Welcome to the December edition of our monthly Myanmar update, updating you with the key need to know points from the Myanmar news.
Following the landslide victory of the National League for Democracy (NLD) in November 2015, NLD’s leader Aung San Suu Kyi has held separate meetings with three of Myanmar’s key political figures: President U Thein Sein, Senior General Min Aung Hlaing and the retired Senior General Than Shwe. The meetings were requested by Ms Suu Kyi, in the interests of national reconciliation and to discuss a smooth transfer of power to the new government.
During their separate meetings with Ms Suu Kyi on 2 December, both Mr Thein Sein and Mr Aung Hlaing reportedly pledged to assist in a smooth transfer of power. In addition, both Mr Thein Sein and Ms Suu Kyi agreed to set up a channel of communication to help guide the transition process.
It was reported that Mr Than Shwe, who headed the country's military until he stepped down in 2011, has also pledged his support for Ms Suu Kyi as the country’s new leader during his meeting with Ms Suu Kyi on 4 December.
An eight-member joint transition committee comprising members of the outgoing military government and the NLD has been set up to facilitate the transfer of power to the NLD. The committee hopes to complete its work within one month, before the current parliament’s term ends on 30 January 2016.
Second round of foreign bank licensing
The Central Bank of Myanmar (the CBM) has announced that it will be carrying out a new licensing round in 2016 to grant additional licences to foreign banks. A licence holder will be permitted to provide onshore wholesale banking through a branch.
The announcement provides that the CBM will distribute to eligible banks a request for Expressions of Interest (EOIs) in early 2016 to initiate the new licensing round. Foreign banks with representative offices in Myanmar or which are in the process of obtaining one will be permitted to participate. Foreign banks headquartered in economies which successfully obtained a licence in the first round held in 2014 (Australia, Japan, Malaysia, Peoples Republic of China, Singapore, and Thailand) will not be able to participate.
Members of our team advised on the previous round of foreign bank licensing and have been involved in tenders and transactions involving the government and state own enterprises. Please feel free to contact us for further information.
Further easing of US sanctions under General Licence 20 (GL 20)
The US Office of Foreign Assets Control (OFAC) issued GL 20 on 7 December 2015. According to OFAC’s announcement, GL 20 is a six-month licence lasting till 7 June 2016, which allows individuals, companies and financial institutions to conduct most transactions that are “ordinarily incident” to the export of goods, technology, or non-financial services to or from Myanmar, that would otherwise be prohibited by the Burmese Sanctions Regulations. These authorised transactions include participating in trade finance transactions, paying port fees and paying shipping and handling charges associated with sending goods to or from Myanmar.
GL 20 also authorises United States financial institutions to unblock and return transactions blocked on or after 1 April 2015 that would have qualified as authorised had they been engaged in pursuant to the authorisation under GL 20.
GL 20 was issued in response to reports of unintended interruptions of trade due to sanctions concerns with the Asia World Port Terminal, a key port in Yangon which is reportedly run by Asia World Port Management (AWPM), a subsidiary of Asia World Co. Ltd. (Asia World). Both AWPM and Asia World are reportedly on the list of Specially Designated Nationals (SDNs).
While GL 20 is intended to support the easing of US sanctions on Myanmar in response to significant positive reforms in the country, the US State Department has stated that it is not a response to the November general elections and does not signal a change in US sanctions policy toward Myanmar.
Opening of the Yangon Stock Exchange (YSX)
The YSX opened on 9 December 2015 with the following six companies obtaining approval to list on the exchange:
- First Myanmar Investment Co., Ltd;
- First Private Bank Ltd;
- Great Hor Kham Public Co., Ltd;
- Myanmar Agribusiness Public Corporation Limited; (v) Myanmar Citizens Bank Ltd; and
- Myanmar Thilawa SEZ Holdings Public Limited. Trading is expected to begin in February or March 2016.
Dr Maung Maung Thein, the Myanmar Securities and Exchange Commission chair, also indicated that the amendments to the Myanmar Companies Act 1914 will open the market to foreign buyers and international joint ventures. It is anticipated that the revised act will be passed after the NLD takes office in March 2016.
Ten securities companies intend to operate as underwriters, out of which nine are still awaiting the grant of a provisional underwriter licence as of 10 December 2015.
Parliament approves amendments to the Mining Law
Following almost three years of debate between its upper and lower houses, the Pyidaungsu Hluttaw has approved proposed amendments to the Myanmar Mines Law 1994.
Amongst other changes, the approved amendments allow for foreign investment into small and medium-sized mining ventures for the first time. Conversely, the existing law permits foreign investment only into large companies. Small-scale mining will also be legalised.
Parliament approves National Ceasefire Agreement (NCA)
On 8 December, the Pyidaungsu Hluttaw approved the NCA which was signed on 15 October 2015 (see our October and November 2015 postcards for more information.)
Union minister and deputy chair of the government’s Union Peace making Work Committee Mr U Aung Min commented that the NCA, while still a work in progress, would function as a positive starting point for the new government, and that it was a step toward establishing dialogue with non-signatory organisations.
The NCA imposes a deadline of 14 December 2015 for the approval of a draft framework for political dialogue by the Union Peace Dialogue Joint Committee. It is anticipated that political dialogue will commence in mid-January 2016.
Draft Public Debt Management Law submitted to parliament
A draft Public Debt Management Law has been submitted to the parliament’s bill committee. The draft law was prepared with assistance from the Asian Development Bank, and was first published in mid-July 2015 for the purpose of obtaining feedback.
According to the Ministry of Finance, the new law is intended to manage the country’s domestic and external debts more effectively. Under the new law, the Ministry of Finance will be solely authorised to approve and manage government debt, and all debt and cash management activities will be under its treasury department.
In addition, it is envisaged that the new law will promote the development of domestic securities and bond markets.
Directorate of Investment and Company Administration (DICA) issues revised list of inactive companies
Following feedback that the original list of inactive companies produced by DICA contained errors, a revised list was produced by DICA. Daw Nilar Mu, director of DICA’s Department of Company Registration, stated that DICA would wait for active companies to get in touch for at least another month, before striking off the inactive companies from the register in early 2016. Please contact us if you would like a copy of the list or if you would like any assistance in relation to the same.