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Legal Update Q1/2016

Myanmar News: ▪Arbitration Law 2016▪ UnionTaxLaw2016andNotification18/2016amendingtheCommercialTaxRegulations 2011

▪ Shops and Establishments Law 2016▪Condominium Law 2016▪ Notification26/2016concerning

Foreign Investments

Myanmar Luther News, Legal Update Q1/2016

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In its last sessions, the outgoing parliament has passed a total of 25 new laws:(1) LawAmendingtotheMyanmarLighthouseAct(2) PublicDebtManagementLaw(3) Road Transportation Business Law(4) Railway Transportation Business Law(5) Arbitration Law(6) Law Amending the Penal Code(7) The Third Time Amending Law to Pyithu Hluttaw

ElectionLaw(8) The Third Time Amending Law to Ahmyothar Hluttaw

ElectionLaw(9) The Third Time Amending Law to State or Region Hluttaw

ElectionLaw(10) The Legal Aid Assisting Law(11) TheSpecialCommodity(Goods)TaxLaw(12) TheLawAmendingtheFactoriesAct,1951(13) TheSecondLawAmendingtotheWardandVillageTract

Administration Law(14) ThePesticideLaw(15) TheNewGenerationofPlants(Seedling)ProtectionLaw(16) TheLawAmendingtotheCodeofCriminalProcedure(17) PaymentofWagesLaw,2016(18) Shops and Establishments Law, 2016 (19) National Planning Law, 2016-2017 (20) TheFinancialInstitutionLaws(21) The Union Budgets Law, 2016(22) The Union Revenue (Tax) Law, 2016(23) TheSecondLawAmendingtoMyanmarGemsLaw(24) The Condominium Law (25) Law Relating to the Person Retired President of Union(26) Pleasefindbelowasummaryofthemostimportantnew

laws,aswellasthemostrecentministerialnotifications.

Arbitration Law 2016On5January2015, theMyanmarparliamentfinallypassedtheArbitrationLaw2016.ThenewlawreplacestheArbitrationAct1944andprovidesthedomesticlegalframeworkfortheimplementationoftheNewYorkConventionontheRecognitionandEnforcementofForeignArbitralAwardsof1958(the“NewYorkConvention”).Basedonthislaw,foreignarbitralawardsissuedinacountrywhichispartytotheNewYorkConventionshouldnowberecognizedandenforceableinMyanmar.

Please find below a shor t summary of the mostimportantchanges.

I.ArbitrationundertheformerArbitrationAct1944

Before passing the new law, the enforcement ofMyanmararbitral awards and particularly foreign arbitral awards inMyanmarwasinpracticedifficult,ifnotimpossible.

Myanmar’sformerArbitrationActdatingbackto1944providedfordomesticarbitrationonly.Undertheact,thecourtsweregivenextensivepowerstorevoketheauthorityofanarbitrator(sec.5ArbitrationAct1944)ortoremovearbitratorsorumpires(sec.11ArbitrationAct1944).

Myanmar’s signing of the New York Convention on 16 April 2013 was the first step towards the recognition andenforcementofforeignarbitralawardsinMyanmar.Untilnow,itwas,however,doubtfulwhethertheenforcementofforeignarbitral awards in Myanmar would be possible as agreed in the conventionwithoutproperimplementationundernationallaw.

II.TheArbitrationLaw2016

WiththeenactmentoftheArbitrationLaw2016,theMyanmarParliament finally implemented the agreed terms of theNewYorkConvention.The lawsupersedes theArbitrationAct1944and isbasedon theUnitedNationsCommissionon International Trade Law´s (UNCITRAL) Model Law on InternationalCommercialArbitration1985.Itselevenchapterscontainregulationsfordomesticandinternationalarbitration,aiming to provide

“[…] fair and effective resolution of domestic and international economic and commercial disputes [as well as] recognition and enforcement of foreign arbitral awards in the resolution

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of disputes through arbitration and to encourage use of arbitration in resolving disputes” (sec. 4 Arbitration Law 2016).Consequently, foreign investors shall have the option to resolve disputes with Myanmar parties through arbitration under foreignlaw(e.g.SingaporeLaw)andinforeignjurisdictions.

1.InternationalArbitration

Pursuant to sec. 3 i) Arbitration Law 2016, internationalarbitrationrelatestoarbitrationplacesoutsideofMyanmar,inwhich:-

(i.) any party to an arbitration agreement has, at the time of theconclusionoftheagreement,itsplaceofbusinessinanycountryotherthantheUnionofMyanmar;or

(ii.) theplaceofarbitration ifdetermined in,orpursuant to,thearbitrationagreementissituatedoutsidethecountryinwhichthepartiestotheagreementhavetheirplacesofbusiness;or

(iii.)anyplacewhereasubstantialpartoftheobligationsofthecommercialrelationship is tobeperformedortheplacewithwhichthesubject-matterofthedisputeismostcloselyconnected, issituatedoutside thecountry inwhich thepartiestotheagreementhavetheirplacesofbusiness;or

(iv.)the parties to the arbitration agreement have expressly agreedthatthesubjectmatterofthearbitrationagreementrelatestomorethanonecountry.

An arbitration awardmade, in pursuance of an arbitrationagreement,intheterritoryofamemberstatetotheNewYorkConventionotherthanMyanmarisdefinedasaforeignaward(sec.3k)ArbitrationLaw2016). Inorder to recognizeandenforcea foreignarbitralaward, thepartyshallpursuant tosec.45a)ArbitrationLaw2016submitthefollowingdocumentsand information:

(i.) Originalawardorcopythereofdulyauthenticated;

(ii.) Or iginal arbitrat ion agreement or an author izedcopythereof;

(iii.)Evidencetoprovethattheawardisaforeignaward;and

(iv.)Translat ion into Engl ish of the award and the arbitrationagreement.

