3 and in addition have
the following characteristics:
• A capital investment requirement of greater than the local currency equivalent of […]
[Comment: the Government might want to limit PPP to project of a certain value (the transaction costs linked
to the PPP approach might not be justified for small projects / Thresholds might also be required as the
procedures to be applied could be different depending on the project size]
• A contract duration of longer than three (3) years.
[Comment: three years seems relatively and the Government could consider increasing it to at least five years ]
Participation in PPPs may take place in both productive and socio-economic services sectors including,
but not limited to the following:
• Agriculture;
• Generation, transmission and distribution of electric and thermal power;
• Processing, storage, transportation, transmission and distribution of oil and natural gas;
• Automobile, railway, water, air, urban transport;
• Roads and railways (including bridges and tunnels);
• Public utilities and public services;
• Medical, medico‐preventive and other healthcare services;
• Education, upbringing, culture and social services;
• Mobile and stationary telecom services;
• Tourism, recreation and sports;
• Water resources and wastewater;
• Solid waste management;
• Mining and other forms of mineral extraction (upon approval from the Pyidaungsu Hluttaw);
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• Survey, implementation and monitoring of hydropower projects work such as civil and mechanical
work, power supply, power stations, and electricity supply enterprises;
• Other sectors involving the provision of services to a wide range of consumers.
The related departments/organizations need to analyze whether the PPP project is in line with the
existing laws, rules and regulations. Also, the PPP projects need to obtain comments and suggestions
from the Attorney General’s Office.
C. ENABLING FRAMEWORK
The Government recognizes that a comprehensive enabling framework is required for further
developing the PPP market in the country. The enabling framework comprises different elements that
are detailed in the sections below.
1. Legal and Regulatory Framework
The legal and regulatory framework needs to be compatible with the PPP policy formulated. Currently,
private sector investors and lenders need to consider a framework of laws that may be relevant to a PPP
project in Myanmar. However, referring to these laws has only given the parties a sense of what is
regulated. In practice, the project’s fate is heavily dependent on the customary practice in the field,
risking arbitrary decisions of relevant authorities. Therefore adjustments to the existing framework
might be required for establishing a pro-PPP environment.
a) Legal Basis
There are few Myanmar laws that establish clearly that the private sector is allowed to invest in public
services or to own public facilities. Most laws in Myanmar do not specifically mention whether private
sector companies can actually own facilities which are used for public sector services. The laws may
state vaguely on which government departments may cooperate with the private sector, either
domestic or foreign. However, the laws most often neither mention the structure of the arrangement
such as Build-Own-Transfer (BOT), or otherwise, nor provide the exact scope of the rights of the private
sector (see detailed analysis in Annex I)
Hence, there is a need to strengthen the legal basis for private sector involvement in public services
delivery. This should contribute to clarify whether the private sector can perform certain public services
and hold facilities used in the supply of public services under a contract with the Government.
The Myanmar PPP environment also depends on the existing restrictions regarding foreign ownerships
of key aspects of an infrastructure project. This is important as foreign companies are required to
implement large PPP projects. In Myanmar, the Foreign Investment Law (FIL) provides a framework for
foreign investments to be carried out in the country and lists some activities that are currently
prohibited for foreign ownerships (see Annex II for more details on these restrictions).
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b) Procurement Rules
Another key element of the legal and regulatory framework relates to the procurement rules, which are
in most countries not suited for PPP projects. The PPP projects require a slightly different approach than
general public procurement for the following reasons:
• PPP are developed on the basis of output requirements rather than detailed design specifications as
it is common for general public procurements. The private sector’s management of risks to achieve
the output requirements helps to ensure value for money and optimal life cycle costs.
• General public procurements place greater emphasis on the lowest cost for the construction of a
specified facility, with less emphasis on value for money and optimal life cycle costs.
• Due to the inherent complexity of PPP projects, interaction between the public authority and the
private partners during the procurement process might be necessary in order to refine project
specifications.
To achieve the best outcome, the Government needs to ensure competition, transparency and fairness
in the selection of the private sector party proposing to design, finance, construct, operate and maintain
the infrastructure and related facilities under a long term, risk sharing contractual relationship
• Competition: The principle objective of a fully-developed, well-functioning PPP system is to provide

needed infrastructure facilities and related services at fair and reasonable tariffs to be paid by users.
This objective can most effectively be achieved through free and open competition. The first step to
maximize free and open competition is through widely-circulated public advertising which opens-up
and instills greater confidence in the PPP procurement process, encourages more contractors to
compete for PPP projects, and results in overall lower prices for the benefit of the public and all
users.
• Transparency: Transparency enables everybody affected by PPP projects to understand the
Government objectives and the precise methods to be used to attain them. A transparent PPP
process requires (a) the "rules of the game" to be made available to all participants and (b) the
"game" to be followed in accordance with those rules.
• Fairness: Capable, responsible contractors should compete for PPP projects only if they have
confidence in the fairness and integrity of the overall process; i.e., all participants are treated fairly
and consistently over time and as between each other.
• Accountability: Public sector officials should be held to a fiduciary duty or obligation to report,
explain, or justify their action. All Government Contracting Agencies (GCA) officials are required to
abide by good governance principles and to justify, for example the recommendation to award the
contract to the bidder offering the highest evaluated proposal.
This competitive approach requires a departure from the Memorandum of Agreement (MoA) way of
developing projects with a single private sector party that has been prevailing in Myanmar for many
infrastructure projects.
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To support implementing agencies dealing with PPP projects, PPP procurement rules or a PPP
procurement manual should be developed to provide clear guidance to public entities implementing
PPP projects (Annex III provides a review of current procurement rules in Myanmar).
While developing these guidance materials, the Government needs to explore whether the existing
legislation needs to be modified or not. Once the rules are established, they need to be properly
followed to avoid legal challenges that might be introduced by losing bidders.
c) Other Related Laws and Regulations

Different laws and regulations can impact the success of PPP projects and might need to be reviewed to
facilitate private sector involvement in public infrastructure. This includes the following issues:
• Contract law
The contract legal framework might limit the provisions that parties can introduce into their
contractual agreement. As a PPP project implies the signature of contract between a private partner
and a public entity, this legislation needs to be considered when developing PPP projects. For
instance, the level of damages set in a contract with regard to breach of contract might in certain
cases be limited by the courts Likewise, the law might constraint the ability of the parties to agree
on compensation payments in the event of an early termination of the contract.
This element is however important for giving sufficient comfort to the private partner financing an
infrastructure project. Annex IV highlights the main features of the Myanmar contract law, which
might impact PPP projects, and some recommendations.
• Dispute resolution mechanism:
Efficient dispute resolution mechanisms should be in place to deal with differences that will
inevitably arise between the public and private partners during the life of a long-term contract of
typically 20 years. Before entering into such long term contracts, the private sector will require
mechanisms be in place to guarantee its rights are protected. In this respect arbitration is often
preferred to in-court procedures, because it’s perceived as quicker and more independent from
political interference. In the wake of Myanmar’s 2016 amendment of the Arbitration Act, Annex V
reviews the existing dispute resolutions in Myanmar and provides some recommendations in this
respect.
• Land use issues:

Land acquisition is often quoted as greatest challenge to the success of PPP projects and without
land no infrastructure projects can be realized. Those problems often arise because land may not be
easy to acquire for a number of reasons including legal and regulatory obstacles, which might
require some adjustments. Annex VI outlines the current framework in Myanmar with regard to
land use and suggests some possible areas of improvement.
• Environmental and social issues and environmental assessment

For any infrastructure projects, environmental and social considerations are important. The
Government of Myanmar updated and modernized its environmental and social legal framework
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with the Environmental Conservation Law of 2012, followed by implementing rules issued in 2013
and 2014. A detailed analysis of this legislation is provided in Annex VII. Some finance institutions
require adherence to international standards for managing environment issues in order to be able
to lend to PPP projects (see the equator principles). With regard to the private investors, they might
want to seek to limit their liability with regard to environmental damages, which will depend on the
legal and regulatory environment.
• Insurance
PPP projects carry a number of risks and potential liabilities that are typically covered by insurance.
The availability of insurance coverage and the terms of such coverage are important for the viability
of these projects. Annex VIII presents the current legal framework with regard to insurance and the
existing limitations.
• Labour Law
Employment issues are particularly relevant for PPP projects. In particular, legislation might impact
the way employees from the public are transferred to the private sector in case an existing public
service is outsourced to a PPP company (important issues could include: What happens at the end
of the PPP contract? Will any employees be transferred back to the public entity?). Other
employment issues, such as minimum wages, social security and visas for foreign workers, will also
be considered when assessing a PPP projects. Annex IX provides a review of the current situation in
Myanmar with regard to these questions.
• Taxation
The local tax regime impacts the profitability of PPP projects and therefore the attractiveness of a
country for private investors. As such, investors will carefully assess the existing environment and
the existence of tax incentives such as tax holidays. They will also consider the possibility of future
changes in the tax regime and contractual stabilization of tax treatment (particularly for
discriminatory changes). Annex X describes the tax regime applicable to PPP projects in Myanmar.
• Insolvency laws
PPP projects are mainly financed through bank loans and all parties, notably lenders, need to review
the local insolvency laws in order to understand what happen if a project company becomes
insolvent. For example: Are there clear procedures for appointment of liquidators?; Is-it possible for
the banks to intervene prior to liquidation (e.g. Step-in rights, which are rights given to lenders in
project financed arrangements to "step in" to the project company's position in the contract to take
control of the infrastructure project where the project company is not performing); What is the
prioritization among the different creditors?. Annex XI provides answer to these questions.
• Security
To secure their loans, the lenders to a PPP project will want to take some securities (for example on
the project assets, the land, the shares of the project company and the project cash flow). As the
country security regime dictates the lender ability to take these securities, this regime can affect the
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capacity of lenders to provide the required financing for PPP projects. Annex XII portrays the current
legal environment with regard to security regimes.
• Foreign Exchange
Investors and lenders are often not located in the country where the project revenues are
generated, which means that money will need to be transferred abroad (for instance to service
foreign debt and repatriate profits). Likewise, a private partner in a PPP project might need to
purchase materials abroad or pay expatriate workers in foreign currency. Therefore they pay
particular attention to laws that may limit their capacity to make transfers. Annex XIII provides an
overview of the current legislation with regard to currency exchange controls.
d) PPP Law
Based on the legal review conducted and detailed in the annexes, it is believed that legal enactments or
amendments to existing laws are necessary to improve the environment for PPPs. This is notably the
case with (i) the authority of the private sector to perform certain public services and to hold facilities
used in the supply of public services under a contract with the Government, (ii) public procurement, (iii)
and certain legal issues in connection with the use of land and buildings, insurance, and employment.
It is felt that a number of these issues will be most efficiently addressed in one comprehensive new law,
a Law on Public Private Partnerships. This Law could address the gaps and remove any overlaps, conflicts
and impediments in the existing legal framework. In addition, the Law could establish a set of general
principles and rules for PPPs based on best international practices. All public entities will be expected to
comply with these principles and rules, thereby ensuring high degree of consistency in approach across
sectors. The law could also create the necessary institutional arrangements that are presented in section
2 below.
Separately, it should be noted that a number of other legislative developments need to progress to
improve the environment for PPPs, such as land reform and treaties for the protection of foreign
investment. In addition, certain new regulations are needed right away to improve the perfection of
security in Myanmar and the imposition of stamp duty.
e) Regulatory Mechanisms
As provision of many public assets and/or related services has natural monopolistic characteristics, a
regulation system is required to ensure that the interests of users and service providers are protected
taking into consideration the affordability of the users and certainty of pricing and revenue stream to
the private party.
Myanmar has created several relevant independent regulatory bodies, such as the Telecommunications
Authority, the Electrical Authority and the Central Committee for the Consumer Protection.
A key element of the regulation relates to tariff setting and review. For instance if a private operator is
authorized to collect fees from users, how are such fees set? Are there any limits? How is price adjusted
over time?
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These questions should be addressed through independent (multi-sectoral, where applicable)

regulators. Wherever there is no sector specific regulator, regulation would be through contractual
arrangements. Where the regulatory mechanism becomes operational subsequent to a PPP contract
execution, the contract provisions should prevail to minimize regulatory risk.
2. Institutional Arrangements
PPP projects requires specialized expertise and there is a need to provide clarity with regard to the
responsibilities within the Government and to the decision making process. Typically, countries with a
successful PPP programme have created a three-tier structure with an inter-governmental committee, a
technical unit and the implementing agencies. With this in mind, the Government considers
implementing the following structure and provide adequate support in terms of budget and staff:
a) PPP Committee
The Government could establish a PPP Committee, which should have the following responsibilities:
 Adopting PPP regulations and standard documents to be used by GCA;
 Approving PPP projects at different stages (for example prior to the development of feasibility
studies, the issuance of bid documents and the signing of PPP contracts) as illustrated in the figure
below;
4 Phases of PPP Development
Identification Preparation Transaction Management
Approval for Approval for Approval for Signing

