Myanmar: Key regulatory updates since the declaration of a state of emergency

In brief

Since the declaration of a state of emergency on 1 February 2021 and the transfer of all legislative, executive and judicial powers to the Commander-in-Chief of the Defence Services ("CIC"), we have seen several legal changes in the country which are expected to have an impact on businesses.

This client alert discusses some of the key business-focused regulatory changes and their likely impact on existing businesses and potential investors.


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:

  1. appointment of new ministers to replace the incumbents who were appointed under the National League of Democracy ("NLD")-led government;
  2. appointment of new heads in other central functions including the Union Attorney General's Office ("UAGO") and Central Bank of Myanmar ("CBM"); and
  3. 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.

View Japanese Version (日本語版)

Contact Information

Copyright © 2024 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.