[Date Prev][Date Next][Thread Prev][Thread Next][Date Index
The BurmaNet News, July 12, 1997
- Subject: The BurmaNet News, July 12, 1997
- From: strider@xxxxxxxxxxx
- Date: Fri, 11 Jul 1997 01:41:00
------------------------ BurmaNet ------------------------
"Appropriate Information Technologies, Practical Strategies"
The BurmaNet News: July 12, 1997
BURMA SOLIDARITY GROUP MALAYSIA: PRESS STATEMENT
BKK POST: GAINT STONE UP FOR SALE
NLM: TIN OO URGES VIGILANCE
NLM: MINISTER ANTICIPATES CLOSER BILATERAL TIES
REUTER: BURMA DEADLOCKED TWO YEARS AFTER RELEASE
TODAY MAGAZINE: INVESTMENT IN MYANMAR
ALTSEAN: ACTIVISTS URGE ASEAN: REVIEW MEMBERSHIP DECISION
July 11, 1997
A L T E R N A T I V E A S E A N N E T W O R K O N B U R M A
tel: 66 2 275 1811, 66 2 693 4515 fax: 66 2 693 4515
c/o FORUM-ASIA 109 SUTHISARNWINICHAI RD SAMSENNOK HUAYKWANG BANGKOK 10320
For immediate release: July 11 1997
ACTIVISTS URGE ASEAN: REVIEW MEMBERSHIP DECISION
Bangkok, Fri: A network of Asean-based supporters of human rights and
democracy today urged Asean to reconsider its decision to proceed with
admitting Burma as a full member at its July Summit.
The Alternative Asean Network on Burma (ALTSEAN-BURMA) said that Asean, in
the interests of logic, consistency and dialogue, should also delay Burma's
admittance until peace was restored to the country. Yesterday, Asean Foreign
Ministers decided to delay Cambodia's entry and to admit Laos and Burma at
the Summit later this month.
ALTSEAN-BURMA Coordinator Debbie Stothard said: "We applaud Asean's call for
dialogue in Burma which was made earlier this month, however Asean needs to
back it up with a clear signal to ensure that Burma's military junta will
take it seriously.
"A delay in Burma's membership will give Burma's Slorc regime some time to
seriously consider and positively respond to Asean's call for dialogue.
"The Cambodian crisis is an ominous reminder to us all that membership
should not be taken lightly and intending members should prove their sincere
commitment to peaceful resolution of conflicts.
"In many ways, the situation in Burma parallels Cambodia. War continues to
rage in parts of the country. A total of more than 200,000 refugees are
gathered on its borders with Thailand, Bangladesh and India. Forced
relocations and forced labour is rampant. The overwhelming rate of drug
production and HIV/AIDS infection under the irresponsible administration of
the Slorc continues to pose a threat to this region.
"If Asean is willing to recognise the elected representatives of Cambodia,
logically, it should do the same for Burma.
"What Burma's democracy movement and ethnic nationalities ask for is
tripartite dialogue. This extremely reasonable request is enthusiastically
supported by Asean-based activists and the international community.
"Asean should not squander the opportunity to facilitate this essential
process." emphasised Ms Stothard.
For more information, please contact:
Bangkok tel. (66 2) 275 1811 or (66 2 692 4515)
BURMA SOLIDARITY GROUP MALAYSIA: PRESS STATEMENT
July 11, 1997
ASEAN's double standards over Cambodia and Burma
The ASEAN Foreign Ministers' decision yesterday to postpone Cambodia's ASEAN
membership but to admit Burma on July 24 as scheduled confirms, yet once
again, ASEAN's hypocrisy and double standards.
In the first place, the Foreign Ministers' decision has exposed finally and
firmly that ASEAN's so-called commitment to the principle of
non-interference in the internal affairs of another state is an utter myth.
It shows that ASEAN has never been honest or principled about this matter.
When it is convenient, as in the case of Cambodia, ASEAN is prepared to
intervene and interfere in the affairs of another country through
diplomatic, political and economic pressure.
When it is not convenient, as in the case of Burma under the military junta,
the SLORC, ASEAN does nothing to embarass or jeopardise the illegal and
illegitimate regime there.