Feasibility Study? Launching Tender? the Contract?
The Myanmar Investment Commission (MIC) might be considered as a candidate for holding the role of
a PPP committee as it gathers the relevant ministries at a high level such as Ministry of Planning and
Finance and the Attorney General. MIC is also already involved in reviewing and approving foreign
investment licences, which will be required in most PPP projects.
b) PPP Unit
The Government should establish a PPP Unit to be located in the Ministry of Planning and Finance,
which should act as a national centre for PPP expertise. The functions typically assigned to the PPP unit
include the following:
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 Coordinating appraisal of PPP projects and providing recommendations to the PPP committee
before its approvals at different stages (the PPP Unit plays the role of the secretariat of the PPP
committee);
 Administrating a Project Preparation Facility (as described in section 3) and managing the
consultants recruited through the Facility;
 Providing technical support to GCAs throughout the preparation, tendering and contracting process
of a PPP project ;
 Promoting the PPP programme (for example by helping GCAs to identify projects that could be
implemented as PPPs);
 Supporting capacity building activities for GCAs;

 Developing guiding materials for GCAs (e.g. criteria for project selection, procurement guidelines,
standard contracts, advises on legal and regulatory reforms);
 Monitoring progress on PPP projects implementation and reporting to the PPP committee (this
includes: managing a database of PPP projects and a dedicated website);
c) Government Contracting Agencies (GCAs)

GCAs, such as line ministries and sub-sovereign entities, should remain responsible for identifying,
developing, preparing, tendering and monitoring Public Private Partnerships within their areas of
jurisdiction. GCAs usually establish PPP teams, also known as PPP Nodes, responsible for the
development and management of PPP projects in their respective agencies.
3. Government Support for PPP projects
The Government should facilitate as much as possible the mobilization by private parties, of
international and domestic finance by deploying a wide range of instruments to support project
preparation and financial viability of projects.
a) Project Preparation
A Project Preparation Facility should be established to enable public entities to prepare PPP projects for
tender including the conduct of project appraisals to ensure that projects are bankable and attractive to
potential bidders. Such facility is required to access expertise not available internally through
consultants. These consultants might be legal advisors recruited to draft the PPP contract, technical
advisors recruited to develop project specifications, or financial advisors recruited to evaluate financial
proposals received from bidders. By establishing a dedicated facility, the Government ensures that
resources can be quickly mobilized and are not dependent on the yearly national budget cycle. The
Government could also consider revolving mechanisms to ensure the replenishment of the facility. To
this end, development costs are recovered from the winning bidder in some countries.
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The PPP Unit should develop guidelines related to the governance of the facility as well as for the
management and selection of consultants under the facility. These guidelines shall be approved by the
PPP Committee.
b) Project Bankability
Some PPP projects might not be viable if user fees are unlikely to compensate for the infrastructure cost
because of tariff or demand related considerations. Some projects might also not be feasible because
the private sector is not ready to take on some project risks. To address these issues, governments have
developed different mechanisms:
• Grants to PPP projects

The Myanmar Government should consider establishing mechanisms to cover partial project costs in
selected cases where projects that are socially desirable cannot be implemented in the absence of a
grant because the projects are not bankable or are only bankable with unaffordable fees. In this
respect, many governments throughout the world have created what’s called “viability gap funding”
mechanisms.
• Availability-based payment
In some countries, the availability payment model has been used to overcome demand risk. In this
model, a government pays the private partner a predefined sum at regular time intervals over the
life of the project contract provided that the predefined quality standards are met. In other words,
while the private partner designs, constructs, finances, operates and maintains the public asset, its
revenue stream does not depend upon the number of users. This system requires however to set-up
a mechanism to manage the long-term liabilities generated by these availability payments.
• Guarantees
Some PPP projects require additional support in the form of guarantees to cover some of the
country or project risks. The need for such guarantees should be carefully assessed prior to
authorizing the projects to proceed with the tendering. As these guarantees may create liabilities for
the Government in the long run, they need to be closely monitored (for instance by a dedicated unit
in the Ministry of Planning and Finance). The Government might also consider creating a Guarantee
Fund capable of meeting Government contingent liabilities arising from PPP projects. The Box 1
explains the current framework related to public guarantees in Myanmar.
Box 1: Public Debt Management Law
Myanmar has recently announced a new law, the Public Debt Management Law (enacted in 6 January
2016, “the Law”) restates and clarifies some of the existing rules with respect to government loans,
bonds and guarantees. The Law contains a special chapter dedicated to guarantees. It provides that “the
MOF may issue guarantees and other forms of guarantee for loans to any person, association of persons
or projects in accordance with such stipulations as may be approved by the Government and the
Pyidaungsu Hluttaw” (s. 23). Ministers of other ministries may also give guarantee, but only if
specifically mandated by the Minister of Finance. For example, the Ministry of Transport and
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Telecommunications or the Ministry of Electric Power and Energy are unable to issue a guarantee for an
infrastructure or a power project by themselves unless the Minister of Finance would grant them the
specific authority to do so. The power of the Government to issue guarantees for projects or for that
matter for debts of SOEs is under the Law limited to instances where the Pyidaungsu Hluttaw has
approved the matter. The Law does not state which degree of detail is required for the Pyidaungsu
Hluttaw’s approval. Is an individual approval of the exact terms of the guarantee required? Presently,
that is not how it has been done. The current practice has been that the Pyidaungsu Hluttaw approves a
project in general terms and allows the Government to provide guarantees in connection with that
project. For example, s. 12 of the UBL (Union Budget Law) 2012 stated that: “The Minister of the MOF
may, on behalf of the Union, furnish guarantees for taking of loans under this Chapter III”. In other
words, the reference in the UBL is made to loans or guarantees in connection with projects or
expenditure identified in the Union budget, not in general. The UBL does not provide a legal basis for the
Union Government to issue guarantees for projects which are not provided for in the Union Budget.
Source: VDB Loi
c) Project Financing
To be successful and sustainable, PPP projects require fixed rate long‐term financing, preferably, in local
currency. The Government should continue to explore new regulations which may ease the challenges
for private partners and their lenders to mobilize financial resources. In this respect, some countries
have created public finance institutions that provide long-term funds to PPP projects.
4. PPP Process
The Government should develop clear procedures for the identification, preparation, transaction and
management of PPP projects that provide certainty to public officials and to the private sector. These
procedures should be in line with the applicable legislation.
Overall, the Government should move away from a situation where it responds to private proposals and
where the private sector defines the project. Instead the Government should define projects based on
its priorities and based on its own planning and then allocate these projects through competitive
tendering.
The four phases of PPP project are briefly described below.
a) Identification
Typically, this is the responsibility of GCAs with support of the PPP Unit (the PPP Unit may also on its
own initiative identify and propose projects to a GCA for PPP implementation). In this phase, Pre‐
Feasibility Analysis would be undertaken by the GCA to assess broad viability of every project intended
to be procured as a PPP and to assess whether the project is likely to bring more value if implemented
as a PPP rather than through the traditional procurement process. Based on this analysis, the GCA will
develop an Outline Business Case (the content of the Outline Business Case will be defined in guidance
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documents to be produced by the PPP Unit). Once the Outline Business Case is approved, the GCA could
proceed to the project preparation phase.
b) Preparation
With support from external consultants, GCAs will develop the full Business Case through a full-scale
feasibly analysis (the required content of the business case should be defined fully by the PPP Unit in
subsequent policy documents). The bid documents will then be prepared (which include the draft PPP
contract and the feasibility study). These bid documents will have to be approved by the PPP Committee
before proceeding with the PPP transaction. Overtime the Government should develop standardized
terms for the PPP contracts.
c) Transaction
Transparent, accountable, non‐discriminatory, competitive and timely procurement processes will be
followed so as to encourage maximum participation by private sector and to imbibe public confidence in
the procedure. The PPP procedures to be developed would define the norms, timelines and
responsibilities for procuring PPP projects. For instance, these rules should clarify the level of interaction
allowed with the bidders, which might be necessary in complex projects like PPPs. Before the contract
can be awarded, the final PPP contract shall be approved by the PPP Committee.
d) Management
GCAs shall ensure effective monitoring of PPP Projects over the whole lifecycle of the project and
allocate sufficient resources to monitor the private partner performance, and to enforce penalties if
required. Among other things, the management procedures should establish efficient communication
channels. For example, clear reporting requirements should be imposed on the private partner so the
public authority remains informed of project progress and can identify potential problems early on.
Project management procedures should also establish protocols to implement the continuous
adjustments that are likely to be required throughout the life of a long-term project.
5. Capacity Building
The existing capacity to deal with PPPs is inadequate in Myanmar and therefore, there is a need for
major capacity building programme in all areas of PPP designs and implementation. These areas include
negotiations, feasibility, procurement, management and other implementation aspects. In addition, the
development of PPPs is a complex task which requires diverse skills in areas including technical,
economic, financial, legal and procurement disciplines. International best practices demonstrate the
need to undertake capacity building measures for effective implementation of PPPs, encompassing also
change of mindset to all parties and stakeholders.
Therefore the Government intends to develop a National PPP Capacity Building Programme, which will
be a comprehensive programme to develop institutional and individual capacities for identification,
procurement and management of PPPs. Establishment of online toolkits, manuals and draft
documentation will also be an important requirement for delivery of the Governments objectives.
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D. CONCLUSION AND IMPLEMENTATION ROADMAP
COMPONENT OF OBJECTIVE INTERVENTIONS TIMEFRAME

PPP ENABLING
FRAMEWORK
1 POLICY Having a vision and Approving the PPP policy Short-term (this is the
strategy for using PPPs as document first thing that needs to
a means to deliver public be done)
infrastructure services
Identifying a political
champion supporting PPP
2 LEGAL AND Clarity for Government Enacting a Law on Public- Short to Medium term
REGULATORY actions and a conducive Private Partnerships that
FRAMEWORK environment for PPP clearly state the authority of
projects Government entities to
engage in PPP arrangements
for specified sectors to be
enumerated in the law (the
PPP law should also confirm
the rights and obligations of
private partners, including
ownership and right to
transfer of facilities in
accordance with the
contract).
Setting-up a legal basis for Short to Medium term
adequate PPP procurement
rules
Taking necessary actions Medium term

with regard to PPP related
laws detail in the Annexes
(e.g. regard to land, dispute
resolution, insolvency,
insurance, foreign exchange,
labour law and taxation)
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PPP ENABLING
FRAMEWORK
3 INSTITUTIONAL A supportive institutional Establishing a PPP Unit with Short-term (<2 years)
ARRANGEMENTS arrangement whereby dedicated human and
internal capacity is built financial resources (the PPP
and responsibilities are Unit should have clear
assigned for promoting responsibilities with regard
and implementing PPP to project approval and
projects funding for project
preparation)
 The PPP Unit could be
created by inter-
departmental or Presidential
notification
Establishing a PPP Short to Medium-term

Committee (possibly as
another responsibility of the
MIC)
4 GOVERNMENT A body of financial support Setting-up a Project Short-term (<2 years)

SUPPORT measures that will make Preparation Facility to be
projects sufficiently managed by the PPP Unit
profitable and safe for
attracting private
Creating a legal framework Medium-term
interests.
for government guarantees
(for example by adopting a
regulation under the Public
Debt Management Law and
the Law on Government Act
(or, once enacted, a PPP
Law).
Assessing the need and Medium-term

feasibility of creating a
Viability Gap Funding
mechanism (there is
currently uncertainty as how
VGF grants can be obtained
as part of the Union Budget
Process)
16

PPP ENABLING
FRAMEWORK
5 PPP PROCESS Clear procedural guidance Developing guiding manuals Short to Medium-term
materials for each of the for identifying, preparing, (can only be done after
four phases of a PPP procuring and managing PPP the Policy and/or the
project projects. applicable legislation is
revised)
The PPP unit should develop Medium-term

and promote templates for
PPP contracts, with
particular attention to force
majeure, change in law,
termination, dispute
settlement, lenders rights,
etc.
6 CAPACITY Sufficient internal capacity Developing a National PPP Short-term (ad-hoc

