Key takeaways
The State Administration Council ("SAC") was formed on 2 February 2021 to exercise the sovereign powers transferred under the state of emergency in accordance with the Constitution. It consists of 8 military officers (including the CIC as Chairman) and 8 civilians.
The SAC subsequently issued numerous orders relating to the administration of the country, including those relating to the following subject matters which are relevant to business operations in Myanmar:
- appointment of new ministers to replace the incumbents who were appointed under the National League of Democracy ("NLD")-led government;
- appointment of new heads in other central functions including the Union Attorney General's Office ("UAGO") and Central Bank of Myanmar ("CBM"); and
- amendments to the Electronic Transactions Law 2004 ("ETL") and proposed draft Cyber Security Law ("CSL").
Newly-imposed sanctions by US and several other countries are targeted at selected military personnel.
As the situation in Myanmar continues to evolve, it is important for businesses which are operating, or intend to invest, in Myanmar to monitor developments and assess how such changes could impact their plans.
Appointment of new personnel by the SAC
Since its formation, the SAC has issued numerous orders relating to the administration of the country, including the appointment of new ministers to replace the incumbents who were appointed under the NLD-led government and new heads in other central functions such as the UAGO and the CBM.
The CIC had in a public speech on 8 February assured investors that there will be no change to existing foreign, government and economic policies of the country during the state of emergency. It appears that most of the new ministerial, UAGO and CBM appointees have previous civil service experience in their respective ministries or agencies under previous governments. One such example would be the appointment of U Aung Naing Oo as the new Minister for Investment and Foreign Economic Relations ("MIFER"). He is well-known among investors and has been regarded to be supportive of investor-friendly reforms during his previous roles as the Director-General of the Myanmar companies registrar, the Directorate of Investment and Company Administration, Joint Secretary of the Myanmar Investment Commission and most recently the Permanent Secretary of MIFER.
That said, it is also important to note that while the SAC had authorised the continuation of important functions such as the judiciary and other statutory agencies, e.g., the Anti-Corruption Agency, there has also been a substantial change of personnel in the judiciary and other agencies in recent weeks.
Amendments to existing laws
The SAC has issued several legislative amendments to existing laws and regulations since its inception. These include amendments to the Law Protecting the Privacy and Security of the Citizens, the Penal Code and the Criminal Procedure Code. More relevant for businesses, perhaps, would be the amendments to the ETL and the release of the CSL.
The CSL, which was circulated to mobile network operators and telecommunication companies for comments on or around 9 February 2021, has attracted a lot of attention within the community and many civil society groups and businesses have expressed their reservations about some of the provisions under the CSL. To be clear, we understand that the CSL was initially prepared by the NLD government and subsequently updated by the SAC. We note that the ambit of the CSL could be seen to be unduly wide and extends to a wide spectrum of distinct issues, including cyber security, data protection, data localisation, provision of online services (and licencing/registration requirements) and recognition of electronic transactions. We also observe that the CSL grants wide discretionary powers to the various committees to establish further regulations which could impact the legal certainty and transparency essential for business operations. To-date, while the SAL has not implemented the CSL, it has enacted some of the provisions under the CSL as part of the amendments to the ETL which were issued on 15 February 2021. Some of the key amendments to the ETL and their potential impact on businesses are as follows:
- Protection of personal data - any party responsible for maintaining personal data shall, inter alia, keep them secured and not allow disclosure of such data to any third party unless permitted under the law. A breach of these obligations could result in a monetary fine not exceeding MMK 10 million or imprisonment for a minimum of one year to a maximum of three years or both.
- Exceptions to the protection of personal data - The management of personal data does not prevent the usage of personal data for the purpose of investigation, organisation of information, submission as evidence in court proceedings by relevant authorities or when it relates to cyber security and cybercrime matters concerning national security, sovereignty and stability.
Sanctions
On 10 February 2021, US President Biden issued Executive Order 14014 “Blocking Property with Respect to the Situation in Burma” (“EO 14014”), which provides for the imposition of sanctions on certain Myanmar parties in response to the ongoing situation in Myanmar. In parallel with the issuance of EO 14014, the US Treasury Department’s Office of Foreign Assets Control designated 15 parties on the Specially Designated Nationals and Blocked Persons List. The list can be referred to on the US Treasury Department's website. Several other countries including New Zealand, Canada and the UK have also imposed some form of sanctions targeted at selected Myanmar military officials. There is no indication to-date that country-wide sanctions would be imposed on Myanmar. It is also important to note that the existing sanctions do not restrict investment or the export of financial services to the country.
Conclusion
The combination of nationwide curfew orders, internet shutdown directives and COVID-19 regulations continues to have an adverse impact on business operations. Ongoing civil disobedience activities have also led to disruptions in day-to-day government functions and banking transactions.
The situation in Myanmar remains fluid. Businesses are encouraged to monitor any announcements of new regulations issued by the SAC on a regular basis and monitor the impact, if any, on their operations in Myanmar.
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