Malaysia's Foreign Minister Datuk Abdullah Ahmad Badawi has called on the
Cambodian government under Hun Sen to ensure that the National Assembly and
other democratic institutions in that country are not dissolved. We support
However, how sad and unfortunate that Datuk Abdullah Ahmad Badawi has not
used the occasion to call on the SLORC generals to hand over peacefully
power to the National League for Democracy (NLD) under the leadership of
Aung San Suu Kyi, in accordance with the democratic verdict of the Burmese
people as expressed through the general election on 27 May 1990.
The Foreign Ministers of ASEAN are not unaware that the SLORC military
gangsters have repeatedly rejected their ever-so-gentle suggestions to
conduct a dialogue with the NLD and other legitimate Burmese groups. This is
a direct slap on the collective face of ASEAN; it is yet another reminder
that ASEAN's so-called policy of `constructive engagement' is nothing but a
fig leaf which has failed miserably to conceal the illegalities and
indecencies of the SLORC military junta.
If what Hun Sen did in Cambodia a few days ago is a coup, then the SLORC
junta's continued refusal to hand over power to representatives duly elected
by the Burmese people was and is a coup. There can be no doubt on this
The question is: Why the double standards by ASEAN?
We had before warned that ASEAN's condoning the SLORC's coup in Burma could
and would encourage coups in other parts of Southeast Asia and even in ASEAN
itself. Events of the past few days in Cambodia have validated our dire warning.
We very much regret that the ASEAN Foreign Ministers had failed yesterday to
take a principled stand against the SLORC military junta in Burma by also
postponing Burma's membership. The is a terrible shame, and it is utterly
unfair to the people of Burma.
It increasingly appears that after 30 years, ASEAN is nothing but an
association of political hypocrisy and diplomatic cowardice, repeatedly
betraying its own founding principles in vulgar pursuit of opportunism, and
tying itself up in knots of contradictions.
Fan Yew Teng
Burma Solidarity Group Malaysia.
BKK POST: GAINT STONE UP FOR SALE
July 11, 1997
Cheewin Sattha, Mae Hong Son
Former drug warlord Khun Sa wants to sell his last treasure, a jade stone
weighing 200 tonnes, according to a source close to him.
Khun Sa, who has been residing in a military camp in Rangoon since his
capitulation to the Burmese government in January 1996, had asked his son,
Chao Cham Huang, to handle the sale of the largest, precious stone in the world.
Among the potential buyers are businessmen from Taiwan and the Middle East.
The former Mong Tai Army leader has kept his treasure in a secret place in
central Shan State, said the source, adding that the stone was a product of
Mongkut mine situated in the same state.
After his surrender to the Burmese government, Khun Sa is reported to have
washed his hands of drugs.
According to the source, he has invested jointly in the hotel business with
high-ranking military officers. His 200-room five-star hotel is expected to
open this year.
NLM: TIN OO URGES VIGILANCE TO AVERT ATTEMPTS TO DESTROY NATION
July 5, 1997 [abridged]
Yangon, 4 July - Secretary-2 of the State Law and Order Restoration
Council, Chief of Bureau of Special Operations, Chief of Staff (Army)
Lt-Gen Tin Oo met officers and other ranks of the Tatmadaw (Army, Navy, Air)
of the Ministry of Defence and elaborated on the political situation
prevailing in the country, what should be known about activities of internal
and external destructive elements and the salient points which
Tatmadawmen must observe, at the Ministry of Defence this morning.
He said preventive measures must be taken in accord with the law
against the outbreak of violations, disturbances and anarchic acts and some
West powers have been resorting to various unfair means in favour of their
puppets to gain power and said above-ground destructive elements have
established contacts with underground insurgents and become involved in
There have been many crimes committed by above-ground destructive
groups against the State and the people, the Secretary-2 said and added
some people asked why action has not been taken against them.
The Secretary-2 went on to say that the State Law and Order
Restoration Council has been watching with magnanimity whether they will
change their activities, and pointed out it is found that the above-ground
puppet organization of the West bloc has been making preparations for
resorting to various means to gain power.
He spoke of various means employed by the terrorists to cause the
disintegration of the Union, and declared that the State Law and Order
Restoration Council will prevent any act detrimental to the interests of
the State in accord with the law.