BUILDING to support the Capacity Building capacity building
implementation of a PPP Programme activities)
Programme.
Medium-term (well-
structured capacity
building programme
with appropriate
funding)
17
ANNEXES:
LEGAL REVIEW OF PPP-RELATED ISSUES
18
Annex I: Legal basis for private investment in public services in Myanmar
There are few Myanmar laws that establish clearly private sector actors to invest in public services or to
own public facilities. Most laws in Myanmar do not specifically mention whether private sector
companies can actually own facilities which are used for public sector services. The laws may state
vaguely on which government departments may cooperate with the private sector, either domestic or
foreign. However, the laws most often neither mention the structure of the arrangement such as Build-
Own-Transfer (BOT), or otherwise, nor provide the exact scope of the rights of the private sector.
For example:
• The Highways Law 2000, which has the authority to “construct highways”, “acquire land” for roads
which are not within the Development Committees jurisdiction, mention only that the Ministry can
“have a business cooperation” with private sector entities in terms of “construction, extension,
repair and maintenance of highways”. However, there is no explicit mention of BOT arrangements,
the possibility of toll roads or of rights and obligations of private sector entities in such cases.
• The Rangoon Water Works Act 1885 implies that only the Government is authorized to “cause a
water pipe system to be laid”, without mention of any cooperation between the public and the
private sector. The Yangon City Development Council Act 2013 does refer to “granting of permission
to source, feed and sewage treatment under a contract system” with any organization. In
connection to roads or buildings, and public lighting, that same law does not refer to the BOT
system or to private sector rights.
• The Electricity Act 2014, a rare exception, does refer to “private power generators” and allows the
Ministry to set out “favorable conditions for investment” by such private sector entities.
• The Telecommunications Law 2013 specifically allows private sector investment in

telecommunications services.
On the other hand, the State Owned Enterprises Law 1989 provides for a list of activities such as
extraction of timber, petroleum, gems etc., broadcasting services, insurance services, banking services
etc. under the complete monopoly of the Government of Myanmar even though it also states that the
Government of Myanmar may, in the interest of the country, permit any enterprise to conduct those
activities in a Joint-Venture with the Government.
Recommendations: Through the enactment of a PPP law, the Government could clearly state the
authority of Government departments at any level to engage in PPP arrangements for all specified
sectors, to be enumerated in the law. The PPP law could also confirm the rights and obligations of
private partners, including ownership and right to transfer of facilities in accordance with the contract.
19
Annex II: Restriction on Foreign Investors
The Foreign Investment Law (FIL) provides a framework for foreign investments to be carried out in
Myanmar. Subsequent to the enactment of the FIL, the Myanmar Government issued Notification
11/2013 and Notification 49/2014. Notification 11/2013 is also referred to as the “Investment Rules”
and details operational aspects of the FIL and the rules referred to the remittance of foreign currency.
Notification 49/2014 details the different business activities in which foreign investors are allowed to
participate and restrictions to be applied to such investments.
According to Art9 of the FIL, investment in Myanmar shall be done by means of (1) a 100% foreign
owned company; (2) a joint venture between Myanmar citizens or government organizations and
foreigners; or (3) an agreed contract.
In order for a foreign investor to benefit of the provisions set forth in the FIL, such investor shall set up a
Myanmar company. Should the company be set up in the form of a joint venture between Myanmar
citizens and foreigners, the percentage of capital to be owned by each co-venturer can be agreed by the
same co-venturers.
Furthermore, the Myanmar companies to be eligible to benefit of the provisions of the FIL shall apply for
a MIC Permit. Such permit grants the company, inter alia, the tax holiday, the right to remit abroad
foreign currency, the right to use land for up to 50 years plus two 10 year extensions and the guarantee
that the Government shall not nationalize the company.
Chapter II, Article 4 of the FIL provides for a list of foreign investments which are designated as
restricted or prohibited. In such article those activities are specified as, inter alia, prejudicial to the
traditional culture, detrimental to public health and natural resources, and specified by law as reserved
to Myanmar citizens.
According to Article 5 of the FIL, the MIC may permit the above mentioned restricted or prohibited
investments with the approval of the Union Government Board.
Notification 49/2014 set forth a list of activities which for a foreign investor are prohibited or permitted
only in the form of a joint venture with a local partner. In case a local partner is required, in theory, the
foreign party may own up to 80% shareholding.
Please see the below table which specifies some of the activities listed in Notification 49/2014 in the
fields of energy, infrastructure and real estate. But please note that it is unclear if Notification 49/2014
is exhaustive.
FIELD ACTIVITY REMARKS
Energy Administration of electric power system Prohibited

Inspection of electrical works Prohibited
Excavation of mineral resources including gold Prohibited
20
FIELD ACTIVITY REMARKS

within the surrounding area of river and
waterway
Small and medium scale generation of Allowed only in joint venture with
electricity Myanmar citizens
Generation of electricity to be used for railway Shall secure the approval of the
industry Government. Joint venture with
the respective government
enterprise/department shall be
allowed. Shall secure the remark
of the Ministry of Transport and
Telecommunications
Infrastructure Implementation of construction, installation Allowed to execute joint venture
and operation of storage tanks, oil loading and only with the Ministry of Electric
discharging jetties, pipelines, related Power and Energy
equipment and buildings required for import /
export, transportation, storage, distribution
and sale of oil, natural gas and petroleum
products.
Real Estate Development of international standard golf Allowed only in joint venture with
courses and resorts Myanmar citizens
Development, sale and lease of residential Allowed only in joint venture with
apartments / condominiums Myanmar citizens
Development and resale of office / commercial Allowed only in joint venture with
buildings Myanmar citizens
Development, sale and lease of residential Allowed only in joint venture with
apartments in residential areas connected to Myanmar citizens
industrial zones
Construction of low cost housing affordable by Allowed only in joint venture with
the public Myanmar citizens
Development of new towns Shall secure the remarks of the
Ministry of Construction. Shall be
allowed to execute joint venture
only with Government
Urban re-development Shall secure the remarks of the
Ministry of Construction. Shall be
allowed to execute joint venture
only with Government
Recommendations: The regulation could mark clearly that outside of the restrictions mentioned in
49/2014, foreign investors may own up to 100% shareholding.
21
Annex III: Procurement rules in Myanmar
Myanmar does not have one comprehensive body of rules for public service projects. Thus, relevant
rules that would apply to a specific case may be referred to and be consulted whether they are
applicable in practice. For procurement rules, there is a certain rule to be referred to, namely, Directive
No. 1 of 2013 Presidential Directive on Procurement (the Directive).
If a proposed PPP project is to be offered as a result of a public tender in Myanmar, then any foreign
private partner must consider this Directive No. 1. This presidential directive mainly sets out basic
tender rules. The following is the brief of the directive.
According to the Directive, the government will organize a tender invitation committee to set out
detailed rules and regulations and set up respective regional and state government groups if and when
required. The government shall also stipulate definite rules and regulations with regards to invitations to
tender. There will be a tender evaluation and selection committee who will be in charge of evaluating
the tender prices by listing the prices as per low/high values.
In terms of announcement, the government shall announce tender winners in state owned newspapers
for at least a week prior to opening bids and within two weeks in advance on ministry noticeboards and
websites.
All tender forms, tender rules and terms and conditions shall be specified and kept in record. The
government shall issue the above records to the individuals who will submit tenders and publicly put the
open tenders into tender boxes at the tender selection hall and set up a strict security system to open
the tender boxes. These tenders shall be announced and opened in front of the tender invitation
committee and the individuals who submitted them.
The tender with the lowest price and that complies with the rule will be selected. The tender selection
shall consider international standards on environmental conservations and whether the activities are in
accordance with basic political, social, economic norms of the country.
The directive also notes on tenders relating to purchasing such as to specify and announce the list of
goods to be purchased and the specifications.
On the tenders relating to construction, if there is a company offering to conduct a preliminary

investigation on the project without consideration of whether or not the implementation of the activity
is possible, it shall be allowed without giving preferences to the bidder. The Government should make
sure that no preferences should be given to bidder giving support to the requirements of government
departments. The priority of selection shall be given to bidder with lowest percentage of labour cost and
the business owner’s service fees. The bids should not be awarded to companies engaging in predatory
pricing.
On service tenders, priority shall be given to bidders who support employment opportunities. On
tenders relating to lease and sales, the activities transferring from government organizations to private
22
parties shall be complied with the facts stated in the notification letter by the Privatization Committee
organized by President’s Office.
Other rules direct governments: to scrutinize the financial credibility and background as for its expertise
of the winner; to mention the winner’s responsibility when failed to meet the quality standard and the
prescribed schedule; to manage the process of tenders to make sure the price validity period to be three
months, payment methods to be agreed, the State’s custom procedures to be complied, not to allow
sub-contracts, and the winner to comply with the rules and regulations.
Particularly, the directive mentions that the schemes to be conducted for some works (e.g. oil and gas
blocks) shall be announced. Also, the schemes to be conducted for dispute settlement shall be clearly
stated in the contract.
Current Challenge and Recommendations
There is no comprehensive public procurement law, although some regulations have been issued in
2013, of which one of them being the Directive. Although the Directive does establish some principles
and helpful rules, it arguably is drafted with procurement of goods and construction services in mind
rather than with selecting long term private partners for public infrastructure evaluation criteria and
process (the possibility of soft testing need for outside consultants) different for PPP projects. A
forthcoming PPP Law could include procurement rules that are more appropriate for PPP projects in
order to strengthen the environment for PPPs. A forthcoming PPP law could also set out a transparent
procurement system.
23
Annex IV: The contractual Framework
1. Background to Myanmar Contract Law

The Myanmar Contract Act of 1872 (“Contract Act”) has its origin under the common law concept of
contract. Like many other common law systems, the Contract Act has all the basic ingredients describing
what would constitute a valid contract, what would be voidable at the option of a party affected due to
factors such as duress, fraud, coercion, etc. and what would be treated as void before the contract had
even been executed (void ab initio). However, other than the prescribed limitations under the Contract
Act itself, considering the modern contracting practice, there are outdated or stagnated provisions in
the Contract Act which also act as a limitation on the freedoms of contract. A few of the important
limitations of contract under the Contract Act and other laws have been highlighted below. These
limitations may affect or impact any PPP projects in Myanmar.
2. Limitation on Damages
The relevant provisions under the Contract Act pertaining to the level of damages are provided under
sub sections (“ss” or “Ss”) 73 and 74.
a) Section 73
The provisions under section (“s” or “S”) 73 of the Contract Act provides for various compensatory relief
but not relief that is penal in nature. The purpose of s73 is that where the loss suffered by the party
affected by the breach can be compensated by money, the party would be placed in the same condition
had the contract been performed. S73 clearly states “…compensation for any loss or damage caused…,
which naturally arose in the usual course of things from such breach, or which the parties knew, when
they made the contract, to be likely to be the result from the breach of it…”. It provides for an obligation
on the party in breach to remove the consequence arising out the breach.
S73 can award the aggrieved party nominal damages or expected benefits in case the performance was
intended to be achieved in future. In certain circumstances the courts may also grant compensation for
loss of profits (say improper recession of contract) but such compensation cannot be for any remote and
indirect loss or damage.
b) Section 74
The provision under s74 caters to a situation where the parties have stipulated an amount in the
contract as a penalty by way of liquidated damages for breach. This section does not confer any superior
advantage to the parties (other than s73) in case the liquidated damages/penalty is so stipulated in the
contract itself. S74 provides that if an amount by way of damages or penalty is stipulated in the
contract, the court will only grant a reasonable amount of compensation to the aggrieved party not
exceeding the amount so stipulated. That would mean that even if an amount is provided for under the
contract as in the form of liquidated damages, the court has the power to allow a lower amount than
the amount so stipulated. The relevant excerpt of the section states “ …to receive from the party who
has broken the contract reasonable compensation not exceeding the amount so named or, as the case
may be, the penalty stipulated for.”
24
What would constitute as reasonable compensation would depend upon case to case and facts
constituting the right of compensation thereto.
3. Templates of PPP Contracts

The coordination between the different Government departments in Myanmar at the source of PPP
projects in terms of contractual conditions is at present mostly carried out through the Attorney
General’s Office (AGO) and, to some extent, by the Myanmar Investment Commission (MIC).
The AGO tends to harmonize non-sector specific issues such as dispute settlement, governing law, public
governance and other similar issues.
The MIC focuses on certain commercial issues such as land use prices, due administrative process and
financial planning (such as debt and equity mix).
Different Government departments, such as the Ministry of Electric Power and Energy and the Ministry
of Construction, have developed their own templates over time. These templates have varying degrees
of compatibility with the expectations of international sponsors and lenders. Depending on the case,
many of these templates can be regarded as “non-bankable” from the perspective of international
lenders. At a sub-sovereign level, in most cases even those templates are not available.
4. Conclusions and recommendations

