Employment in Myanmar1. Restrictions on employing foreigners Section 27A of the Myanmar Companies Act

o a foreign company, whether a hundred per cent owned or a joint venture and a branch/representative office, is required to obtain Permit and Registration. However, a joint venture with the State equity formed under Special Company Act 1950 is exempted from obtaining a Registration.

o In appointing personnel in an organisation formed under the Permit issued by Myanmar Investment Commission (MIC), preference shall be given to citizens, provided that the MIC may, if necessary, allow the appointment of experts and technicians from abroad.

o An economic organisation formed under a Permit shall make arrangements for local and foreign training so as to ensure its local personnel proficiency in their work and promotion to higher ranks of services.

o Work permit: Allowed for foreign experts and technicians employed by the enterprises formed under the Permit issued by MIC1

Investor has to mention the number of foreign experts/ technicians to be employed in the investment application form submitted to the MIC

After obtaining MIC permit, the company needs to apply for appointment and stay-permit

With endorsement of MIC, the company has to apply for work permit to the Directorate of Labour under the Ministry of Labour, and for stay permit and visa to the Immigration and National Registration Department under the Ministry of Immigration and Population.

Current Foreign Investment Law (1988)o Foreign investors can acquire no more than 35% of company’s

total equity, and only via joint ventures Private limited liability

Number of members restricted to 50 Transfer of shares restricted Public cannot subscribe shares

Public limited liability At least 7 shareholders After registration of company must apply for

Certificate of Commencement of Business The governing law for the limited companies is the

Myanmar Companies Act 1914. A company with share contribution of the State shall be registered under the Special Company Act 1950 and the Myanmar Companies Act 1914

Myanmar Companies Act 1914

1 http://www.dica.gov.mm/efao.htm

o Minimum capital Industrial, Hotel and Construction company: USD 150,000 Services, Travels and Tours company, Bank Representative

Office and Insurance Representative Office: USD 50,000

2. Mandatory minimum requirement for employee The Union of Myanmar Foreign Investment Law (Bill)

o Minimum 25% skilled employees to be Myanmar nationals in first 2 years

o 50% 5th year onwardso 75% by 15% yearo All unskilled employees must be Burmeseo Hiring of workers must be made through state-run labour

offices/local employment agencieso Employers must make arrangements to train and develop skills of

workers List of Myanmar’s Labor Laws (could not find the exact act though) that

deal with subjects such as work hours, holidays, leaves of absence, social welfare, work rules and other matters.

o Employment and Training Act (1950)o Employment Restriction Act (1959)o Employment Statistics Act, (1948) o Factories Act (1951) o Labour Organization Law (2011), o Leave and Holidays Act (1951), o Minimum Wages Act, (1949), o Oilfields Labour and Welfare Act (1951), o Payment of Wages Act (1936), o Social Security Act (1954), o Shops and Establishments Act (1951), o Workmen’s Compensation Act (1923)o Labour Dispute Settlement Law (2012).

Severance payment2

o Service period < 3 months- 1 month’s payo Service period up to 1 year- 2 months’ payo Service period 1-3 years- 3 months’ payo Service period >3 years- 5 months’ pay

Wages and salarieso Determined by the type of establishment where the employee

workso All payment practices subjected to Payment of Wages Act 1936,

Payment of Wages Rule of 1937 Working hours and days 3

2 http://www.ide.go.jp/English/Publish/Download/Brc/pdf/04_chapter4.pdf page 1423 http://www.ide.go.jp/English/Publish/Download/Brc/pdf/04_chapter4.pdf page 143

o Factories Act 1951o Shops and Establishments Act 1951 o

Workplace Hours per day/weekShops, offices, trading centres 8/48Services, media and entertainment 8/48Factories, oil fields and mines 8/44Underground mines 8/40Government offices 7/35

Overtime: o Maximum for shop or commercial establishment: 11 hours per

day/ 60 hours per week with minimum rest period of 30 minutes every 5 hours

o No more than 16 hours overtime per weeko Overtime wages: double normal wage/ payo Weekly holiday

Workers required to work on weekly holidays to deal with exceptional pressure of work are entitled to the overtime rate and to substitute weekly holidays within two calendar months

Leave and holidays4

o Leave and Holidays Act 1951 6 days casual leave 10 days annual/ earned leave 21/20 gazette public holidays 30 days medical leave

3. Employment incentives Only certain types of economic activities are allowed for investments5

o Agricultureo Livestock and Fisheryo Forestryo Mining o Industry

Foodstuff Textile Personal Goods Household Leather Products and the Likes Transport Equipment Building Materials Pulp and Paper Chemicals, Chemical Products and Pharmaceuticals

4 http://www.ide.go.jp/English/Publish/Download/Brc/pdf/04_chapter4.pdf page 1445 http://www.dica.gov.mm/pa.htm

Iron and Steel Machinery and Plant

o Constructiono Transport and Communicationo Trade (Hotels and Tourists Industry) o Economic activities mentioned in section 3 of the State-owned

Economic Enterprises Law, provided permission has been obtained under section 4 of the said Law.

o If investment proposals not specified in the above mentioned list is submitted, they will be considered on a case-by-case basis by MIC.