Even KNU which remains in the jungle had prepared to exchange arms for
peace, but some West bloc organizations flattered and incited them to mar
peace and tranquillity he stated and added KNU turning a blind eye on the
peace within reach, issued Metharawhta declaration to continue to oppose
the State Law and Order Restoration Council and seize power through armed
The declaration is the policy drawn by the agents of the West bloc and
also gained support of above-ground puppet destructive groups he stated and
called on Tatmadawmen to prevent all attempts of the above-and under-ground
destructionists to cause disintegration of the Union.
He also urged all to try to equip themselves with ten strengths and
five basic qualities and to uphold 12 fine traditions and to forge unity in
the Tatmadaw on the basis of the motto which says "Only if the Tatmadaw is
strong will the nation be strong" in accord with the guidance of Senior
General Than Shwe, Chairman of the State Law and Order Restoration Council
and Commander-in-Chief of Defence Services.
NLM: MINISTER ANTICIPATES CLOSER BILATERAL TIES WITH SINGAPORE
July 6, 1997 [abridged]
Yangon, 5 July - The conclusion of the Certificate in Food Preparation
Course organized by the Ministry of Hotels and Tourism in collaboration
with Singapore Tourist Promotion Board took place at Kandawgyi Palace Hotel
here this afternoon.
It was attended by Minister for Hotels and Tourism Lt-Gen Kyaw Ba,
Deputy Minister Brig-Gen Tin Aye, Ambassador of Singapore Brig- Gen Patrick
Choy Choong Tow, directors-general and managing directors under the
ministry, officials of STPB and Singapore Hotel Association Training and
Education Centre, course instructors and trainees.
Minister Lt-Gen Kyaw Ba delivered an address.
As Myanmar is joining ASEAN very soon, the existing relationship
between Myanmar and Singapore will be closer and there will be more
cooperation in the region. And with more cooperation and activities in
regional tourism, our Ministry of Hotels and Tourism and the Singapore
Embassy in Myanmar will surely have to work closer.
Being our good neighbour and friends, may I take the liberty of the
occasion and explain the sincerity of our government. Since our government
is well aware that tourism is the fastest foreign earning generator and has
multiplier effect that support businesses ranging from hotels, tour
operators, restaurants to ground transportation and retail shops, the
encouragement is fully given to accelerate the development of this
industry. By doing so we believe that our economy will be stronger and our
people will have a better life.
However, we have some undesirable elements trying to sabotage the
efforts of the government in order to gain political power. They have been
making propaganda that our government does not care for the majority and
that by investing in Myanmar and by tourists visiting Myanmar, the military
government under which people are ill treated will last forever.
But because of the instigation made by the earlier mentioned
power-craving group, Myanmar government is misunderstood. The economic
sanction imposed by the USA is one outcome. The sanction does not only stop
the coming of new investors, but also makes one or two companies from USA to
withdraw their business.
It is clear that for the benefit of gaining power, the destructive
elements have created antagonistic outlook which includes the boycotting of
Visit Myanmar Year. At the time when we celebrated the opening of Visit
Myanmar Year 1996 in November 1996, there were many reservations at the
hotels in all parts of the country for their forth coming visit to Myanmar.
However, in December the destructive elements supported by the CIA created
problems like bomb explosion and student demonstrations. Due to these
unpleasant events, foreign visitors began to cancel their reservations
which damaged the smooth flow of the hotel and tourism industry. The sad
news is that with the decrease in number of guests in the hotel, some
hotels had to reduce the number of staff and people face difficulties as
they lost their jobs. Therefore, the work of these unscrupulous elements is
surely not in favour of patriotism but to gain power and to fulfill their
Clear Understanding [subhead]
However, I believe our good neighbour countries have clear
understanding about our government and there are many investors still
working together with us who are willing to help develop our country. I
have no doubt Singapore is always here with us.
Only by proving that you are better than before will you make your
teacher proud of you and we who organized the course for you will be happy.
This is the right way for you to fulfill the obligation you owe to the two
governments concerned, for your prosperity. In another way, we may say that
your good performance is an enhancement of the goodwill cooperation of the
two countries and the perpetuation of the everlasting friendly relationship.