Pursuanttosec.46a)ArbitrationLaw2016,MyanmarcourtsshallenforceaforeignawardinthesamewayasaMyanmarcourtdecree.However,thelawprovidesasetofrulesinsec.46 b) Arbitration Law 2016, enabling the courts to refusetoenforcea foreignaward (e.g. in caseof invalidityof thearbitrationagreementorwherethecompositionofthearbitralauthorityorthearbitralprocedurewasnotinaccordancewiththeagreementoftheparties).

2.ArbitrationinMyanmar

In case of domestic arbitration (i.e. arbitration within theUnionofMyanmar),thearbitrationtribunalshalldecideuponthedisputesubmitted forarbitration inaccordancewith therelevantMyanmarlaws(sec.46a)ArbitrationLaw2016).Thetribunalshallfirstdecidewhetherthepartieshaveexpresslyauthorizedittodosobeforedecidinginaccordancewiththetermsofthecontractandshalltakeintoaccounttheusagesofthetradeapplicabletothetransaction.

3.Conclusion

TheenactmentoftheArbitrationLaw2016willhaveapositiveimpactonforeigninvestmentinMyanmarandinthelongrunpavethewayformorelegalcertaintyinMyanmar.ButsinceMyanmararbitrationtribunalslackexperience,Myanmarcourtstend(ed) to interferewithdomesticarbitrationandMyanmarpeopleoftenmistrustinternationalarbitration,itwilltaketimeforconcernedauthoritiesandpartiesaliketoadjusttothenewarbitrationregime.


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Union Tax Law 2016On 25 January 2016, the Myanmar parliament passed the UnionTaxLaw2016.Since2014,theparliamentannounceschangesforspecialgoodstax,commercialtaxandincometaxonanannualbasis.Thenewlawshallbeeffectivefrom1Aprilforthefinancialyear2016-2017.

PleasefindbelowasummaryofthemostimportantchangesimplementedbytheUnionTaxLaw2016.

I.IncomeTax

Therateofcorporateincometaxremainsunchangedat25%underthenewUnionTaxLaw2016.

Similarly, no major changes have been announced forindividuals, with personal income tax rates remainingunchangedat0%-25%withapersonalbasicreliefforresidentsat20%ofthesalaryincome(cappedatMMK10,000,000).

NoincometaxshallhoweverbeleviedonanindividualearninguptoMMK4,800,000peryear,andallowancesforresidentindividual tax payers living together with a parent, spouse or childrenhavebeenslightlyincreased:

�Co-residentparentreliefwasincreasedtoMMK1,000,000perparent;

�SpousereliefwasincreasedtoMMK1,000,000;and�ChildreliefwasincreasedtoMMK500,000peroffspring.

II.CommercialTax

While there isnovalueadded tax inMyanmar,commercialtax is levied as a turnover tax on a wide range of goods and servicesproduced,tradedorrenderedwithinMyanmaraswellastheimportofgoodsbasedonthelandedcost(i.e.thesumofthecost,insuranceandfreightvalue,andcustomsduties).

Underthelaw,anymanufacturer,traderandserviceproviderisrequiredtoregisterforcommercialtax.Exemptedfromthecollectionof commercial taxareonlyenterpriseswhichdonotexceedthestatutoryturnoverthreshold,whichhasbeenincreasedfromMMK15,000,000toMMK20,000,000.

The general commercial tax rate on the import or sale ofgoodsandprovisionofservicesremainsunchangedat5%.Commercialtaxratesfrom0%to120%may,however,applydependingonthenatureofthegoodsandservicesdescribed

intheschedulesappendedtotheCommercialTaxLawandtheSpecialCommodity(Goods)TaxLaw2016.

1.IncreasedCommercialTaxonSpecialGoods

16specialgoods,includingtobaccoandalcohol,aresubjecttohighercommercialtaxrates.

WhilethetotalnumberofspecialgoodshasnotbeenchangedcomparedtotheUnionTaxLaw2015,thewayofcalculatingthetaxwasamendedforsomegoods.Forexample,cigaretteswillnowbetaxedperstick,whilealcoholwillbetaxedperliter.Apackof20cigaretteswithasalespriceofuptoMMK400willbetaxedatMMK3perstick,cigaretteswithasalespriceofmorethanMMK801willbetaxedatMMK15perstickandimportedcigaretteswillbetaxedat120%oftheirlandedvalue.Aliterofalcoholicliquor(allkinds)withasalespriceofmorethanMMK20,001perliterwillbetaxedatMMK3,375perliterandimportedalcoholwillbetaxedat60%(landedvalue).

The detailed tables can be found in the new Union TaxLaw2016.

2.ReducedCommercialTaxoncertainServices

Passengertransportservicesbydomesticairlinesandsalesproceedsfromtheconstructionandsellingofbuildingsshallbetaxedatarateof3%.

3.CommercialTaxonExports

The tax on exports has not been changed under the newUnionTaxLaw2016.Zerocommercialtaxshallbegenerallyleviedontheexportofgoods.Increasedtaxesapplyforthefollowing exports:

No Type of Goods Tax Rate1 Crude oil 5%2 Natural gas 8%3 Teakorhardwoodlogsandconversions 50%4 Unpolishedjade,ruby,sapphire,emerald

andotherpreciousstones15%

5 Polishedjade,ruby,sapphire,emeraldandotherpreciousstones;andjewelries

5%

6 Electricpower 8%

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4.CommercialTaxExemptedGoods

Under the new Union Tax Law 2016, the total number of goods exemptedfromcommercialtaxwasincreasedfrom79(UnionTax Law 2015) to 86:

Sr Type of Goods1 Paddy,rice,brokenrice,coarsebran,finebran,

paddyhusks2 Wheatgrain,coarseflour,fineflour,coarsebran,

finebran3 Allkindsofmaizeandothercerealsandflourthereof4 Allkindsofpulses,halves,flour,branandshells5 Groundnuts,shelledorunshelled6 Sesamum7 Mustardseeds,sunflowerseeds,tamarindseeds,

cottonseeds8 Palm oil9 Rawcottonallkinds

10 Juteandotherfibres11 Garlic,onions12 Potatoes13 Tapiocabulb,tapiocaflour14 Spices,raw(leaf,fruit,seed,bark);spices,

prepared (masala)15 Freshfruitsallkinds16 Vegetables17 Sugarcane,sugar,palm-candy,jaggery18 Mulberryleaves(silkwormfodder)19 Medicinalplantsorherbs20 Thatch,reeds,‚dani‘,‚taung-htan‘,‚hpala‘,‚wa-u‘,

‚thanaka‘andsuchagriculturalproductsnotelsewherespecified

21 Firewood, bamboo22 Liveanimals,fish,prawns23 Silkcocoons24 Cane,finishedorunfinished25 Honey, beeswax26 Lac27 Cake,mealandresidueofgroundnuts,sesamum,

cottonseeds,ricebranetc.28 Grosssoappowder,grosssoap29 Bleachingsubstances30 Coiryarn,palm-shellcharcoal31 Tealeaves,freshordry,allkinds32 Stamps,allkinds(includingrevenuestamps)33 Sealingwaxandsticks34 Slates,slatepencilsandchalk35 Shrimpandfishsauces(Ngan-pya-ye)

36 Oilandoilcakeofpeanut,sesamum,sunflowerseed,bran, soybean

37 Freshfish,freshprawn,freshmeat38 Driedfish,driedprawns,allkinds39 Marinatedfish,marinatedprawns,allkinds40 Fish powder, prawn powder41 Value-addedproductsbasedonaquaticproducts

suchasfishandprawns42 Milkandmilkpowderallkinds43 Chilli,chillipowder44 Saffron, saffron powder45 Ginger46 Fish paste47 Ripe tamarind48 Nationalflags49 Prayerbeads,allkinds50 Variouskindsofrulers,eraser,sharpener51 Wood-replacementfuelblocks52 Coconutoil(notediblepalmoil)53 Variouskindsoffowleggs54 Pumpkinseeds,watermelonseeds,cashewnuts55 Religiousclothes(suchasmonk‘srobes)56 Oil dregs57 Saltallkinds58 Rubber59 Betel Nuts60 SyntheticFertilizers61 Insecticides,pesticides,fungicides,herbicidesetc.62 Agriculturalmachinery,toolsandspare-parts63 Rawmaterialsandfinishedgoodsforanimalfodder,

fishmeal,prawnmeal64 Medicinesforanimals,fish,prawn65 Artificialinseminationfluidandtubesforhigh-

grade breeding66 Solarpanels,solarchargercontrollersand

solar inverters67 X-rayfilm,platesandotherX-ray,surgicaland

medicinalpharmaceuticalapparatusesandequipment (only for goods imported by self for use in respectivehospital,clinics)

68 Bandages,gauze,othersurgicaldressingmaterials,hospitalandsurgicaloutfitandsundries(onlyforgoodsimportedbyselfforuseinrespectivehospital,clinics)

69 Householdmedicinesandotherpharmaceuticals,allkindsforhumanconsumption(otherthanthoserestrictedbyCommercialTaxregulations)

70 Pharmaceuticalrawmaterials71 Textbooks,exerciseanddrawingbooksandvarious

kindsofpapersfortheproductionofsuchbooks,allsortsofpencils


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72 Graphiteforpencilproduction73 Condoms74 Arms,vehicles,machineries,materialsand

equipment,accessoriesandspare-partsthereof,usedbydefenseandsecurityorganization

75 Variouskindsofgunpowder,variouskindsofdynamitesandaccessoriesthereofusedbythecivildepartments

76 High-grade,pure-straincerealseedsandsprouts77 Firetrucks,hearses78 Goodssoldinforeignexchangeatspecificlocations

for departing passengers79 Goodsforforeigndiplomaticmissionsand

consulatesona“reciprocalbasis”,anddiplomatsandnon-diplomaticpersonnelthereof

80 GoodsforusebytheArmedForcesandforconsumptionbymembersoftheArmedForces,purchasedunderexpenditurebudgetallocatedtotheMinistryofDefense

81 Rawmaterials,componentsandpackagingconsignedfromabroadforcutting-manufacturing-packaging(CMP)intofinishedgoods

82 Fuel oil sold by the Ministry of Energy to foreign embassies,UnitedNationsagenciesandforeign diplomats

83 GoodsprocuredwithmoneydonatedorgrantedasaidtotheUnionbydomestic/foreignorganizations

84 Jetfueloilsoldforutilizationonforeignoutboundflights

85 Sparesandpartsformachinery,equipmentandmaterialsusedinairplanesorhelicopters

86 GoodsexemptedfromtaxesbytheUnionParliamentin the interest of the Union

5.CommercialTaxExemptedServices

Further, the total number of services exempted fromcommercialtaxwasincreasedfrom23(UnionTaxLaw2015)to 29:

Nocommercialtaxshallbeleviedonthefollowingservices:

Sr. Kind of services1 House rental other than from a house rental

business enterprise2 Parkinglotservices3 Lifeinsuranceservices4 Micro-financeservices5 Healthcareservicesotherthancosmetic

bodymodification

6 Educationalservices7 Goodscarriageservices(carriagewithmotor-

vehicles,watercraft,aircraft,machineries)8 Employmentagencyservices9 Capitalmarketservices10 Bankingservices11 Customs/portclearanceservices12 Cateringequipmentrentalservices13 Cutting-manufacturing-packagingservices14 Funeralservices15 Kindergartenservices16 Myanmar traditional physiotherapy/physiotherapy by

the blind 17 Housemovingservices18 Roadtollcollectionservices19 Animalhusbandryandveterinaryservices20 Publictoiletservices21 Foreignroutepassengertransportservices22 Artandcultureservices23 Publictransportservices(bus,train,ferry-ship)24 Licensefeespaidtostateorganizations25 Printingandpublishingservicesfromthesecurity

printingworksundertheMinistryofDefense26 Servicesprocuredbyforeigndiplomaticmissions

andconsulatesrelevantona“reciprocalbasis”,anddiplomatsandnon-diplomaticpersonnelthereof