Myanmar’s contract law environment is essentially a 1872 codification of English common law in
relation to contracts and the contracts used at present by the Government for infrastructure projects
are not in line with the needs of international investors and lenders. Also, the Contract Act allows the
courts, in certain circumstances, to limit damages set out in a contract.
As a part of a new law on PPP, provisions should be inserted to ensure that the agreement of the parties
will be upheld. Additionally, the PPP unit should develop and promote templates for PPP projects, with
particular attention to force majeure, change in law, termination, dispute settlement, lenders rights, etc.
25
Annex V: Dispute Resolution Mechanisms
The process for making a civil claim is governed by the Code of Civil Procedure of 1909 (“CPC”), and the
Orders and Rules issued under the CPC. The CPC, amongst other things, provides for the various courts
having jurisdiction over civil disputes. Additionally, Myanmar law also provides for a alternative dispute
mechanism by way of arbitration as provided under the new Arbitration Act of 2016 (“AA”).
The general hierarchy and pecuniary jurisdiction of common courts with respect to civil matter in
Myanmar are as follows:
Supreme  Supreme Court:

Court - Highest court in Myanmar
- Has appellate jurisdiction
 District Court:
- Suits of values ≥ 10,000,000 MMK ≤ 500,000,000 MMK
High Court - Suits under the Specific Relief Act, i.e. for specific performance,
(Region/ injunctions
State) - Has appellate jurisdiction
 High Court:
- Suits of values ≤ 500,000,000 MMK
District - Has appellate jurisdiction
Court - A high court for each region and state of Myanmar
 Township Court:
- Suits of value ≤ 10,000,000 MMK
- If subject matter concerns immoveable property, can only sue in
Township that township
Court - Can only appeal to District and High Courts
1. Arbitration
In terms of disadvantages and risks of having arbitration in Myanmar, the primary disadvantage and risk
is that Myanmar’s judicial system is not as well-developed or robust in terms of legal precedents as
other jurisdictions, such as Japan, Singapore or Hong Kong. The AA predates the 1985 UNCITRAL model
arbitration law and therefore does not contain strong parameters for arbitration proceedings. To the
best of our knowledge, no arbitration rules have been enacted in relation to the AA, thus the conduct of
an arbitration proceeding may be very much left to the direction of the arbitrator(s), who may be
inexperienced in the kinds of complex contractual disputes that could arise in relation to a PPP contract.
The Government has enacted a new AA in 2016, which is intended to bring the law in line with
international arbitration standards, but this law is yet to be passed.
2. Sovereign Immunity
Sovereign immunity refers to the scenario whereby a sovereign state, in this context, the Government of
Republic of the Union of Myanmar, is immune or exempt from having civil or criminal legal proceedings
brought against it by an individual or entity.
26
Myanmar has no law specifically catering to state immunity. However, Myanmar law will recognize that
any commercial contract with respect to Myanmar government is not protected under the doctrine of
sovereign immunity. An analogy can be drawn from a few national laws of Myanmar. The State Owned
Enterprises Law, which provides for certain economic activities that can be carried out by the
government only or in a JV with the government, states under s8 that any organization constituted
under the law shall be a body corporate with right to sue and be sued. Similarly s79 of the CPC provides
for a procedural requirement pertaining to any suit by or against the Government of Myanmar and s80
of the CPC provides for the notice requirements pertaining to a suit against the Government of
Myanmar. However there is certain ambiguity under Myanmar law to differentiate between a
government act and a commercial act made by the government.
3. Challenges and Recommendations
The current challenges in Myanmar with regard to dispute resolutions are the following: the New York
Convention has not yet been implemented into Myanmar Law (it is expected that the will soon be) and
Myanmar has only very few investment protection treaties in force.
To improve dispute resolution mechanisms, the Government should pass the Draft Arbitration Act,
which is in line with the UNCITRAL Model Law on Arbitration and should accelerate the conclusion and
ratification of investment treaties.
27
Annex VI: Land Use Issues
1. Land Ownership and Title in Myanmar
a) Legal framework and different “types” of land in Myanmar

In Myanmar, there is a patchwork of law and customs that govern land “ownership” and use. In general,
it is deemed under the law that all lands are originally owned by the state (with the exception of certain
freehold/ancestral lands) and may be granted, leased or otherwise provided to private persons. This is
specifically provided for at Art37 of the Myanmar Constitution of 2008, and a number of laws and
regulations in Myanmar, including the Land and Revenue Act of 1876 and accompanying rules, the Lower
Burma Town and Village Lands Act of 1899, the Upper Burma Land and Revenue Regulations of 1889;
the Land Acquisition Act of 1894; the Land Nationalization Act of 1953 as revoked by the Farmland Law
of 2012 and accompanying rules; the Duties and Rights of the Central Committee for the Management of
Culturable Land, Fallow Land and Waste Land by Notification No.44/1991 and the Vacant, Fallow and
Virgin Land Management Law of 2012 and accompanying rules.
Under the above referenced laws and other laws and even customs (i.e., not specifically provided under
statute), there are a large number different land “types” in Myanmar, including freehold land, grant
land, agricultural land, former agricultural land authorized for a different use (sometimes formerly called
“La Na 39”), vacant/fallow/virgin land, grazing land, amongst a variety of other titles. A full review of all
the land types in Myanmar goes beyond the scope of this report.
As is evident, any PPP project can become quite complicated in relation to the site due to the myriad
land laws and regulations. Please see below for the common issues required for consideration in any
PPP project in relation to land for the site.
b) Registration issues and lack of title

Importantly there are no actual “title deeds” for land in Myanmar in the majority of cases relevant to
PPP projects. Rather, in ascertaining the land type and ownership, it is necessary to review all of the
historical land transactions generally available at the land administration department of the relevant
township, which would involve examination of various documents rather than actual titles. As an
example, on inspection at the land administration department, one might need to review years of tax
receipts showing that taxes have been paid for a particular parcel of land, followed by a permit issued to
use the land for agricultural purposes, followed by a document authorization a change of purpose, etc.
However, while the history of the land can sometimes be ascertained, there is no single title-deed on
which the transactions or registered, but rather it is necessary to piece together a variety of different
documents, which are often incomplete or ambiguous. At times the available documents might be
inconsistent, and it might not be possible to actually determine the “type” of land and as such, a PPP
project company may not actually be able to confirm who holds title to the land.
In addition, there is also the issue of registration of land. For instance, amongst Myanmar nationals, it
has been the norm to “transfer” land without actual registration of the transfer, in order to avoid stamp
duty. This can obviously result in complications when a private partner in a PPP project wishes to lease
28
land, for instance, if the registered owner is not available or even dead, notwithstanding that the most
recent buyer or heir is available and willing to transact.
c) Resettlement
The Land Acquisition Act allows the government to acquire clear ownership and possession of land after
following a prescribed process involving a number of public announcements, hearings involving persons
interested in the land, and payment of compensation to those persons, although the Act does not set-
out any formula or method for calculating compensation, nor any restrictions or considerations to be
considered before acquiring land, but merely if it is in the public interest.
In addition, it has been suggested that the Vacant, Fallow and Virgin Land Law, also allows a form of
acquisition by the government, i.e., where the government deems a parcel of land vacant, fallow or
virgin land notwithstanding that parties may have used the land and claim an interest therein. Also, the
Farmland Act allows the government to evict persons from agricultural land where the land is not being
used for its prescribed purpose, i.e., farming specified crops, or where a permit has not been obtained.
Past land confiscations are controversial in Myanmar, and there are a number of complaints from
previous land holders who have had their land confiscated, and a land confiscation investigation
commission has been established to look into such claims. As part of an investors due diligence, it should
make enquiries with the land confiscation investigation commission, to determine whether there are
any claims against the target land in question.
2. Legal Interests Available to Foreign Developer
a) Lease
Under ss5, 15, 101, 103-104 of the Transfer of Property (Restrictions) Act, 1987 TIPRA, a foreign
company (i.e., a company with even 1 foreign shareholder) cannot lease land for more than 1 year
unless that company has a relevant beneficial contract with the state.
In addition, if the land owner in question is the government or ministry thereof, then this should be
deemed a beneficial contract with the state, and warrant a lease term of more than one year. Indeed it
is common for foreign investors to enter into a BOT agreement with government land owners, which
generally includes a lease of the land to the foreign investor, for 30-50 years, usually extendable.
In addition, there is a separate body of land called the Special Economic Zone. The legal basis of this SEZ
is the Special Economic Zone Law of 2014 (“SEZ Law”), which is completely outside of the Foreign
Investment Law (“FIL”). The SEZ Law and the FIL provide similar benefits in that they both permit a lease
term for an initial 50 years. However, they differ with regard to renewal terms in that the SEZ Law allows
a renewal for 25 years, while the FIL permits two 10-year extensions to foreign investors.
Accordingly, foreign companies seeking to be involved in a PPP project are generally limited to leasing
land in Myanmar, provided they can benefit from special incentives provided by the FIL or SEZ Law, or
other beneficial contracts with the state.
29
b) Mortgages and secured interests

According to the Transfer of Property Act of 1882 (“TPA”), there are a number of different types of
mortgages in Myanmar. An “English mortgage” (a bit of a misnomer in current times) occurs where the
immovable property is transferred absolutely to the lender/mortgagee with the proviso that that the
property will be retransferred upon full repayment. A simple mortgage occurs where the
borrower/mortgagor keeps possession of the property, but subject to the agreement that in the event
of default, the property will be sold and the proceeds are applied to the debt. A mortgage by conditional
sale occurs when the mortgagor transfers the property to the mortgagee, although subject to the
condition that the sale will not become absolute until the mortgagor defaults. A usufructory mortgage
occurs where the mortgagee takes possession of the property until repayment, with the ability to
receive rents and profits from the property in lieu of interest. A mortgage by deposit of title deed occurs
when the borrower delivers the title documents in respect of the property with the intent to create a
security, without registration.
In Myanmar practice, mortgage by deposit of title deed is currently nearly the only form of mortgage
which is actually used, because it does not require registration or payment of stamp duties. An English
mortgage, from the perspective of enforcement, the “strongest” form of mortgage currently available in
Myanmar. It can be enforced without court intervention, provided that no party is Hindu, Buddhist or
Muslim (so this would not be an issue if the parties are PPP project companies). However, practically
speaking, the English mortgage has some important drawbacks at this point in time. Registration is
required and particularly in connection with foreign invested borrowers (who may only lease land, not
own it) is largely administratively untested. Furthermore, for a number of types of land, a registered
mortgage such as the English mortgage or the simple mortgage registration has not even been tested in
connection with Myanmar borrowers. In addition, under the TIPRA, a foreign lender can generally not
acquire rights under a mortgage (i.e., be a mortgagee) unless such a mortgage is approved in the MIC
permit.
3. Rights of Access to Third Party Land
The concepts of easements and rights-of-way are recognized in Myanmar. For instance, the Land and
Revenue Act (1976) at s.6 states the following:
No right of any description shall be deemed to have been or shall be acquired by any person over
any land to which this Part applies, except the following:
(a) rights created by any grant or lease made by or on behalf of the Government;
(b) rights acquired under sections 26 and 27 of the Limitations Act …
S26 and s27 of the Limitations Act essentially provide that where an access-way, water way, access to
light/air has been peacefully and openly enjoyed as an easement for 20 years (or 60 years, where the
servient property belongs to the Government) then the right to such access will become absolute and
indefeasible. Easements are also recognized elsewhere, for instance under s8 of the TPA.
30
In theory it should be possible to create an express “right of way” over land by written instrument and
to register the same with the Office of Registration of Deeds (“ORD”), and such written instrument must
compulsorily be registered as per the Registration Act of 1909. It is also worth noting that the definition
of “immovable property” at s2(6) of the Registration Act includes rights of way, and s17(1)(b) requires
registration of non-testamentary instruments which create any right, title or interest in immovable
property. Similar to mortgages in Myanmar, in current times, registration of rights of way is largely
untested.
4. Expropriation
As noted above, the Land Acquisition Act in Myanmar allows the government to mandatorily acquire
land upon providing notices to the public and any known occupants on the land, having hearings where
objectors may be heard, and providing compensation to any persons interested in the land. Notably, the
Land Acquisition Act does not set-out any requirement that the state consider a balance of convenience
as between the land-holder and the public interests, nor any method for the fair calculation of the
compensation.
In addition to above, the Works of Defence Act of 1903 allows the Government to impose restrictions on
the use and enjoyment of land in the vicinity of the works of defence in order that the land may be kept
free of buildings and obstructions. Indeed the Works of Defence Act allows the Government, upon
prescribed notice and subject to compensation, to enter onto lands, demolish buildings, cut down trees,
etc.
Similar powers may also exist under municipal laws, for instance, s35 of Notification 2/2001 issued
under the City of Yangon Development Law of 1990, provides that the city committee may acquire
private land and buildings to make way for urban development projects in the interests of the public,
subject to compensation being paid.
It should be noted that according to s28 of the FIL, upon receiving a MIC permit, the Union Government
will provide assurances that it will not nationalize the enterprise during the contract period or any
extensions thereof. Similarly, s86 of the SEZ Law provides that investment businesses in the SEZ are
guaranteed not to be nationalized within the permitted period. Although the foregoing provisions do
not specifically reference land, if a long-term land lease is an integral to the investment business, then
the assurances provided under s28 of the FIL and s86 of the SEZ Law would presumably apply to land
expropriation.
5. Zoning and construction permission
a) Zoning
The City of Rangoon Municipal Act of 1922, the City of Yangon Development Law of 1990, the Yangon
City Development Law of 2013 and the City of Mandalay Development Law of 2002 (collectively, the
“Development Committees Law”), provides, amongst others, for the city committee to make rules
regarding land-use bye laws and zoning for Yangon and Mandalay respectively. The Development
31
Committees Law provides for the formation of a committee to administer matters, including bye-laws
and zoning, for townships and adjoining townships not including Yangon or Mandalay.
b) Construction permit
In general, construction is subject to approval of the relevant city development committee. Other than
Yangon and Mandalay, the practice for obtaining a construction permit can vary a great deal from
locality to locality, and in some cases, it may not be possible to obtain formal construction permission.
In Yangon, obtaining a construction permit is a complex process. This will typically involve, in the first
instance an application to the fire department for a fire permit license, which would require submission
of various documents including original or colour copies of the architectural drawings, mechanical and
electrical drawings, land-ownership documents, company documents of applicant, amongst other
documents. If the fire department is satisfied it would issue a fire permit letter.
c) Special economic zones and industrial zones