REUTER: BURMA DEADLOCKED TWO YEARS AFTER SUU KYI'S
July 8, 1997
By Deborah Charles
BANGKOK - When Burmese opposition leader Aung San Suu Kyi was
freed from six years of house arrest in 1995, she greeted the world with
optimism and with calls for dialogue between the ruling generals and her
But two years on, the Nobel Peace laureate is a virtual prisoner in her own
house and has seen her family only a handful of times. Hopes of dialogue
with the military appear little more than a pipedream, diplomats said on
``There was a bit of a moment of hope at first,'' said one Rangoon-based
diplomat. ``But not now.''
``After her release things were a bit happy for a while; she could give
weekend talks and hold meetings. The first year was not so bad, but the
second year was very bad.''
Suu Kyi, who won the 1991 Nobel prize for her non-violent campaign to
bring democracy to Burma, was released from six years of house arrest on
July 10, 1995.
The day after her release an upbeat Suu Kyi told a news conference the
government needed dialogue with the democracy movement or face ``utter
devastation.'' She made similar comments to supporters in weekend rallies
outside her residence.
She urged all nations to be tough on Burma until it improved its human
rights record and recognised the democracy movement. While she was
under house arrest, her National League for Democracy (NLD) party won a
landslide victory in a 1990 election but the result was never recognised by
the governing State Law and Order Restoration Council (SLORC).
``When she was released, everybody expected something to happen,'' said
another Rangoon-based diplomat, referring to the political situation in
``But up until now nothing has changed. And almost every day now the
Burmese newspapers carry negative articles against her and the NLD. It's
not getting any better.''
A senior Burmese official summed up the government's attitude, which
appears to be toughening, towards Suu Kyi.
``Since her day of release the NLD party has got itself into a lot of mess
and now is even in a more serious situation,'' he told Reuters from
Over the past year, Suu Kyi and her party have faced several crackdowns
by the government which on various occasions has rounded up thousands
of NLD supporters and party members and detained them for varying
lengths of time.
The NLD has been unable to function as a normal political party because
the government has also banned most large gatherings of the party and
blocked off access to Suu Kyi's house which serves as her party
In an effort to marginalise Suu Kyi the authorities have cut off her phone
line and closely monitored her visitors and movements.
Suu Kyi's husband, British academic Michael Aris, and her two sons have
only been permitted to visit Burma a few times since 1995. She does not
visit them for fear she will not be able to return.
SLORC officials have refused to negotiate with Suu Kyi, saying she
missed her opportunity when she pulled her party out of a National
Convention which is drafting guidelines for a new constitution.
Suu Kyi withdrew NLD representatives from the mostly hand-picked
convention in November 1995, saying it did not represent the will of the
The government recently stepped up its accusations that the NLD is
involved in terrorist activities.
Top generals have made several statements lately warning it would take
action against ``destructive elements'' such as Suu Kyi and the NLD if they
did not mend their ways.
``Her instigation of civil unrest and and encouragement of terrorism is
something that adversely affects the nation's stability and development,''
the Burmese official said. ``It could be said that she wasted no energy and
time during these last two years.''
TODAY MAGAZINE: INVESTMENT IN MYANMAR
June 1-16, Vol 4
by James Finch and David Schmahman
An Updated Look At Whether Investors In Southeast Asia Should Enter
Myanmar is on many companies' short list as a place to consider for
expansion sometime in the future. And there are real political reasons why
it may be prudent for some to take their time. Investment in Myanmar is
not for the faint of heart or the thinly capitalized. Those who have invested
in Myanmar, however, have noticed quite a number of changes in the legal
environment and environment climate in recent months. What follows is
an update on several basic questions which a foreign investor must ask to
determine if the timing is right to enter Myanmar. Notwithstanding the
timing issue, certain things about Myanmar are certain. Myanmar is the
largest country in mainland Southeast Asia with abundant natural
resources and a motivated and educated population. The thirty years of
self-imposed isolation that kept it from fulfilling its potential have ended
and investment is now encouraged even as the logistics of it are, still being
ironed out. Consider, for instance, that
- Myanmars population of 43 million is 85% literate, and that two
thirds of the population -still earns its, living in agriculture. Despite these
facts, only 12% of Myanmar's cultivable land is being farmed.
