Saturday, August 19, 2017

Myanmar raises the bar

The country is opening up its economy to foreign investors. To do so, it is introducing the Myanmar Companies Bill, extending credit and lifting bans to raise confidence in its economy.

The latest draft of the Myanmar Companies Bill will allow foreigners greater participation in the local economy, if approved. Aung Htay Hlaing / The Myanmar TimesThe latest draft of the Myanmar Companies Bill will allow foreigners greater participation in the local economy, if approved. Aung Htay Hlaing / The Myanmar Times

The latest draft of the Myanmar Companies Bill was submitted to the Amyotha Hluttaw by Deputy Minister for Planning and Finance U Maung Maung Win on July 20.

If approved, the new bill will replace the existing and now obsolete 1914 Myanmar Companies Act. The bill was drafted combining the 1914 Myanmar Companies Act and Special Companies Act with help from the Asia Development Bank, U Maung Maung Win said.

Comprising 8 parts, 32 chapters and 478 sections, the aim of the new bill is to make the regulatory framework more compatible with international practices and develop a functioning capital market in Myanmar with sufficient shareholder protection and foreign participation.

Among the new laws to be introduced is one allowing foreigners to own shares in Myanmar companies. Local companies with foreign shareholders will also be able to raise the threshold for when it will be considered a foreign company. That threshold is expected to be 35%, according to an April note by law firm Berwin Leighton Paisner (BLP).

The new bill also removes the requirement for foreign companies to hold a separate permit to trade, significantly reducing the regulatory burden and leveling the playing field between local and foreign companies, BLP notes.

These changes will “greatly increase the ability of local companies to benefit from foreign investment and access to foreign capital. It will also facilitate foreigners buying shares in companies listed on the Yangon Stock Exchange (YSX),” BLP noted

Meanwhile, corporate governance standards will also be raised to build greater confidence in local companies. The new bill will introduce a 24-hour, publicly accessible electronic registry for companies, enabling them to comply with reporting requirements in a more transparent and cost-effective way.

Lower compliance costs will benefit small-and-medium enterprises and family businesses in particular, potentially spurring a greater sense of entrepreneurship among the local business community, create more jobs and drive more business activity.

Drafts of the new bill in the Myanmar language and English have been published on the Directorate of Investment and Company Administration website and state media and are open for public suggestions.

MPs who want to revise the bill will have to sign and submit with detailed descriptions the relevant sections and subsections to the Director General of Amyotha Hluttaw on or before Jul 25, Speaker Mahn Win Khaing Than declared.

Translation by Zaw Nyunt