27 ServicesprocuredwithmoneydonatedorgrantedasaidtotheUnionbydomestic/foreignorganizations

28 GoodsexemptedfromtaxesbytheUnionParliamentin the interest of the Union

29 Inter-organizationservicesbetweenorganizationssuchastheOfficeoftheUnion,President,OfficeoftheUnionGovernmentCabinet,OfficeoftheUnionParliament,OfficeofthePeople’sParliament,OfficeoftheNationalParliament,OfficeoftheUnionSupremeCourt,OfficeoftheConstitutionalTribunal,OfficeoftheUnionElectionCommission,OfficeoftheUnionAttorneyGeneral,OfficeoftheUnionAuditorGeneralandOfficeoftheUnionCivilServiceBoard,OfficeoftheNaypyitawCouncil,SocialSecurityBoard,OfficesoftheRegion/stategoverningbodies,departments.GoodsprocuredwithmoneydonatedorgrantedasaidtotheUnionbydomestic/foreignorganizations(excludingservicesprocuredorprovided by State-Owned-Enterprises)

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III.NotificationNumber18/2016oftheMinistryofFinance

On4February2016 theMinistryofFinance further issuedNotification 18/2016 amending sec. 42 and sec. 52 of theCommercial Tax Regulations concerning the set-off ofcommercialtax.

1.Amendmentofsec.42ofCommercialTaxRegulations

Followinglastyear’sNotification180/2015dated21January2015 which implemented the set-off of commercial taxin service enterprises, the Ministry of Finance has in itslatest amendment of the Commercial Tax Regulationsalignedtherespectiveregulations forproduction, tradeandserviceenterprises.

Initially,sec.42ofCommercialTaxRegulationsstipulated,that

�amanufacturerofgoodsmayset-off thecommercial taxpaidon thepurchaseor importof rawmaterialsorsemi-finishedgoodsfromthecommercialtaxdueonthesaleofgoodsproducedbythemanufacturer;and

�atraderofgoodsmayset-offthepaidcommercialtaxonthepurchaseorimportofgoodsfromthecommercialtaxdueonthesaleofthegoods.

Notification 180/2015 extended the application of sec. 42CommercialTaxRules to serviceproviders, allowing for aset-off of commercial tax paid formatters concerning theenterprise, from the commercial tax due for the servicesprovidedbytheserviceprovider.

Whiletheset-offformanufacturersandtraderswaslimitedtocertaininputtaxes,theset-offforserviceproviderswas–atleastintheory–notrestricted.

ThenewNotification18/2016furtherstipulateswhichcommercialtaxmaybeset-offbymanufacturers,tradersandservices:

Amanufacturermaydeduct:-

(i.) Commercial tax already paid on landed-value ofgoodsimported;

(ii.) Commercialtaxalreadypaidonthepurchasefromanothermanufacturer,traderorimporter;and

(iii.)Commercial tax already paid on services chargesfor ser v ices procured in connect ion wi th themanufacturingenterprise.

Atradermaydeduct:-


(ii.) Commercialtaxalreadypaidonthedomesticpurchaseofgoods;and

(iii.)Commercial tax already paid on service charges forservicesprocuredinconnectionwiththetradingenterprise.

Aserviceprovidermaydeduct:-


(ii.) Commercialtaxalreadypaidonthedomesticpurchaseofgoods;and

(iii.)Commercial tax already paid on service chargesfor services procured in connection with the serviceenterprise.

While the legal framework for theset-offofcommercial taxisclearerthaneverbefore,difficultiesintheimplementationremainasaresultof insufficient implementationandlackofproperdocumentationrequiredfortheset-off.

2.Restrictionofset-off

PursuanttoNotification18/2016,commercialtaxpaidontheacquisitionof fixedandcapitalassetsofanenterpriseareexplicitlyexcludedfromset-off.


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Shops and Establishments Law 2016On 25 January 2016, the Myanmar Parliament passed the new ShopsandEstablishmentsLaw2016.Thenewlawreplacesthe 65 year old Shops and Establishments Act 1951 andcontains regulationsonworkinghours,paymentofwages,workplacesafetyandhealth.


I.CoveredShopsandEstablishments

The new law applies to -

(i.) Shops (i.e. premises used wholly or in part for thewholesaleorretailsaleofcommoditiesorarticlesoranypremises for the purpose of goods forwarding agencyenterprise,tradingagencyenterprise);

(ii.)Commercialestablishments(i.e.establishmentscarryingoutadvertising,commission,freightforwardingagencyorcommercialrepresentativebusinesses);

(iii.)Publicentertainmentestablishments(i.e.cinemas,theatres,clubs, reception halls, video establishments, karaokeestablishments, arcades using computers or electronicsystems,fun-fairs,gardensandplaygrounds);

(iv.)Industrial establishments (any enterprise engaged in industrialactivitynotcoveredbytheFactoriesAct1951);and

(v.)Other establishments as stipulated by the Ministry of Labour,EmploymentandSocialSecuritybynotification.

The Shops and Establishments Law 2016 does not apply to sidewalkhawker shops, shopsat irregularpublic fairsandpublicentertainmentestablishmentsandshopsattemporarilyheldfestival.

II.CoveredEmployees

While theShops andEstablishmentsAct of 1951was notapplicabletomanagers(sec.5g)ShopsandEstablishmentsActof1951),thenewlawdoesnolongerlimititsapplicationto non-managerial staff.Asa consequence, the stipulated

workinghours–includingtheregulationsconcerningovertimeandrestperiods–shallinfuturealsoapplytomanagers.