- Myanmar has a continental shelf of 230,000 square kilometers but
the fishing industry extracts barely half its sustainable stock. Myamnar has
80% of the world's teak forests, and huge reserves of oil, gas, coal, tin,
tungsten, lead, zinc, iron, copper, gold, and a variety of precious stones,
that await extraction.
- The question is therefore not whether Myanmar will become a
major center of economic activity but when, and who will be best
positioned to participate when this happens.
II. TEN QUESTIONS ABOUT INVESTING IN MYANMAR
The Myanmar investment regimen and legal system may seem
impenetrable to the uninitiated, but they are not. Similarly the business
choices any venture encounters -whether and how to incorporate, when and
in what form to import capital, expertise, or equipment, in what
circumstances one should consider involving a local partner, or how
Myanmar's old British company law interacts with its new foreign
investment structures are not as perplexing as they seem.
We have tried to distill what we have learned - often the hard way
- into ten questions and answers which are, designed at the time of this
writing - to do two things: First, alert the reader to the basic consideration
of doing business in Myanmar. Second, decide if now is the time to invest.
1. ARE CERTAIN KINDS OF ECONOMIC ACTIVITIES STILL OFF-
LIMIT TO FOREIGN INVESTMENT ?
One of the first acts of the new regime (the State Law and Order
Restoration Council or SLORC) in 1988 was to promulgate a Foreign
Investment Law which permitted foreign investment 'in accordance with
[certain] basic principles.' These principles emphasize self-reliance, orderly
economic development that includes the country's regions as well as its
hubs, the acquisition of expertise and technology, and the exploration of
Investment in Myanmar by foreigners must be shown to comport
with these objectives and, consistent with them, certain items are off-limits
except with special dispensation. "Restricted activities include the
harvesting and sale abroad of teak, exploration for and extraction of oil and
gas, pearls, jade, precious stones and metals, fish and prawn breeding, post
and telegraphs, air transport, Banking and insurance, broadcasting,
electricity generation, and the manufacture of defense-related products.
These areas, presumably, are those in which the, government wishes to
retain control, emphasize self sufficiency, or drive a harder bargain with
potential investor given the scale of potential profits.
There is significant foreign involvement already in the energy
field by several major energy companies. Agreements with the government
on investment in other "restricted' are-as, usually in the form of joint
ventures with the government, are similarly available, but the chances of
success are greatly improved if one has prior intelligence as to what the
government's objectives and concerns are. A prudent investor must take
care to anticipate and meet these concerns as they pertain to the particular
kind of economic activity that the investor contemplates, and these can be
learned by doing one's homework, in exploratory meetings with
government officials, and by eyeing what others have done in analogous
2. WHAT BUSINESS STRUCTURES ARE SUITABLE FOR
INVESTMENT IN MYANMAR?
There is a fairly complex regulatory scheme in place that creates a series of
roadmaps for potential investors depending on what specific business
activities they contemplate and the level of investment they propose. In
very general terms an investor's choices, and the consequences of each
choice, are as follows:
Appointment of a Business Representative - This is the least expensive and
least regulated way in which to establish at present in Myanmar. The cost
to a foreign investor is basically the cost of the appointment letter and the
registration fees with the Ministry of Trade, but there are obvious
limitations too. The investor may not have foreign employees, the scope
of the business is basically limited to having a sales agent in the country,
and there are no investment or tax incentives.
Establishment of a Branch Office -This approach requires the investor to
obtain a permit to trade, a process that requires a fair amount of
paperwork, has certain levels of mandatory importation of foreign capital,
and takes several months to shepherd through the regulatory process. An
application for a permit to trade may be submitted through the Company
Registration Office and is valid for two years from the date of issue,
although it is renewable.
The advantages of registering a branch office are that an investor can hire
foreign employees and gain brand name exposure in the country and, of
course, the level of business that can be conducted is significantly greater
than that which can be conducted by a business representative. One
disadvantage is that the head office of the branch may be liable for the
The minimum, capital requirements for establishment of a branch office
are as follows. A manufacturing company must import the hard currency
equivalent of Ks. 1,000,000, a trading company Ks. 500,000, and a service
company Ks. 300,000, all at the official rate. Only half that amount,
however, needs to be brought into the country before, the business
commences operations. Imported capital can be used to pay incorporation
expenses, rent, salaries and the like, and can also be in the form of capital
equipment. Once actually imported, the hard currency may be converted to
kyat at the unofficial rate to the dollar. Consideration should be given to
meeting this requirement by the importation of machinery or equipment.