As an exception to the above process, the SEZ Law provides that the management committee for any
SEZ can grant construction permits to applicants (i.e., applicants to lease land in the SEZ and obtain
incentives provided under the SEZ Law), which is included as the “one stop” services provided under SEZ
Law. So far the process for obtaining construction permission within a SEZ has proved efficient; and
similarly, the process for obtaining construction permission in industrial zones and areas controlled by
regional governments has also proved to be efficient.
Through this review, the following challenges have been identified:

 Foreign invested companies cannot own land, but can long lease with government permission.
 There are a number of points which could be confirmed to avoid all doubt such as ownership of
buildings on leased land, mortgages of leased land and right of foreign investors to transfer leased
land.
 Land acquisition and land use conversion procedures are sometimes not sufficiently predictable in
advance.
A PPP law could clarify a number of uncertainties which persist in connection with land use and
ownership of buildings. Such law should also confirm the right of the PPP project company to obtain
land use rights for the project within existing laws and regulations.
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Annex VII: Environmental and Social Assessment Issues
1. Background
Private operators in PPP projects generally will have to submit an environmental impact assessment
(“EIA”) and an Environmental Management Plan (“EMP”) to the Ministry of Natural Resources and
Environmental Conservation for its approval. If these documents are approved by the MOECAF, then it
will issue a Certificate of Environmental Clearance, approving the PPP project. A copy of this certificate is
submitted to the MIC. The project company must operate in accordance with the conditions, if any, set
out in the certificate.
Myanmar updated and modernized its environmental and social legal framework with the
Environmental Conservation Law of 2012, followed by implementing rules issued in 2013 and 2014.
Under Notification 50/2014, it lists a myriad of business activities that require an EIA, including, to name
a few:
 mining enterprises;
 hydropower;
 large scale electrical generation projects;
 “large scale” construction projects such as (amongst others):
- airports;
- automobiles;
- bridges;
- oil and gas pipelines;
- railways;
 manufacturing (textiles, amongst others);
 projects that operate in national parks or in areas containing endangered flora/fauna or areas
prone to natural disasters.
In spite of the activities listed in Notification 50/2014, in practice, it is recommended to liaise with the
regulator to get their view whether compliance is required for the PPP project. Unless told otherwise by
the regulator, a private operator should take the view that their project requires an EIA even if it is not
specifically listed in Notification 50/2014.
2. Environmental Impact Assessment (“EIA”)

a) Application procedure
An EIA must be submitted to the MOECAF at the same time as the investment proposal is submitted to
the MIC. An EIA must be conducted by a licensed third party organization. The EIA licensing procedures
have not yet been finalized; thus there are currently no licensed EIA providers in Myanmar. The
Environmental Conservation Department (“ECD”) maintains a referral list of companies, which it will
provide upon request.
33
The MOECAF will provide guidance to the project company as to the terms of reference and timeframe
for the EIA; thus, the requirements and contents of these two reports may differ between projects.
As a general rule, however, the ECD’s draft rules and procedures provide that an EIA must include:
 a summary of the report;
 an introduction;
 the policies, laws and organizational framework that is relevant to the proposed project;
 an overview of the proposed project and suggested alternatives to the project;
 the methodology, objectives, and impacts considered in the EIA;
 a detailed description of the project area (including aerial and satellite photos, topographical
maps, geological maps, hydrological maps, maps of the water sources and soil layers,
biodiversity maps, socioeconomic maps and data, cultural maps, three-dimensional depictions
of the scenery, and information about the environmental quality and weather patterns in the
area);
 an assessment of related effects of the proposed project;
 a description of the EMP; and
 a description of the public comment and negotiation process, the outcome of the process and
future discussions and negotiations to be held.
Experience in dealing with a number of PPP agreements indicates that a number of specific standards
are likely to be required to be in the EIA:
 surface water (for rivers, lakes, reservoirs and other waterways);
 water quality for coastal areas;
 underground water quality;
 ambient air quality;
 noise;
 emission;
 effluent treatment and disposal; and
 solid waste.
b) Timeframe
The draft rules and procedures provide that the EIA (and EMP) will be reviewed within 60 days. If the
reports are accepted, the MOECAF will issue a Certificate of Environmental Clearance, which is
submitted to the MIC. Once the PPP project company receives its MIC Permit, it must carry out the
project in accordance with the terms set out in the Certificate of Environmental Clearance (as well as the
terms of the MIC Permit). If the reports are not accepted, the PPP project company is given an
opportunity to amend the reports and re-submit them to the MOECAF.
A small number of very recent PPP agreements (e.g. Power Purchasing Agreement (PPA)’s) provide
comprehensive guidance on the environmental standards applicable to the project, typically in the form
of an environmental annex that contains specific details on environmental and social standards.
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It is likely that the PPP project company could obtain the EIA within 180 days; however, this will depend
on the company that completes the EIA and on the project site. It is to be noted that the EIA will have to
be completed by the time the MIC Permit is issued. The practice of the Government authorities is to
grant MIC Permits and at the same time give investors an additional 180 days to complete their EIAs
(and EMPs). This practice exists despite the requirement under Myanmar law that EIAs be completed
before an MIC Permit is issued; hence, the above reference to likely being able to complete it within 6
months.
3. Environmental Management Plan (“EMP”)

An EMP must include:

 an overview of the project;
 the environmental, socioeconomic and health policies and legal requirements that are relevant
to the project;
 a summary of the measures taken to reduce adverse environmental impacts;
 maps and aerial and satellite photos of the area;
 management and monitoring plans for each phase of the project (including pre-construction,
construction, operation, termination, and post-termination phases);
 sub-plans for managing and monitoring the following sectors:
- air quality;
- water quality;
- waste;
- sound;
- smell;
- chemical substance;
- soil erosion and silt deposits;
- biodiversity;
- health and safety for workplace and society;
- cultural heritage; and
- employment and training
 work schedules and sub-plans for each work place;
 cost allocations for the management and monitoring plans; and
 contingency plans for emergencies.
b) Timeframe
Without repeating much of what has already been covered under 7.6.2.2 above, despite the
requirement under Myanmar law that EIAs and EMPs must be completed before an MIC Permit is
issued; it is likely that an EMP will take 6 months before completion/approval.
4. Social Impact Assessment (“SIA”)

There are no finalized rules or procedures yet with regard to SIAs. Generally, MIC proposals must show
how the project will have a positive impact socially and its effects on the local community, the region
35
and Myanmar. Any risk of negative effects should also be presented with an approach of how this risk
will be mitigated. Positive social impacts include the following:
 creating employment;
 training;
 social security and welfare for employees;
 tax contributions;
 creating foreign currency collection (via exports);
 enhancement of infrastructure;
 technology transfer;
 health care; and
 corporate social responsibility.
b) Timeframe
It is likely that the project company could obtain the SIA within 180 days, as this is typically completed at
the same time as the EIA and EMP. However, this will depend on the PPP project company that
completes the SIA and on the project site. Again, as per 7.6.2.2 and 7.6.3.2 above, Myanmar law
stipulates that EIAs, EMPs and SIAs must be completed before an MIC Permit is issued; however again, it
is likely that an SIA will take 6 months to complete/approved.
5. National Environmental Quality (Emission) Guidelines
The Ministry of Natural Resources and Environmental Conservation has recently circulated the National
Environmental Quality (Emission) Guidelines (“the Guidelines”) under notification 615/2015 on 29
December 2015. The guidelines prescribe specific principles to control noise and vibration, air emission
and effluent discharges.
These Guidelines are mainly extracted from Environmental Health and Safety (EHS) of International
Finance Corporation (IFC) that provides international guidelines to prevent pollution for each sector to
be adopted by developing countries. These Guidelines are considered to be achievable in new facilities
by existing technologies at reasonable costs. Application of the Guidelines to existing facilities may
involve the establishment of site-specific targets, with an appropriate timetable for achieving them. The
Guidelines apply to all projects that require an EIA.
The provisions under the Guidelines also apply to the EMP and Environmental Compliance Certificate
(ECC) of projects. The EMP and ECC contain commitments, wherein the investor is required to make
operational changes in the future in order to reduce the amount of pollutants, e.g., by using treatment
technologies before disposal or discharge of the pollutants, minimizing the discharge of waste that is
required to be treated.
6. Challenges and recommendations
The legal and regulation framework for the environmental and social impact assessments are quickly
improving in Myanmar. As part of the planning process, the PPP law will provide that PPP unit should
assess the social and environmental ramification before it bids out the project to the private investors,
rather than proceeding without eliminating the fundamental uncertainty.
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Annex VIII: Insurance
1. Current situation
As per the Foreign Investment Rules (Notification 11 of 2013), any enterprise that obtains a permit from
the MIC will have to obtain insurance only from insurance corporations permitted by the Government of
Myanmar (rule 79). At present no foreign insurance companies are allowed to operate in Myanmar and
any investment will have to insured through local insurance companies. Any foreign insurance company
which wants to operate in Myanmar can only do so through a government insurance company called
Myanma Insurance.
There are two existing laws in relation to the insurance sector in Myanmar, being The Myanma
Insurance Business Law of 1996 and the Myanma Insurance Law of 1993, which only govern local
insurance companies. Currently there are 12 licensed insurance companies in Myanmar, out of which 3
are only for life insurance and 9 are for all other insurances (being those able to underwrite insurances
pertaining to fire, life, fatality, highway and special classes, etc.) Myanma Insurance can usually provide
insurance coverage of up to US$2,500,000, and local private insurance companies can usually provide
insurance coverage of up to US$500,000. For any amount above US$500,000, the local private insurance
companies would have to obtain reinsurance with a foreign company reinsured through Myanma
Insurance only. Further, for sectors such as oil and gas, power plants and manufacturing, only Myanma
Insurance can provide insurance as the other licensed insurance companies do not have permission to
do so.
Additionally, there are three foreign insurance companies licensed to operate in the Thilawa special
economic zone (“SEZ”). These companies are: 1) Sompo Japan Nippon Kao Insurance Inc.; 2) Tokoi
Marine & Nichido Fire Insurance Co. Ltd.; and 3) Mitsui Sumitomo Insurance Co. Ltd.
The abovementioned licensed insurance companies can only operate in the Thilawa SEZ. The foreign
companies established in the Thilawa SEZ would be allowed to take insurance from the abovementioned
licensed insurance companies and this condition also applies to Myanmar companies established in the
Thilawa SEZ. However, it should be noted that the companies established in the Thilawa SEZ are also
allowed to take insurance from local insurance companies, including Myanma Insurance. Further, the
abovementioned foreign insurance companies will have to do a reinsurance of 10% of each of their
insurance underwriting with Myanma Insurance. This would mean that the foreign insurance companies
mentioned above will only have direct insurance underwriting for 90% of each policy. Further, Myanma
Insurance reserves the right to reject any offered reinsurance, and in that case, the foreign licensed
insurance companies can underwrite up to 100%.
For any foreign insurance company to be granted a license in any SEZ, it should have a representative
office in that SEZ for a period of three years. At present, there are 22 different foreign insurance
companies having representative offices in Myanmar. A representative office is not allowed to conduct
any business of insurance.
2. Challenges and recommendations