III.OperatingHours

The Shops and Establishments Law 2016 extends the curfew for shops and commercial establishments by twohours.While shops and commercial establishments wererequiredtoclosefrom9pmto5amunder theformerShopsandEstablishmentsAct1951,thenewclosinghoursextendfrom11pmto5am(sec.7a)ShopsandEstablishmentsLaw2016). Public entertainment establishments – other thantheatres,performancesandopen-airvenuesincludedinpublicentertainmentestablishments–shallbekeptclosedbetween1amand5am(sec.8a)ShopsandEstablishmentsLaw2016).

Shops, estab l ishments and pub l ic enter ta inmentestablishmentswhich, due to the nature of work, need toremainopen24hoursperday(e.g.shopsatairports,hotels,guesthousesandclubs)shallapplyforaspeciallicensewiththeFactoriesandGeneralLabourLawInspectionDepartment(sec.9a)ShopsandEstablishmentsLaw2016).

IV.WorkingHoursandOvertime

Pursuanttosec.11ShopsandEstablishmentsLaw2016,noemployeeshallworkformorethaneighthoursinanyonedayandformorethan48hoursinanyoneweek.Workinghoursinexcessofthesehoursperday/weekshallbedeemedtobeovertime.Totalhoursofovertimeshallnotexceedtwelvehoursinanyoneweek.Incaseof“specialneed”,overtimeshallnotexceed16hours inaweek.Furthermore,noworkshallbedonebeyondmidnight.

Pursuanttosec.17ShopsandEstablishmentsLaw2016,anemployerrequiringanemployeetoworkovertimeshallprovideovertime remuneration inaccordancewith the law (i.e. twotimestheregularwage/salary).

V.RestPeriods

Under the old Shops and Establishments Act 1951, anemployeewasallowedtotakeabreakofatleast30minutesafter five hours of work. This continuous period of workhas been reduced to four hours (sec. 12 a) Shops andEstablishmentsLaw2016).Furthermore,thetotalofworkinghours, breaksandovertimeshall not exceedelevenhoursperday.

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Please note, that the rest period requirement shall not apply towatchmenorguards(sec.12(b)ShopsandEstablishmentsLaw2016).

VI.Minors

Thenew lawcontainsmorespecificregulationsconcerningminorsworkinginshopsandestablishments.

Whilenopersonunder theageof13yearswasallowed toworkundertheoldShopsandEstablishmentsAct1951,thisminimumagehasbeen lifted to14years(sec.13a)ShopsandEstablishmentsLaw2016).Minorsmusthoweverbefitforwork,confirmedbyanauthorizedphysician.

Withregardtoworkinghoursforminors,thenewlawstipulatesthat -

(i.) no person who has not completed 16 years of ageshall be permitted to work beyond prescribed workinghoursatashoporestablishment (sec.13b)ShopsandEstablishmentsLaw2016);

(ii.)nopersonwhohascompleted14yearsofagebutnot16yearsofageshallberequiredorpermittedtoworkduringtheperiodbetween6pmand6am(sec.14b)ShopsandEstablishmentsLaw2016);

(iii.)no personwhohas completed 14 years of age but not16yearsofageshallberequiredorpermittedtoworkinanother shop or establishment on the same day of having workedinanyshoporestablishment(sec.14d)ShopsandEstablishmentsLaw2016).

No employee under 18 years of age shall be required or permitted to work at a task or workplace determinedashazardous.

VII.RestdaysandRemuneration

Pursuanttosec.15a)ShopsandEstablishmentsLaw2016,anemployershalldesignateatleastonedayperweekasapaidrestday.

Remuneration of employees shall not be disbursed later than seven contiguousdaysafter expiry of the time interval forwhichremunerationistobedisbursed(sec.15b)ShopsandEstablishmentsLaw2016).

VIII.WorkplaceSafetyandHealth

Incontrast to theoldShopsandEstablishmentsAct1951,the new Shops and Establishments Law 2016 containssome – although rather vague – regulations concerningworkplacesafetyandhealth.Pursuanttosec.24ShopsandEstablishmentsLaw2016,theemployershall–

(i.) implementpropermeasuresforcleanliness,freedomfromodorsandsanitarycondition;

(ii.)implement measures to ensure good vent i lat ion andlighting;

(iii.)implementmeasures to prevent noise in excess of thelevelprescribed;

(iv.)implement measures to prevent excessively hightemperaturesandforfireprevention;and

(v.)provide sufficient first-aid kits and medicamentsforemployees.

IX.Non-Compliance

Anemployerconvictedoffailingtocomplywithprovisionsofthe Shops and Establishments Law 2016 shall be punished withimprisonmentorwithafineorwithboth(sec.25-31ShopsandEstablishmentsLaw2016).


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Condominium Law 2016Afterthreeyearsofgoingbackandforthbetweentheupperand the lower house, the Myanmar Parliament passed the longawaitedCondominiumLawon29January2016.Sofar,foreignerswerenot allowed to buyany kindof immovablepropertyinMyanmar.Underthenewlaw,foreignersmaynowacquireupto40%ofhousingunitsinacondominium.


I. LegalRestrictionsonLandOwnership applicabletoForeigners

The acquisition of land in the Republic of the Union ofMyanmar is governed by numerous laws and regulations.Restrictionsmayapplybothwithregardtothelanditself,aswellastheacquisitionoflandbyforeigners.Foreignownershipof immovable property is restricted under the Transfer ofImmovable Property Restriction Law 1987, pursuant towhichnoforeigneror foreignownedcompanyshallacquireimmovableproperty(e.g.bywayofpurchase).

II. CondominiumLaw

Myanmarlawsdohoweverallowforcertainexemptionsfromtheserestrictions.UndertheTransferofImmovablePropertyRestrictionLaw1987, theMyanmargovernmentmayallowdiplomaticmissions,UnitedNations’organizationsandotherorganizationstheownershipanduseofimmovableproperty.