The Union of Myanmar Foreign Investment Law (Bill) o For net profits transferable abroad, the following will be deducted

Employee’s bonus funds Contribution made by employer to employee’s provident

fund Employee’s social welfare fund Enterprise development fund

Myanmar Special Economic Zone Law (Draft) o Government guarantees no foreign businesses will be nationalizedo However if it ever occurs then compensation based on market

value will be made Foreigners may not purchase land or condominiums in Myanmar. International Sanctions since 19976

o United States:7

Latest relaxations: General License No. 14-c issued on 17 April 2012:

Authorizes exportation of financial services for not-for-profit activities.

On 11 July 2012, the US further relaxed sanctions as follows;

OFAC General License No. 16 Authorizes the Exploration of Financial Services to Burma, subject to certain limitations.

OFAC General License No. 17 Authorizes New Investment in Burma, subject to certain limitations and reporting requirements.

New Executive Order Targeting Persons Threatening the Peace, Security or Stability of Burma.8

o European Union: Latest relaxation:

6 Doing Business in Myanmar, Myanmar Legal, 30 August 20127United States Treasury Department website; http://www.treasury.gov/resourcecenter/sanctions/Programs/pages/burma.aspx; retrieved 15 May 20128 United States Treasury Department, Office of Foreign Asset Controls website; http://burma.usembassy.gov/ retrieved 12 July 2012

Council of the European Union Decision 2012/225/CFSP issued on 26 April 2012All sanctions have been lifted with the exception of the arms embargo and equipment embargo that might be used for internal repression, which continues for 12 months.9

o United Kingdom: Latest relaxation:

Suspend assets freeze on nearly 500 people and restrictions on key industries.10

o Australia: Latest relaxation:

Australia has lifted all travel bans on Myanmar citizens as reported on 7 June 2012. There are no general trade sanctions. However the Australian government retains the capacity to impose sanctions if required by the circumstances, and still has prohibitions on weapons trading.11

o Canada: Latest relaxation:

Prohibitions on import, export, investment, financial transactions, and technical data have been removed. Asset freeze and prohibition on transactions also remain in effect for designated individuals, but the list of individuals is being reduced.12

Incentiveso Corporate Income Taxes/ Income Tax Allowance

Minimum 3 years income tax exemption, extendible on case-by-case basis

o Exemption/ Reduction of taxes on imported capital goods Union of Myanmar Foreign Investment Law 1988

Exemptions on custom duties or internal taxes on imported capital equipment and materials during the construction, exploration and development period of the investment project

Such exemption can be enjoyed by investor during the construction period (or MIC approved extended construction period)

o Exemption/ Reduction of taxes on imported raw materials

9 Transcript of EU Decision can be viewed at http://eur- lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:115:0025:01:EN:HTML

10 The United Kingdom Treasury Department website; www.hm-treasury.gov.uk/fin_sanctions_burma.htm; Note that the UK shares many policies on sanctions with the EU.11http :// www.channelnewsasia.com/stories/afp_asiapacific/view/1206240/1/ .h tml; R et ri eved 8 Jun e 2 01212 http://www.gazette.gc.ca/rp-pr/p2/2012/2012-05-09/html/sor-dors85-eng.html

Exemption from customs duty and other internal taxes on imported raw materials is granted for first 3 years of commercial production

o Others Exemption/ relief from income tax on profits which are

maintained in a reserved fund and re-invested within one year

Right to accelerate depreciation Relief from income tax up to 50% on the profits accrued

from exports Right to pay income tax on behalf of foreigners employed

and to deduct the same from the assessable income of the enterprise

Right to pay income tax of the foreign employees at the rates applicable to the citizens of Myanmar

Right to deduct expenditures for research and development carried out within the State

Right to carry forward and set off losses up to 3 consecutive years, from the year the loss is made13

13 http://www.dica.gov.mm/inc.htm