Unlike a 100% foreign owned local subsidiary, which would be taxed at a
30% corporate rate, a branch office would be taxed at non-resident rate of
at least 35%. Incorporation of a 100% Foreign Owned Local Subsidiary -
Unlike several other Southeast Asian countries, Myanmar allows 1000/o
ownership of local companies. As with a branch office, a permit to trade is
required along with its requirement that certain amount of capital be
imported, depending on whether the local entity is to engage in
manufacturing, trading or services. The company would also be subject,
both in the requirements for its incorporation and once established, to
various requirements- of the Myanmar Companies Act of 1914, a corporate
code that would be, familiar to lawyers in many former British colonies.
The company memorandum and articles of association must describe its
business objectives and these basically are limited to trading,
manufacturing and construction services, insurance, banking and finance,
and hotels and tourism, as defined by the Companies Registration Office.
Standard forms for these documents are available and should be used
whenever possible since this makes translation and acceptance by officials
far easier. In naming a local company the Myanmar Investment
Commission prefers to have the word "Myanmar" appear in the company's
name, and if it does so appear, it must be the first word in the name.
Local companies are, as stated above, subject to a 30% tax and must
comply with the various provisions of the Myanmar Companies Act.
Incorporation of a Joint Venture
Company - A joint venture with a local person or company need not be
incorporated. The basic requirements pertaining to a permit to trade and
compliance with the Myanmar Companies Act apply to investors wishing
to enter the Myanmar market with a local partner and incorporate. If the
foreign party wishes to incorporate with a government entity as a joint
venture the permit to trade requirement is not applicable. Likewise, with a
government partner, the company would be formed tinder the Myanmar
Special Companies Act rather than Myanmar Companies Act. Since it is
not yet resolved whether the exchange rate on purchasing further shares
would be the official or the market rate, an investor should try to get that
portion of the company's capital which he wants at the outset and not try to
resolve, this later.
There are, of course, certain advantages to entering a joint venture with a
local entity, including local knowledge the local joint venturer may have,
reduced start up time, and perhaps the local joint venturer's local contacts.
Myanmar Foreign Investment Law (MFIL) (more details
inhttp://www.myanmar.com/)-The Myanmar Government has adopted an
investment scheme that provides incentives for certain larger favoured
investments (over US$500,000 for manufacturing concerns are
US$300,000 for service companies) and which imposes a correspondingly
more complicated paperwork process on those who wish to take advantage
of it. An investment under the MFIL can be 100% foreign owned, a joint
venture between a foreigner and a citizen, a joint venture between the
government and a foreigner or even a sole proprietorship or partnership. If
the investment is a joint venture, at least 35% of the equity capital must be
contributed by the foreign partner.
Incentives under the MFIL include a three-year tax holiday, guarantees
against nationalization, and a variety of other tax benefits and exemptions
depending on the circumstances of the investment, often subject to
3. HOW EASY IS IT TO GET BASIC THINGS, LIKE OPENING BANK
Not very. Banks in Myanmar are for the most part not computerized,
transactions that can be done abroad at an ATM may take a morning, and
basic banking services may prove to be unavailable just when you need
them (wire transfers, for instance.)
As discussed above, when an investor forms a local company the investor
will be required to bring in a certain amount of cash in the first year.
Usually, half has to come in before the company is allowed to open its
doors, and officials will not grant long term visas or allow the company to
rent property, hire employees, or open a bank account., until the money
comes in. Once the money comes in it will be placed in a sundry account
and not released to the company's own account without negotiation,
paperwork and patience. A company commencing operations in Myanmar
should count on at least three weeks before money shipped in to Myanmar
Other matters one takes for granted elsewhere such as reliable electricity,
Internet access, and adequate telephone lines are not automatically
available even in Yangon, but patience and creativity do prevail in the end.