Based on the above review, the following challenges can be identified:
 The local insurance companies do not offer the coverage needed for large infrastructure projects.
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 Foreign insurance companies are required to work through the Myanma Insurance Enterprise,
except for those permitted to work only in SEZs.
To address these challenges, foreign insurance companies should be allowed for PPP projects if no local
offer exists, and this can be provided in the PPP law.
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Annex IX: Labor Law/Employment Issues
Employment issues are particularly relevant for PPP projects. In Myanmar, there are over 20
employment laws and regulations which interlap and at times conflict with each other. Further, many of
the laws are quite archaic and are in dire need of updating. Yet the major components that any PPP
project must consider are listed in this section.
1. Local Recruitment
Companies are required to recruit labor from the Government’s Jobs and Recruitment Office or local
recruitment representatives, or to make their own arrangements. It is a requirement that local and
foreign staff receive the same benefits and equal salaries commensurate with the relevant staff
member’s professional level.
2. Expatriate Recruitment
Foreign companies registered with the Directorate of Investment and Company Administration (DICA)
under the Myanmar Companies Act of 1914 (MCPA), who are not currently holding a MIC Permit, are
not required to conform to any local to foreign employee ratio for their operations in Myanmar. This
means that it is entirely possible for such entities to employ 100% foreign staff for their labor force.
In contrast, the FIL provides that a foreign company with an MIC Permit, when hiring local experts and
technicians for enterprises that require special expertise, may only have up to 75% foreign staff for the
first two years, 50% for the next two years and 25% for the two years after that, but the MIC may amend
the time limit as appropriate for knowledge-based enterprises. Under the FIL and its implementing rules,
exceptions may be obtained. Furthermore, the FIL provides that only local staff shall be hired for
enterprises that do not require special expertise. When submitting a proposal, the investor must state
the number of skilled workers, technicians and staff needed for skilled jobs, or the number of unskilled
workers needed, as the case may be.
Section 86 of Notification 11/2013 provides that the company will submit an annual training plan for its
Myanmar staff to the MIC before 31 January of each year.
3. Work Permits
Currently work permits are only available for foreign companies registered with DICA and possessing a
MIC Permit. Section 87 of Notification 11/2013 provides that an investor with a MIC Permit shall with
the MIC’s recommendation apply to the Ministry of Labour, Immigration and Population for foreign
employee work permits. A standard form for the application (Form 8: Work Permit) is provided as an
Annex to Notification 11/2013. At this time, when a company applies for work permits for its foreign
employees the Labor Department will issue a Foreign Employee Registration Card for those foreign
employees.
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4. Stay Permits
Stay permits are residence permits allowing foreigners to remain within Myanmar for a specified period
of time, namely three months (90 days), six months (180 days) or one year. Stay permits do not provide
authorization for foreigners to work in Myanmar.
5. Requirements of Employment Contracts

It is common practice for an employer to enter into written employment contracts with employees
based on guidance set out by the MOL. The contract specifies the terms and conditions of employment
and details the employee’s responsibilities, place of employment, working hours, wages and benefits,
applicable probation period, grounds for termination, and the duration of employment. The employer
may also establish written work rules that govern employees’ conduct and obligations at a work site and
employee performance standards.
The below table provides an accessible checklist of all the required contents of an employment contract
as provided by Section 5(b) of the Employment and Expertise Development Law.
REQUIRED CONTENTS FOR AN EMPLOYMENT CONTRACT

 Type of employment  Rules for workers to follow
 Probation period  Period of time to be served after
 Wages/salary training given
 Place of employment  Resignation and dismissal
 Term of contract  Termination of agreement
 Working hours  Responsibilities in accord with
agreement conditions
 Days off, holidays and leave
 Repeal of employment by mutual
 Overtime
consent
 Meal breaks during working hours
 Other matters
 Accommodation
 Amending and supplementing the
 Medical care agreement
 Transport services  Miscellaneous
In addition to the above mentioned minimum requirements to be contained in an employment contract,

different industries have different minimum requirements.
6. Minimum Wage
The “National Committee and Minimum Wage Scrutinizing Working Committee” (“Committee”) under
the Minimum Wage Law and Minimum Wage Rules sets the minimum wage. As of 28 August 2015, the
Committee has set the minimum wage as 450 Kyats per hour, totaling 3600 Kyats per day over an 8
hours day (see Notification 2/2015).
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7. Social Security Benefits

Section 15(b) of the Social Security Law provides that any company with five (5) or more employees is
required to register with the Social Security Board and make contributions on behalf of its employees.
The Social Security Board has recently shared some guidance, which has not yet been published, stating
that employers are only required to make contributions for employee salaries up to MMK 300,000
(approximately USD $300). To elaborate further, this means that the employer will not be required to
make contributions for any salary paid above this amount. A more detailed breakdown of the required
contribution is as follows:
CONTRIBUTION EMPLOYER EMPLOYEE TOTAL
Health and social

2% 2% 4%
care insurance
Employment injury
1% None 1%
insurance
Total 3% 2% 5%
8. Challenges and recommendations relevant to PPP projects

Myanmar has a comprehensive labour law system, which was updated recently with a Social Security
Law, increased severance payments, protection of labor unions and an arbitration system to settle
disputes. Little or no rules however exist on continuity of employees of a public entity when transfer to
the private sector. Therefore it is recommended that the transfer of public employees to a PPP company,
which is not regulated in a detailed manner at this point in time, should be addressed in the PPP law.
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Annex X: Taxation
1. Is the tax system stable?

Myanmar’s laws and regulations are regularly amended, but generally not with significant changes. The
implementation of Myanmar’s legal system and the application of its laws and regulations have
generally been informal and hence, may be subject to change without notice.
2. What categories of taxation will the project company and the sponsors be liable to?
Generally a project company operates in Myanmar will be subject to below business taxes:
a) Corporate Income Tax (“CIT”)
The Income Tax Law (“ITL”) imposes a CIT of 25% on a resident’s annual net income. In terms of entities,
a resident is defined as a company established under the Myanmar Companies Act of 1914 (MCPA), and
it is obliged to declare and pay CIT on its worldwide income. Non-residents, which are defined as entities
other than residents, are only obliged to pay CIT on their Myanmar sourced income at 25% from 1 April
2015 under the Union Tax Law (“UTL”) 2015.
b) Loss carry forward

Investors can choose to adopt some of the tax incentives under the FIL or the ITL. With respect to loss
carry forward, the ITL allows losses to be carried forward and set off against profits for the subsequent
three consecutive years, with the exception of capital losses. The application of the loss carry forward
rule is significantly restricted by the FIL.
c) Advance payment of 2% CIT on importation

Companies importing goods must pay a 2% advanced income tax assessment on the customs value of
the goods for import. There are a few exceptions, including the import of materials and equipment
during the construction period of projects with an MIC Permit. The tax that is collected as an advance
payment of the income tax payable by the importer can also be reimbursed.
d) CIT compliance requirements

The company shall make advance payments of its estimated annual CIT by installments per quarter. The
quarterly filing and payments shall be completed by the end of the last calendar day of that quarter.
10% of the unpaid amount of quarterly advance payment of CIT can be charged as a penalty for late
payment.
The actual paid amount is subject to adjustments at year end, and any incurred excess can be carried
down to the following financial year.
3. Capital Gain Tax (“CGT”)

a) CGT is levied on gains from capital assets
Gains from the transfer of capital assets are taxed under the ITL in a distinct heading at rates specific to
capital gains. Capital assets include land, building, vehicles and capital assets of an enterprise, as well as
42
shares, bonds and other similar deeds. In calculating capital gains, net book value of the asset and
expenditure incurred in the procurement of the capital asset can be deducted from the proceeds.
b) CGT rates
The CGT rates as per the UTL 2015 are as follows. CGT rates in the oil and gas sector are not progressive,
but are flat rates.
TYPE OF CAPITAL GAIN CGT RATE

Non-oil and gas sector for residents 10%
Non-oil and gas sector for non-residents 10%
(including a branch)
Oil and gas sector 40% for gain below 100,000 million MMK
45% for gain between 100,001 million MMK and
150,000 million MMK
50% for gain above 150,001 million MMK
The threshold for the Internal Revenue Department (IRD) to levy CGT in a financial year is 5,000,000
MMK. During any financial year, if a person’s aggregate amount of capital gains derived from disposing
of any capital assets does not exceed 5,000,000 MMK, CGT does not apply.
4. Commercial Tax (“CT”)

The (Commercial Tax Law) CTL imposes CT on importation, manufacturing and trading of goods, and
providing services. In terms of CT on services, CT becomes applicable only if the services are provided in
Myanmar. That is to say, if any services are provided offshore, CT would not be levied.
CT liability rests with the person who earns revenue from CT taxable activities. In practice, the taxpayer
would normally charge applicable CT on the invoice in addition to the original amount. In case CT is not
explicitly charged on the invoice, the IRD will nevertheless charge CT on the invoice amount at
applicable rates.
The UTL 2014 reformed the CT system which came into force as of 1 April 2014. Presently nearly all
services rendered in Myanmar are subject to CT at the rate of 5% except for 23 types of services which
are explicitly exempt. Further changes to rates were made in the UTL 2015.
A quick reference to CT rates is provided as follows:
COMMERCIAL TAX ON RATES
Importation Normally 5%, special cases 8%, 10%, 15%, 25%, 30%, 50% or 100% or exempt
Local manufacturing Normally 5%, special cases 8%, 10%, 15%, 25%, 30%, 50% or 100% or exempt
Trading 5% unless exempt
43
COMMERCIAL TAX ON RATES
Exportation Zero rated except for five types of goods (5%, 8%, 10%, 30%, and 50%)
Services rendered in Myanmar 5% unless exempt
As illustrated in the table, the normal CT rate for manufactures, traders and service providers is 5%.
The exemption list includes the following: house rentals, parking lot services, life insurance, health
services, education, haulage, recruitment, banking, customs clearance, catering equipment leases,
contract manufacturing services, funeral services, container services, nursery services, Myanmar
traditional massage and blind massage, house moving services, toll collection services, animal health
and caring services, public toilet services, overseas air passenger transportation, culture and arts, public
transport and license fees paid to government organizations.
For a taxpayer who is involved in the manufacturing or trading business, it could offset its input CT on
raw materials or semi-finished goods against output tax on finished goods, or offset its input CT from
imports or domestic purchases against CT on sales. Under the new Notification No. 180, service
providers are now also able to offset.
For CT taxable manufacturers, traders and service providers, CT will not be charged by the IRD if its
annual revenue does not exceed 15,000,000 MMK during a financial year.
Myanmar does not have any rules to “reverse charge” the payment of CT which is due on services
rendered in Myanmar by a non-resident service provider. Instead, the non-resident service provider
must obtain a CT registration and pay the CT to the IRD.
If the supplier fails to charge or pay CT, there is no clear legal basis for the IRD to collect the same from
the service customer. There is no liability for the customer to pay CT in case the supplier failed to pay.
5. Stamp Duty (“SD”)