ThemostrecentexemptionfromthegeneralrestrictionsistheCondominiumLaw2016.Underthenewlaw,foreigners(i.e.apersonwhoisnotacitizenofMyanmar)maynowpurchaseapartmentsinacondominium.

Pursuantsec.2a)CondominiumLaw2016,condominium is definedasahigh-risebuildingofsixlevelsormore,builtasacollectivelyownedstructureoncollectivelyownedland(landarea of minimum 20,000 square feet or more) and registered undertheCondominiumLaw2016.Theexpressionincludeshousing-unitsandcollective-propertiesprovidedfortheuseofcollective-owners.

The Ministry of Construct ion may st ipulate fur therspecifications,includingtechnologyandsafety/securityofsuchbuildingsandpropertiestobemetbycondominiums(sec.11CondominiumLaw2016).

Amaximumof40%ofhousing-unitsinanycondominiumshallbeavailabletoforeigners.TherestmayonlybesoldtoandpurchasedbyMyanmarcitizens.

In a previous draft, foreigners were only allowed to buy apartments on or above the sixth floor of a condominium.This requirement hashowever beendeleted from the finalCondominiumLaw.

Notification26/2016oftheMyanmar Investment CommissionOn 21March 2016 theMyanmar Investment CommissionissuedNotification 26/2016 replacingNotification 49/2014concerningrestrictionsonforeigninvestment.

While thegeneral distinctionbetweenprohibitedactivities,foreign investments which require a joint venture with aMyanmar citizen and foreign investments which are onlypermittedundercertainconditionshasnotchanged,certainactivitieswereaddedordeletedfromtherespectivelists.

Themostimportantchangeisfoundinsec.3ofthenewnotification,providingthatserviceenterprisesestablishedundertheCompaniesAct1914willinfuturegenerallyrequirepermissionfromtherelevantministry.WhilethishasalwaysbeenthepracticeoftheDirectorateofInvestmentandCompanyAdministration,itwasalwaysunclearonwhatlegalbasistheministry’spermissionwasrequired.

Please find below an unofficial translation of Notification26/2016withtrackchangeshighlightinganyamendmentsfromthepreviousNotification49/2016.

RepublicoftheUnionofMyanmar Myanmar Investment Commission NotificationOrderNumber26/2016 NayPyiTaw,March21,2016

1. Exercisingthepowersconferredundersection56,sub-section(b)oftheForeignInvestmentLaw,theMyanmarInvestment Commission, with the approval of the Union Government Cabinet, hereby publishes as follows thelistsasperChapter(2)concerningApplicableEconomicActivities, namely, types of economic activities whicharenotpermitted;typesofeconomicactivitieswhichare

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permittedonlyunderajointventuresystemwithcitizens;andtypesofeconomicactivitieswhichwillbepermittedonlyunderspecificallyprescribedconditions:

EconomicactivitieswhicharenotpermittedSr. Type of Activity

1 Defense-relatedmunitionsproductionandrelatedservices

2 Activities which may damage mangroves, locations of high religious significance and places of worship of indigenous races, pa stures, hillside plantations, farmland or water resources

23 Conservation/management of natural forests

34 Exploration,prospecting/surveyandproductionjade/gems

45 SmallandMediumEnterprisesofmineralproduction

56 Administrationoftheelectricitygrid

67 Electricalinspections

87 Airtrafficcontrolservices

89 Extractionofmineralresourcesincludinggoldwithinregionsofrivernavigationroutes

109 Waterwaysnavigationpilotservices

1011 JointoperationofprintmediaandbroadcastingmediawithoutapermitfromtheUnionGovernmentCabinet

121 Printingandpublishingofperiodicals[and]allpublicationsinindigenouslanguagesincludingtheMyanmarlanguage

EconomicactivitieswhicharepermittedonlyunderajointventuresystemwithcitizensSr. Type of Activity

1 Production and distribution of hybrid seeds

2 Purification, production and distribution of high-yield and indigenous strains

31 Production,domesticdistributionandsaleofcereal-basedproductssuchasbiscuits,wafers,noodlesallkinds,vermicelli,ricenoodles

42 Production,domesticdistributionandsaleofconfectionaryincludingcandy,cocoaandchocolate

53 Preparation/production,canninganddomesticdistributionandsaleoffoodstuffotherthanmilkandmilkproducts

64 Germinationofbarley;activitiesforproduction,distributionandsaleofalcoholicbeveragesobtainedthroughgerminationofbarley

75 Production,mixing,purification,bottlingetc.forbeverageandnon-beveragealcohol,spiritsetc.;and[their]distributionandsale

96 Production,distributionandsaleofvariouskindsoficemadefrompurifiedwater

107 Purifieddrinkingwater

118 Production,distributionandsaleofvariouskindsofropes/yarn

129 Production,domesticdistributionandsaleofvariouskindsofgoodssuchasceramic-coatedgoods,pots,pans,spoons,knives,forksetc.