4. SHOULD WE TAKE ON A LOCAL PARTNER?
This may be the most important decision an investor in Myanmar will
make. We have heard and participated in the debate dozens of times, and
the outcome differs. A local partner may know the environment, have
contacts and local experience, and know the ropes. As mentioned above,
moreover, investments in certain industries must be with a government
But then there is the cultural divide, the inscrutability of mannerisms,
loyalties, and objectives. Our contribution to the debate each company will
have on this score is as follows. Myanmar is a traditional society. There is
no substitute in Myanmar for developing long-standing personal
relationships. If a company's operations in Myanmar are significant
enough for management to be concerned about them, somebody at a
management level must be based in Myanmar regardless of whether a local
joint venture, partner is brought on board. It is folly, almost invariably,
foreign investors to fly in, set up structures, get the business going, and
then turn it over to a local partner for management without frequent,
consistent, and well structured supervision.
Foreign management must expect to socialize with Myanmar business
counterparts, participate. in local activities, and make efforts to develop a
variety of personal relationships.
5. HOW ENFORCEABLE ARE LEGAL COMMITMENTS IN
MYANMAR COURTS ?
To a great extent Myanmar's legal system was shaped by Britain during the
colonial period and many facets of its basic business law will be familiar to
investors from common law jurisdictions. Indeed, since Burma as it was
then known was administered with India, when much of the common law
was codified in India the codification was similarly adapted in Burma and
eventually compiled into the 13 volumes of the Burma Code. After
independence the Burmese Parliament supplemented and amended parts of
the Code, and from the early 1960s until 1988 a socialist regime decreed
The most important additions to the law, however, are the recent legal
reforms contained in the post- 1988 decrees of the State Law and Order
Restoration Councils. It is these decrees that are of primary interest. to
foreign investors and the government has shown every inclination to take
them seriously, to have them taken very seriously, and to have all parties
rely on their force, intent, and the binding nature of the reciprocal
commitments they create.
6. WILL THINGS CHANGE ONCE MYANMAR BECOMES A
MEMBER OF ASEAN ?
For sure, and for the better. When Vietnam became a member of ASEAN
a variety of economic reforms, particularly in the trade area, were made
without much fanfare even though Vietnam had long resisted pressure
from western nations to make the same changes. Some observers noted
that the explanation for this was that as a member of ASEAN Vietnam
could make the changes and save face - they were required to do so by an
Asian organization which they had voluntarily joined.
Myanmar is stated for membership in ASEAN later this year. At some
point in every developing country's history it "opens up" in way that
Myanmar has not yet done. It is our view that ASEAN membership will be
the predicate event to a variety of economic changes in Myanmar, and as a
result, Myanmar will become more sought, after, more competitive, and
therefore more, rather than less, difficult to enter as an investor.
It is our view that the race to success will most probably go to those with
the oldest, best researched, and most resilient local relationships.
7. HOW MANY LAYERS OF DEPARTMENTAL HIERARCHY MUST
ONE DEAL WITH IN EMBARKING ON A BUSINESS VENTURE IN
Potential investors need only to deal with the government in obtaining
their basic permits and approvals, but that said it is not as simple as it
sounds. There is a fair amount of discretion built into the various approval
processes, and levels of officialdom sometimes substitute for levels of
government in other environments. There is not, in short, "a one stop
shop" facility for foreign investors in Myanmar as there is in some other
countries. While often, when MFIL approvals have been obtained, other
approvals follow fairly easily, this is not always the case and is certainly
not guaranteed. Under the MFIL process, however, because of the level of
detail required in one's submission to the Myanmar Investment
Commission, it is often true that the required permits and licenses,-are
expedited licenses an investors entire business plan has already, by
definition been approved at the highest levels.
The Myanmar Investment Commission, which administers and approves
applications tinder the MFIL, takes the position that the MFIL is the
supreme law and preempts other requirements such as earlier laws that
require official registration and stamp duties to be paid upon certain
documents. Since there is really no way to determine whether the MFIL
will, in fact, be treated as preempting the registration and stamp duty
requirements, an investor should and can first determine whether these
apply to a particular deal and, if they do, get the government to waive
them. There are, of course, a variety of other licenses and permits that are
required, depending on the specific business activities contemplated.
Trading companies, for instance, after obtaining their permits to trade and
being daily incorporated, still need to obtain export and import licenses
and comply with the various registration requirements of the
Export/Import Department of the Ministry of Commerce.