SD is payable on the execution of a variety of instruments as prescribed in Schedule 1 of the Stamp Duty
Act (SDA), at different rates. In particular, lease agreements and agreements in relation to transfer of
property are subject to SD. The liability to pay SD falls on the lessee and the transferee, unless the
parties agree otherwise. The default SD on an agreement is 300 MMK if it does not belong to any
explicitly stated types in Schedule 1, being the schedule that lists the amount of duty payable on various
agreements in the SDA.
6. Withholding Taxes
Notification No.41/2010 imposed WHT on four categories of payments: services, goods, royalties and
interest. The payer is responsible for deducting WHT and remits such amount to the IRD within 7 days
upon each payment.
WHT imposed in Myanmar comprises resident WHT and non-resident WHT. For a resident taxpayer and
a non-resident taxpayer (i.e. branches) who files CIT returns in Myanmar, WHT could be offset against its
44
annual final CIT liability. For non-resident taxpayers who do not file annual tax returns in Myanmar, WHT
is its final tax liability.
Payments made by a resident taxpayer carrying on a business in Myanmar to a Myanmar resident are
subject to a deduction of WHT upon payment at the following rates:
 Services – 2%: Applicable for payments for services performed within and outside of Myanmar,
if under a Myanmar contract.
 Goods – 2%: Applicable to payments for locally purchased goods, but not imports.
 Royalties – 15%: Royalties including fees for the use of licenses, trademarks, patent rights, etc.
Payments made by a resident taxpayer carrying on a business in Myanmar to a non-resident are subject
to deduction of WHT upon payment at the following rates:
 Services – 3.5%: Applicable for payments for services performed within and outside of
Myanmar, if under a Myanmar contract.
 Royalties – 20%: Royalties include fees for the use of licenses, trademarks, patent rights, etc.
 Interest payments – 15%.
7. Can the Project Company be entitled under the contract to compensation for
changes in the tax regime?
There is no legal framework for this but as a commercial point; the Project Company can always raise
this in the partnership agreement.
8. Challenges for PPP Projects and Recommendations

The current challenges are the following:
 There is no regulatory framework for PPP projects to receive advance certainty on the tax treatment
of the project
 The stamp duty implications of financing and security are unclear and could be penalizing
To address these challenges, the IRD could create an advance ruling system and it could issue a
Notification right away addressing the current uncertainties in connection with stamp duty.
45
Annex XI: Insolvency Laws
PPP projects are mainly financed through bank loans and all parties, notably lenders, will need to review
the local insolvency laws in order to understand what will happen if a project company becomes
insolvent.
1. Background to Insolvency
Myanmar does not have any bankruptcy law but instead, has two insolvency laws: (i) the Yangon
Insolvency Act, 1909 (applies to Yangon division only, hereinafter the “YIA”) and (ii) Myanmar Insolvency
Act, 1920 (applies to whole of Myanmar, other than Yangon region, hereinafter the “MIA”). The YIA the
MIA are collectively called as the “Insolvency Laws”. Both the YIA and the MIA have almost the same
provisions with difference in arrangement of sections therein.
The Insolvency Laws are quite antiquated and are not used often. The Insolvency Laws grant powers to
the courts to regulate and decide all questions arising in insolvency. Though the Insolvency Laws only
apply to individuals and would not be applicable to the companies it may still be relevant in the case of
directors and officers of the PPP project company.
2. Jurisdiction of Courts
The Insolvency Laws have different courts having jurisdiction to try matters of insolvency. The YIA
provides for the High Court of Yangon as the court of first instance in cases pertaining to insolvency,
while the MIA provides the power to the district courts. However the courts in both the Insolvency Laws
have similar powers of adjudication, examination, examination and approval of composition of schemes
of arrangements etc.
3. Application of Insolvency Laws

S107 of the YIA and s8 of the MIA specifically exclude the approval of the Insolvency Laws against any
corporation, association, or company registered under any enactment in force. This would mean that
Insolvency Laws are applicable only in cases of individuals. Whilst the insolvency laws pertain to
individuals only and not companies, an individual who is made insolvent (eg. a bankrupt) may be
prevented from acting as a director or an officer of the PPP project company as this goes to the heart of
the individual/director’s ability to manage finances.
4. Protection of Certain Transactions (Claw Back)

S55 of the YIA and s53 of the MIA provide that any transaction made within two years prior to the
adjudication of insolvency shall be void, unless the same has been made in favour of the purchaser or
the incumbrancer (the holder of any incumbrance/security) in good faith and for a valuable
consideration. This would mean that even if a transaction has occurred within a period of two years
prior to the adjudication of insolvency, the transaction shall be valid if it is done in good faith and for a
valuable consideration.
Further, s57 of the YIA and s55 of the MIA provides that noting contained in the Insolvency Laws shall
apply to any payments by the insolvent to any of its creditors; any payments or delivery to the insolvent;
46
any transfer by the insolvent for valuable consideration and any contract or dealing by or with the
insolvent for valuable consideration (subject to ss55 and 53, respectively of the Insolvency Laws).
5. Priority of Payments
S61 of the MIA provides that in the distribution of the property of the insolvent, there shall be a priority
of payments. All debts due to the government and local authorities and all salary or wages not
exceeding twenty rupees (the provisions have clearly not been amended for some time, the rupee being
the relevant currency at the time of drafting the Insolvency Laws when Myanmar was a state of India
and therefore a colony under the British) of any clerk, servant etc. during four months before the date of
presentation of the petition, shall have priority over all other payments. The above mentioned payments
shall rank equal between themselves and shall be paid in full. In case the property of the insolvent is
insufficient, the amount would be paid on a pro rata basis.
Similarly, s49 of the YIA provides for priority of payments, namely, all debts due to the government,
salary and wages of any clerk up to three hundred rupees during four months prior to the date of
petition and rent due to the landlord, provided the rent does not exceeds one month’s rent. All the
above payments are deemed equal and to be distributed in full and in case of the property of the
insolvent is insufficient, the amount would be paid on a pro rata basis.
6. Insolvency Provisions under Myanmar Companies Act

There is one basic difference between insolvency provisions pertaining to individuals and companies,
being the voluntary compromise or arrangement of the company in case of bankruptcy (insolvency in
the case of an individual). In the case of a PPP project company, the Myanmar Companies Act of 1914
(“MCA”) provides that where any dispute which arises between the creditors and the PPP project
company pertaining to financial stress of the company or otherwise, the parties can enter into a
compromise or arrangement to that effect. Further, such an arrangement or compromise has to be
agreed by three-fourths of the creditors. Upon such agreement, an application to that effect is
presented before the court for its sanction, upon which approval would be binding on all the creditors of
the PPP project company. In case of failure to reach a compromise, the company is subjected to wind-up
proceedings.
a) Powers of a winding-up court pertaining to insolvent company

S229 of the MCA states that in winding-up proceeding of an insolvent company, the rules as per the
Insolvency Laws shall prevail and be observed with regard to respective rights of the secured creditor.
This would mean that despite the Insolvency Laws excluding its application in relation to any company,
section 229 of the MCA specifically imports the provisions of the Insolvency Laws as applicable to the
companies as far as rights of secured and unsecured creditors (ie. provable debts and the valuation of
annuities and future and contingent liabilities). However there are certain limitations under this
provision. A court ordered winding-up under the MCA, unlike a court order wind up under the
Insolvency Laws cannot take cognizance and adjudicate upon title of third parties except to the limited
extend as mentioned under s231 and 232 of the MCA. Further, if it is necessary to rule on a third parties
title to an asset, the liquidator will have to take recourse under ordinary civil courts.
47
In general the effect of bankruptcy rules provided under the MCA is:
• to exclude from proof un-liquidated damages for tort; and
• to prevent a secured creditor from proving for the full amount of his debt and subsequently
realizing his security.1
In a winding-up of an insolvent company under MCA, all unsecured creditors are to be paid on a pari-
passu (“equal footing”) basis. The purpose behind the provision is to prevent the insolvent company
from preferring one creditor over the other, with exception of hierarchy of preferential payments as
provided under s230 of the MCA.
b) Presumptions pertaining to certain payments

S231 of the MCA states that any transfer, delivery of goods, payments or execution or other act
pertaining to the property of an insolvent company would be a fraudulent preference, if such a
transaction would be deemed fraudulent preference under the Insolvency Laws in respect to an
individual. S54 of MIA provides that any act done within a period of 3 months by an insolvent which
gives preference to a creditor over others would be deemed fraudulent and void. This would mean that
in the case of PPP project company, its officials, with a dominant motive to give preference to one
creditor over the other, would be subject to s54 of the MIA.
S232 of the MCA provides that in any winding up (an insolvent company or otherwise), whether by the
court or under its supervision, any attachment or distress or execution put in force against the assets of
the wound-up company without the leave of the court shall be void. This would mean that any sale of an
asset of a PPP project company without the leave of the court after commencement of winding-up
proceeding would void.
c) Priority of Payments
S230 provides for hierarchy of payments in case of the winding-up of a company (whether insolvent or
not). The payments include all those made towards taxes due to government or local authorities, all
wages or salary of any employee up to 100 rupees due in last two months, all wages of employees,
compensation payable under WCA, dues pertaining to any employee from a provident fund, pension
fund, gratuity etc. shall have priority over any payments to be made to the creditors of the insolvent
company.

The Myanmar courts have not overseen a corporate insolvency in modern times and the privacy of
secured lenders is recognized by law but there are problems with security perfection. In addition,
judicial procedural laws do not explicitly provide for recognition of step-in by government or lenders. To
address these challenges, PPP law could amend the Code on Civil Procedure to strengthen insolvency
proceedings of a PPP project and procedures to perfect security should be improved as soon as possible,
which does not require a new law but merely an update of relevant regulations and practices.
1 Gore-Browne, 36th ed. p. 550
48
Annex XII: Taking Security
There are a myriad range of security measures that can be used in Myanmar. Securities can be chosen
between charges (fixed and floating), six different types of mortgages as well as pledges,
hypothecations, assignments of rights, and guarantees. However, it is important to keep in mind that in
Myanmar the real life practice often differs from the law. Accordingly, while Myanmar law recognizes
the above mentioned secured interests, in practice, there are a limited number of secured interests
which are able to be perfected, including mortgages by deposit of title-deeds in relation to immoveable
property (i.e. land), pledges or guarantees of moveable property. These practices are changing slowly as
Myanmar opens up to foreign investment. Please see below a table in relation to the types of assets and
what securities can be secured.
1. Assets and security measures
Type of asset What type of security can How to implement it?

you use?
• Mortgage by deposit of title deed • What type of land is it?

Immovable Property • English mortgage • Approval from land owner
Long term leases, • Other mortgages • Approval from MIC,
buildings, • Charge Government
apartments, • Assignment of contract pertaining to • Optimize stamp duty?
infrastructure immovable properties by way of security • Registration with ORD and CRO
Shares of MM Company • Equitable charge • If applicable, MIC approval

• Pledge with a guarantee agreement • Optimize stamp duty
from the (foreign) parent company
• Or, assignment by way of security
Movable goods • Fixed and floating charge • If applicable, MIC approval

Such as stock, • Pledge (with possession) • Some need add’l Gov approvals
equipment, fittings and • Hypothecation • Registration with CRO
• Optimize Stamp Duty
fixtures
Cash • Fixed and floating charge • If applicable, MIC approval

Such as bank account in on account held with MM • Registration with CRO
Myanmar, receipts on bank • Optimize Stamp Duty
• Creating Lien on the banks
invoices, etc.
account
Rights under a contract • Fixed charge • If applicable, MIC approval

Such as Power Purchase • Or, assignment by way of • Registration with CRO
Agreement, Build- security • If legal assignment, pay Stamp
Duty and obtain approval MIC
Operate-Transfer,
• Equitable assignment
Production Sharing
Contract
49
2. Types of Security
a) Mortgage
In accordance with section 58 of the Transfer of Property Act (TPA), there are six types of mortgages that
can be created in Myanmar. Please see the table below:
RIGHT TO
MORTGAGE TYPE ENFORCEMENT REGISTRATION
POSSESSION
1)English  Strongest of all mortgages

Mortgage  Can be enforced without court’s Yes Yes
intervention
 However, obligation of re-conveyance upon
payment exists
2)Simple  Parties can have power to sale without
Mortgage intervention of court if explicitly mentioned Not before Yes
in the deed and the property is situated in
sale
towns notified by Myanmar government
 Can proceed against the mortgagor for
personal covenant to repay the loan
3) Mortgage by  Parties can have power to sale without
conditional sale intervention of court if explicitly mentioned Yes Yes
in the deed and the property is situated in
towns notified by Myanmar government
4) Usufructuary  No sale.
Mortgage  No foreclosure Yes Yes
5)Equitable  Normally cannot be enforced without