1310 Production,domesticdistributionandsaleofvariouskindsofplasticgoods

14 Production of rubber and rubber-products

1511 Packaging


12

1612 Production,domesticdistributionandsaleofvariouskindsofproductsincludingfootwear,handbagsetc.madefromvarioustypesofleather,curedoruncured,otherthanartificialleather

1713 Production,distributionandsaleofvariouskindsofpaperincludingheat-resistantpaper,waxpaper/stencilpaper,toiletpaper;paperrawmaterial;andvariouspaperorcardboardproducts

1814 Production,distributionandsaleofchemical-products(excludingpetroleum,natural-gas,petroleum-products)basedondomesticnaturalsresources

1915 Production,distributionandsaleofflammablesolids,liquids,gasesandaerosolssuchasacetylene,gasoline,propane,hair-sprays,perfumes,deodorants,insect-sprays(excludingpetroleum,natural-gas,petroleum-products)

2016 Production,distributionandsaleofoxidizing-reagents(oxygen,hydrogen-peroxide),andcompressed-gas(acetone,argon,hydrogen,nitrogen,acetylene)

217 Production,distributionandsaleofcaustic-reagents(sulphuricacid,nitricacid)

2218 Production,distributionandsaleofvariouskindsofgases(ingaseous,liquidandsolidforms)ofindustrialuse

2319 Productionofpharmaceuticalraw-materials

2420 SmallandMediumEnterprisesofelectricpowerproduction

2521 Developmentofinternational-standardgolf-courses/resorts

2622 Establishment,saleandrentalofapartments/condominiums

2723 Establishmentandsaleofoffice/commercialbuildings

2824 Establishment,saleandrentalofapartmentsinresidentialareasconnectedtoindustrial-zones

2925 Establishmentofaffordablehousingforthepublic

3026 Domesticair-transportservice

3127 Internationalair-transportservice

EconomicactivitieswhicharepermittedunderconditionsA. ActivitiespermittedwithopinionremarksoftherelevantMinistryintheformofjointventurewithcitizens

Sr. Type of Activity

1 Activities which require the obtaining of opinion remarks from the Ministry of Livestock, Fisheries and Rural Development

1 Apiaryandapiaryproducts

2 Establishmentoffactoriesforproductionoffishing-nets

3 Constructionoffishunloadingport;offishauctionmarket

4 Researchonlivestockandfisheries

5 Seafishing

6 Processingofaquaticproducts

7 Import/export,breeding/productionofanimalandaquaticspecies

8 Fresh-/saltwaterfishfarms

2 Activities which require the obtaining of opinion remarks from the Ministry of Environmental Conservation and Forestry

1 National[botanical]Gardens

2 Nature-based tourism

32 Businessesconcernedwithreductionofcarbonfootprint

13

43 Plantationandtimberextractionthroughlong-termleaseofforestarea(within/withoutreservedarea,protectedarea)

54 Import,furthergenerationanddistributionforprofitofGeneticallyModifiedOrganismsandLivingModifiedOrganisms

65 High-technologyforestry-sectorresearchanddevelopmentsuchastissueculture,conservationandproductionetc.ofquality, pure strains of rare,valuablewoodplants;

76 Developmentofadvancedtechnology,researchanddevelopment,andhumanresourcesintheforestrysector

87 Extractionofresourcesfromforestlandandforest-coveredlandundertheadministrationoftheGovernment

98 Importfromabroad,breeding/productionofnaturalplantsandwildanimalsandexportforprofit

3 Activities which require the obtaining of opinion remarks from the Ministry of Industry

1 Productionanddistributionofsyrup,softdrinksandotherbeverages

2 Productionofseasoningpowder

3 Productionofpharmaceuticalsusedinmedicaltreatmentandemployinganycontrolledchemicals

4 Activities which require the obtaining of opinion remarks from the Ministry of Transport

1 Transportationofpassengersandcargowithwatercraft

2 Establishmentandoperationoftrainingcentresforwaterwaystransport

3 Dockyardservices

4 WatertransportandrelatedenterprisesonlandinpossessionoftheInlandWaterwaysTransportDepartment

5 Activities which require the obtaining of opinion remarks from the Ministry of Communication and Information Technology

1 Localandinternationalpostalservices

6 Activities which require the obtaining of opinion remarks from the Ministry of Health

1 Private hospitals

2 Privateclinics

3 Privatediagnosticservices

4 Privateenterprisesforproductionofmedicinesandmedicalequipment

5 Researchanddevelopmentofvaccinesanddiagnosticmaterials/equipment

6 Privateuniversitiesofmedicine,medicine-relateduniversitiesandtrainingcentres

7 Commerceinrawmaterialsfortraditionalmedicine

8 Cultivationandproductionoftraditionalmedicinalherbs

9 Researchandlaboratoryanalysisoftraditional-medicine

10 Productionoftraditional-medicines

11 Traditionalmedicinehospitals


14

7 Activities which require the obtaining of opinion remarks from the Ministry of Information

1 Regular newspapers published in foreign language

2 FMradiobroadcasting

3 DirectToHome(DTH)

4 DVB-T2

5 CableTV

6 Cinemaproduction

7 Cinema presentation

EconomicactivitieswhicharepermittedunderconditionsB. Activitiespermittedunderotherconditionsintheformofjointventureonly

Sr. Type of Activity Conditions

(1) (2) (3)

1 Import/export, transport, storage, distribution and sale ofpetroleum,naturalgasandpetroleumproducts;andconstruction,installationandoperationofrelatedstoragetanks,loading/unloadingdocks,pipelines,auxiliarymachinery,equipmentandplants

PermittedonlyunderjointventurewiththeMinistryofEnergy.

2 Import,manufacture,constructionandinstallationofmachinery,equipmentandspareparts/suppliesneededforexploration,prospecting,surveyofpetroleumandnaturalgaswithgeological,geo-physical,geo-chemicaltechniques,andinterpretation[ofresults]


3 Import,manufacture,constructionandinstallationofmachinery,equipmentandspare-parts/suppliesneededforoperationsrelatedtoextractionandanalysis of petroleum and natural gas


4 Import,manufacture,constructionandinstallationofmachinery,equipmentandspare-parts/suppliesneeded for operations related to transport of, and constructionofnetworkofpipelinesfor,petroleumandnatural gas


5 Import,manufacture,constructionandinstallationofmachinery,equipmentandspare-parts/suppliesneededforconstructionandinstallationofvariouskindsofoff-shoreplatforms


6 Newconstructionandinstallationofvariouskindsofpetro-chemicalplants;investmentinandrenovationofexistingplants;and[their]operation


15

7 Productionofcigarettes Shalluse50%oflocaltobaccoleavesinfirst3years;(OR)shalluseatleast50%fromraw-materialpurchasedwithexportproceedsoflocaltobacco.Shallexport90.Shallincludescheduleofuseoflocalraw-materialsandofexportintheproposal.RequirestheobtainingofopinionremarksfromtheMinistryofIndustry.