8. HOW EXPENSIVE IS LABOR IN MYANMAR, AND HOW
ONEROUS IS COMPLIANCE WITH MYANMAR LABOR LAWS?
Labor rates are low in Myanmar, and labor laws are less favourable to the
worker than those in most other developing countries. There are no legal
requirements for termination pay for laid-off workers, for instance,
although private enterprises having more than five employees must
contribute 3% of each employee's wages to a social security fund for that
employee, and must register to do so with the township department in
which the employee lives. On occasion this can be a bureaucratic process
with attendant frustrations, but it is, like compliance with most Myanmar
paperwork, manageable and always simpler the second time.
9. TO WHAT TAXES WILL OUR ENTERPRISE BE SUBJECT ?
An overview of the taxes a foreign enterprise and individual might
Encounter in Myanmar is presented below:
- Residents (those who are in Myanmar for more. than 182 days in
a tax year)- taxed at progressive marginal rates from 5% to '.10% for
income over 500,000 kyats. Residents working for companies which have
MFIL benefits may he granted a flat 10% tax rate.
- Companies incorporated in Myanmar: taxed at a flat rate of 30%,
with certain deductions that may serve to decrease taxable income.
Companies which have MFIL, I-)benefits usually receive a three-year tax
holiday and numerous other tax benefits.
- Non-resident individuals and foreign country branches-. taxed at
either 35% or on a progressive scale of from 5% to 40%, whichever is
- Myanmar citizens: taxed at a flat 1O% of income earned in
foreign currency, and at progressive rates for kyat income.
- Miscellaneous taxes:
- Commercial or turnover tax. Essential items are exempted from
this. It is paid on imports and a wide variety of local goods and services.
- Service taxes (hotels and restaurants, for instance) are subject to a
10% commercial tax,
- Import duties;
- Export taxes (maximum 5%);
- Capital gains tax. This is 20% for residents and 40% for
non-resident foreigners, unless the non-resident foreigner is
operating under the MFIL in which case the capital gain rate is 30%.
- Withholding taxes. For example, interest paid abroad is
subject to 15% withholding when paid by resident foreigners and
citizens, and 20% when paid by non-resident foreigners.
- Payment for work done by a foreign contractor is subject to a
2.5% withholding rate when paid by resident foreigners and citizens,
and 3% by non-resident foreigners,
10. WILL OUR INTELLECTUAL PROPERTY BE PROTECTED IN
There has never been specific trademark legislation in Myanmar, although
a draft law is presently under consideration. A prudent investor should not
rely on its being enacted immediately. Most companies protect their
trademarks by filing a declaration of ownership with the Registrar of
Deeds in Yangon and placing a cautionary notice in the local newspaper,
the New Light of Myanmar. This is not a true registration, however, and
would be considered only to be evidence of a mark's use and ownership.
While technically this evidence could be used in a common law 'passing off
' action against an infringer, it would be an imprudent investor indeed who
acted in complete reliance on the certainty of prompt and effective legal
redress in a Myanmar court.
That being said, the following is also true. Our experience is that the
brazen infringement of trademarks is rare, and that once their ownership
has been established to official satisfaction further infringement can
sometimes be discouraged by other means. We would advise extreme
caution, however, in the unrestricted transfer of proprietary technologies.
If there is a common thread running through our discussion it is that
business in Myanmar cannot be done by remote control. For the serious
investor nothing will substitute for exploratory visits and introductions to
and meetings with local businessmen, professionals, and government
officials. The development of such relationships, as well as a sensitivity to
the subtleties and undercurrents of Myanmar life and to "how things are
always done" in Yangon, is not only important to anyone considering
doing business in the country but so important as to render it foolhardy
even to consider a business enterprise in Myanmar without first having
And even if one does not plan to invest in Myanmar in the near future, the
far-sighted investor will consider whether now is not the time to begin the
process of building this type of knowledge base and relationship. All else
aside, Yangon may be one of the most pleasant cities in Asia in to do such
1. James Finch is a partner in the law firm of Rtissin & Vecchi,
International Legal Counselors, LLP and is its resident partner in Yangon,
2. David Schmahman is a partner in the Boston, Massachusetts law
firm of Nutter, McClennen & Fish, LLP.
The authors have collaborated on numerous matters relating to Myanmar.