Mortgage court’s intervention No No
(mortgage by  By far the most common type of mortgage,
deposit of title as it is not necessary to register or pay
deed) stamp duty, although the requirement of
court intervention to enforce is an obvious
disadvantage
6) Anomalous  A combination of two or more of the above May or may not Yes
mortgage mortgages be given
 Would include simple mortgage and depending upon
usufructuary mortgage or a usufructuary the contract.
mortgage and a mortgage by conditional
sale etc.
 It may take various forms depending upon
custom, usage or contract.
50
Charge
 Fixed Charge: Such a charge is against a specific, clearly identifiable and defined property. Under the
MCA , a fixed asset can be created on (at least) immovable property, uncalled share capital, book
debts, movable property and stock in trade. A fixed charge must specify the assets to be charged. A
fixed charge that does not clearly identify the charged assets will be void under the MCA. The
property under a fixed charge is identified at the time of creation of charge. The nature and identity
of the property does not change during the existence of the fixed charge. The company can transfer
the property only subject to that fixed charge so that the charge holder must be paid first that which
is due to them before disposing of that property.
 Floating Charge: A floating charge does attach to any definite property but covers the property of a
circulating and fluctuating nature such as stock-in-trade, debtors, etc. A floating charge can, under
Myanmar law, be created on the undertaking or property of the company. It attaches to the
property charged in the varying conditions which exist from time to time. Such a floating charge
remains dormant until the underlying asset ceases to be a going concern or until the person in
whose favour the floating charge was created takes steps to crystallise the floating charge. The
assets subject to a floating charge may be described in a general sense and do not need to be
identified specifically, ie. a reference to “all trading stock, assets and undertakings” might suffice for
a floating charge.
b) Contractual comforts
 Guarantee: Pursuant to section 126 of the Contract Act, a guarantee is defined as a “contract to
perform the promise, or discharge the liability, of a third person in case of his default”. A guarantee
may be provided by individuals or legal entities (guarantors) to perform the obligations of a loan (i.e.
repayment). The law does not specify the internal corporate approvals that are required for
guarantees involving companies. As a practical matter, the DICA may require that the shareholders
sanction the guarantee in an extraordinary general meeting of the company, in addition to requiring
evidence of approval of the guarantee by the Board of Directors. Accordingly, the shareholders of a
company may provide a guarantee to repay the obligations of a loan.
 Indemnity: Indemnity is a contract, express or implied to keep a person, who has entered into or
who is about to enter into, a contract or incur any other liability, indemnified against loss,
independently of the question whether a third person makes a default. The term, indemnity, is used
in the law in several different times and cases. In its widest sense, it means recompense for any loss
or liability which one person has incurred, whether the duty to indemnify comes from an agreement
or not. This clause may generally be incorporated in an agreement of security itself, however a
separate deed of indemnity is allowed under the law.
It can be noted that a contract beyond the objects clause of the company’s memorandum of association
is an ultra vires contract and cannot be enforced by or against the company. For example a borrowing
beyond the power of the company (i.e. beyond the objects clause of the memorandum of association of
the company) is called ultra vires borrowing and will not be enforceable against the company. In the
context of Myanmar’s company jurisprudence, this may be not that much of a problem when it comes
to raising funds for the company’s own business (because one can also argue that such power is
implied), but it is more likely a problem when raising funds for a parent or a sister company. Accordingly
when seeking a guarantee by shareholders of a company as a security interest in relation to a loan, it is
51
advisable to review the memorandum of association of the company to ensure that such a guarantee is
not ultra vires.
c) Pledge
A pledge of goods is where possession of the goods is handed over to the lender, in order to secure
payment, and if the borrower defaults, then the lender may take over the goods and sell in order to
satisfy the debt (i.e., shares).
A pledge is based upon the premise that the moveable property (e.g. shares) will be returned to the
pledgor (company receiving the loan) upon payment of the debt and performance of the promise. Thus,
the delivery of the moveable property to the pledgee (lender) is a pre-requisite for the pledge to be
effective. In practice, where the pledge is one of shares in a company, the pledgor must deliver to the
pledgee the relevant share certificates, shareholders’ register of the company, Form VI (allotments of
shares), execute a share transfer form. It should be noted that enforcement, i.e. the transfer of the
charged shares, will require approval from the foreign investment regulator, the MIC.
The legal title to a share is in Myanmar law transferred by the notation in the shareholder register by the
board of directors. Under Myanmar corporate law, the directors have the right to refuse the transfer of
shares from one shareholder to another in a number of circumstances.
d) Assignment
Myanmar law permits the legal or equitable assignment of the rights the borrower (or guarantor) has
under contracts with third parties. To make the assignment legal rather than equitable, and thus binding
upon the other contracting party, such party would have to give its consent. The assignment instrument
will rank higher in priority than unsecured creditors because it will have a backing of a secured contract.
An assignment does not transfer the duties and liabilities of a contract. A transfer of contractual duties
and liabilities can be done only through a novation of the contract, which requires terminating the
existing contract and entering into a new contract with the third party. A right to receive payment can
be assigned simply by notifying the payor. Any assignment needs to be registered with the Companies
Registration Office (“CRO”) within 21 days of the deed being executed, and stamp duty will apply to the
deed. Any assignment would also require registration with the Office of the Registrar of Deeds (“ORD”)
in case the assignment of rights arose out of immovable property.
In practice an assignment of rights is often considered with respect to power purchase agreements,
build-operate-transfer contracts, leases, master license agreements for telecom towers, and similar
documents.
e) Hypothecation
Hypothecation is used for creating charges against the security of movable assets, but the possession of
the security remains with the borrower itself. Thus, in case of default by the borrower, the lender (i.e.
to whom the goods / security has been hypothecated) will have to first take possession of the security
and then sell the same. The best example of this type of arrangement is car loans. In this case car /
vehicle remain with the borrower but the same is hypothecated to the bank / financer. In case the
52
borrower defaults, banks take possession of the vehicle after giving notice and then sell the same and
credit the proceeds to the loan account. Other examples of hypothecation are loans against stock
and debtors.
3. On-shore Security Agents
It must also be noted that since any foreigner cannot own any immovable property in Myanmar as per
the TPA, it is always advisable that any foreign lender creating any security interest over an immovable
property in Myanmar should do so through an onshore security agent, which is generally provided by a
local Myanmar Bank. Similarly, an onshore security agent should be used when securing the shares of a
locally owned company who trades only in Myanmar. Such a structure makes enforcement easier for
foreign lenders.
As stated, the service of an onshore security agent is provided by Myanmar local banks, which enters
into any security documents in their name (as security agent or trustee) on behalf of foreign lenders.
The onshore security agent and the foreign lender execute a formal security agent or security trustee
agreement which sets out the rights and obligations of each party, including the remuneration of the
onshore security agent.
In event of default the onshore security agent, takes steps for enforcement of the security upon
instructions provided by the foreign lender and disburses the proceeds resulting from the enforcement
of the security to the foreign lender.

Given that a PPP project would normally require a great deal of financial resources, the major source of
investment is typically provided by foreign lenders. However with the limited number of securities that
are able to be properly perfected, foreign lenders may not feel that it is safe enough to inject money
into the project in Myanmar.
Since the types of PPP projects are quite diversified, the securities that the lender would prefer to
provide would also be different depending on the different projects. To meet these needs, it is highly
recommended that the Government form a PPP specific unit to take charge of facilitating the security
for each projects so that the project would receive sufficient funds to be provided and ultimately to
attract more foreign lenders into future projects.
53
Annex XIII: Currency Exchange Controls
Chapter XVI, Article 39 of the Foreign Investment Law (FIL) provides that an investor has a right to remit
abroad in the relevant foreign currency through any foreign bank the foreign currency that the same
investor who brought the foreign capital in Myanmar is entitled to, the foreign currency that the
Commission allowed to withdraw, the net profit after deducting all taxes and any remaining balance
after paying taxes and deducting the living expenses of the foreign personnel.
According to Notification 11/2013 if an investor desires to transfer foreign currency abroad under
circumstances which are not included in the normal account transfers, he shall apply to the Commission
for a specific permit by completing the transfer permit form and attaching certain documents related to
the company and the bank account.
The Commission has the right to review the application and decide whether to grant the transfer or not.
Should the Commission grant the transfer, the said transfer can be granted for the requested amount or
for a lesser amount. Thus the investor has the right to transfer the Myanmar kyats earned with the
business he set up in Myanmar to a kyat account of a citizen or a citizen-owned company and then to
transfer the said amount in foreign currency to a foreign currency account opened at the bank in the
country where the citizen or citizen-owned company has its account.
The Foreign Exchange Management Act 2012 (FEMA) provides the rules for outward remittances,
making a distinction from current transactions that include: (1) payments due in connection with foreign
trade and other current business, including services, normal short-term banking and credit facilities; (2)
payments due as interest on loans and as net income from other investments; (3) payments of
moderate amounts for amortization of loans for the depreciation of direct investments; and (4)
moderate remittances for family living expenses and capital transactions.
FEMA provides for no restrictions on transactions concerning current transactions. In any case, capital
transactions need Central Bank of Myanmar (CBM) approval. As mentioned above, if a company has an
MIC Permit, it has repatriation of funds guaranteed under FIL and Notification 11/2013, subject to
certain requirements. For instance, companies shall carry out financial transactions through foreign
currency and Myanmar kyat accounts with a bank licensed to carry out foreign currency transactions.
According to the FEMA, the CBM is the governmental body which shall monitor and record all the
money brought into Myanmar to carry on foreign investments. In this regard CBM shall also monitor the
repatriation of principal, interests, profits, dividends and other payments related to such investments.
Foreign investors, as per FEMA, shall declare their funds and prove the evidence of their funds brought
in Myanmar and therefore CBM for each transaction. If a foreign investor does not present the above
mentioned evidence to the CBM, such investor may not be able to remit the funds abroad. Should the
investment terminate in Myanmar, the foreign shareholder will be able to remit the amount of his
investment abroad.
54
Challenges and Recommendations

The restrictions on using foreign currency or converting MMK into foreign currency for the purpose of
obtaining long term project finance loans would be a potential challenge to implement PPP projects in
Myanmar. In this regard, it can be recommended that the regulatory framework of contingent liabilities
should be strengthened in a way that the regulatory approvals for certain financing transactions should
be clarified by means of Central Bank notifications.
55

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Ministry of Planning and Finance

Republic of the Union of Myanmar

• Value-for-Money considerations are central in the decision-making process of the Government

The PPP models supported by the Government could include:

5. Scope of PPPs in Myanmar

1. Legal and Regulatory Framework

• Competition: The principle objective of a fully-developed, well-functioning PPP system is to provide

c) Other Related Laws and Regulations

• Land use issues:

• Environmental and social issues and environmental assessment

These questions should be addressed through independent (multi-sectoral, where applicable)

4 Phases of PPP Development

Identification Preparation Transaction Management

Approval for Approval for Approval for Signing

 Supporting capacity building activities for GCAs;

c) Government Contracting Agencies (GCAs)

3. Government Support for PPP projects

• Grants to PPP projects

Box 1: Public Debt Management Law

Source: VDB Loi

The four phases of PPP project are briefly described below.

D. CONCLUSION AND IMPLEMENTATION ROADMAP

COMPONENT OF OBJECTIVE INTERVENTIONS TIMEFRAME

Taking necessary actions Medium term

COMPONENT OF OBJECTIVE INTERVENTIONS TIMEFRAME

Establishing a PPP Short to Medium-term

4 GOVERNMENT A body of financial support Setting-up a Project Short-term (<2 years)

Assessing the need and Medium-term

COMPONENT OF OBJECTIVE INTERVENTIONS TIMEFRAME

The PPP unit should develop Medium-term

6 CAPACITY Sufficient internal capacity Developing a National PPP Short-term (ad-hoc

LEGAL REVIEW OF PPP-RELATED ISSUES

Annex I: Legal basis for private investment in public services in Myanmar

• The Telecommunications Law 2013 specifically allows private sector investment in

Annex II: Restriction on Foreign Investors

FIELD ACTIVITY REMARKS

Energy Administration of electric power system Prohibited

FIELD ACTIVITY REMARKS

Annex III: Procurement rules in Myanmar

On the tenders relating to construction, if there is a company offering to conduct a preliminary

Current Challenge and Recommendations

Annex IV: The contractual Framework

1. Background to Myanmar Contract Law

3. Templates of PPP Contracts

4. Conclusions and recommendations

Annex V: Dispute Resolution Mechanisms

Supreme  Supreme Court:

3. Challenges and Recommendations

Annex VI: Land Use Issues

1. Land Ownership and Title in Myanmar

a) Legal framework and different “types” of land in Myanmar

b) Registration issues and lack of title

2. Legal Interests Available to Foreign Developer

b) Mortgages and secured interests

3. Rights of Access to Third Party Land

5. Zoning and construction permission

c) Special economic zones and industrial zones

6. Challenges and Recommendations

Through this review, the following challenges have been identified:

Annex VII: Environmental and Social Assessment Issues

2. Environmental Impact Assessment (“EIA”)