8 Productionanddistributionofexplosives(TNT,nitro-glycerine,ammonium-nitrite)

PermittedonlyunderjointventurewiththeNationalGovernment.

9 Productionanddistributionofspontaneouslycombustibleliquidsorsolids(titaniumpowder),heat-producingchemicals(potassium-sulphide),materialseasilydecomposedbyheat,andmaterialsproducingflammablegasesoncontactwithwater(calcium-phosphide)

PermittedonlyunderjointventurewiththeNationalGovernment.

10 Cultivationandproductionofcerealcropsusingimportofnecessaryinputs;distributioninthelocalmarket;exporting

Permittedonlyforproductionofvalue-addedgoods.Shareforforeignerslimitedtoamaximumof49percent.Local/foreigntradingandsaleswillbepermittedontheproductionofthesaidjointventure.Absolutelynotpermittedtoexportpaddybyseaorbordertrade.

11 E-Lottery RequirestheobtainingofopinionremarksoftheMinistryofFinance.Mustbeoperatedonlyunderjointventurewiththegovernment.

12 Establishment of new towns RequirestheobtainingofopinionremarksoftheMinistryofConstruction.Mustbeoperatedonlyunderjointventurewiththegovernment.

13 Urban re-development RequirestheobtainingofopinionremarksoftheMinistryofConstruction.Mustbeoperatedonlyunderjointventurewiththegovernment.

14 Newconstructionofrailtracks,railstationsandbuildings

RequirestheobtainingofpermissionfromtheUnionGovernmentCabinet.Permittedunderjointventure/BOT with the relevant department/enterpriseMyanma Railways [Enterprise].RequirestheobtainingofopinionremarksfromtheMinistryofRailways.

15 Maintenanceandrunningoftrains Requires the obtaining of permission from the Union GovernmentCabinet. Permittedunderjointventure/BOT/lease with Myanma Railways [Enterprise]the relevant department/enterprise.RequirestheobtainingofopinionremarksfromtheMinistryofRailways.

16 Construction,productionandmaintenanceoftrainengines,passengercarriages,cargocarriagesandspare parts

Requires the obtaining of permission from the Union GovernmentCabinet. Permittedunderjointventure/BOT/lease with the relevant department/enterpriseMyanma Railways [Enterprise].RequirestheobtainingofopinionremarksfromtheMinistryofRailways.

17 Establishmentoftowers,machineroomsandfibreopticcableswithinlandinthepossessionoftheMinistryofRailways

Requires the obtaining of permission from the Union GovernmentCabinet. Permittedunderjointventure/BOT/lease with the relevant department/enterprise.RequirestheobtainingofopinionremarksfromtheMinistryofRailways.

18 Advancedcommercialutilizationoflandandbuildingsin the possession ofthe Ministry of Railways

Requires the obtaining of permission from the Union GovernmentCabinet. Permittedunderjointventure/BOT/lease with the relevant department/enterprise.RequirestheobtainingofopinionremarksfromtheMinistryofRailways.


16

19 Transportofpassengersandcargousingtrainsandmotorvehicles

RequirestheobtainingofpermissionfromtheUnionGovernmentCabinet.Permittedunderjointventurewiththerelevant(publicorprivate) department/enterprise/organization.Requires the obtaining ofopinionremarksfromtheMinistryofRailways.

20 Motorvehicleinspection/diagnosis;trainingcoursesfordriving, repair andmaintenanceofmotor-vehicle

Requires the obtaining of permission from the Union GovernmentCabinet. Permitted under citizen 50%-foreigner 50% jointventure.with the relevant (public or private) department/enterprise/organization. RequirestheobtainingofopinionremarksfromtheMinistryofRailways.

21 Electricpowergenerationforuseinrailways Requires the obtaining of permission from the Union GovernmentCabinet. Permittedunderjointventure/BOT/lease with the relevant department/enterpriseMyanma Railways [Enterprise].RequirestheobtainingofopinionremarksfromtheMinistryof Electric Power and the Permission of the Ministry of Railways.

22 Production, distribution and sale of vaccines Only injoint venture with the National Government. Must conform to WHO GMP standards at minimum.

2. Typesofeconomicactivitiesnotincludedinthisnotificationmaybecarriedoutas100%foreigninvestment, except in cases of activities deemed by the Commission to require permission from the relevant ministry due to the nature of the business.

1.3.Services which do not have the nature of investments may be carried only after receiving permission from the relevant ministry.

2.4. Notificationnumber49/2014dated14-8-2014issuedbytheMyanmarInvestmentCommissionisrepealedandsupersededbythisnotification.

<signature> (ZeyarAung) Chairman

LetterNo.:RaKa-6/1/2016(0189-ka) Date:March21,2016

Distribution:OfficeoftheUnionPresidentOfficeoftheUnionGovernmentCabinetParliamentaryOfficeUnion Supreme CourtOfficeoftheConstitutionalTribunalOfficeoftheUnionElectionCommissionallUnionMinistriesall members of the Myanmar Investment CommissionOfficeoftheUnionAttorneyGeneralOfficeoftheUnionAuditorGeneralUnionCivilServiceBoardallOfficesofregion/stategoverningbodiesManagingDirector,PrintingandPublicationEnterpriseforinclusionintheUnionofMyanmarGazette

17

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coveralltopicswithwhichitdeals.Itwillnotbeupdatedandcannotsubstitute

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AlexanderBohusch

Rechtsanwalt/Attorney-at-law(Germany)

Luther Law Firm Limited

Myanmar

Phone +95 1 230 1609/+95 1 230 1917

[email protected]

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