The Myanmar Corporate Governance Scorecard 2018 was recently published as an assessment of the corporate governance practices of 24 Myanmar companies. It is published by the International Finance Corporation (IFC), in partnership with the Securities and Exchange Commission of Myanmar (SECM), Directorate of Investment and Company Administration (DICA) and the Yangon Stock Exchange (YSX).
In this report, the largest Myanmar companies are evaluated against the ASEAN Corporate Governance Scorecard, which is the capital markets benchmark used across the ASEAN region, and given a score to mark how they fair against this internationally-recognised standard. Recommendations on key improvement areas are also given to help these companies engage more competitively with other ASEAN markets.
The average score of the 24 Myanmar companies assessed was 30%, which lags behind the ASEAN average of 69% in 2015. While it was noted that this assessment precedes the Myanmar Companies Law 2017 coming into effect on 1 August 2018, the report gives a general flavour of the areas of improvement that should be prioritised. Some of these includes having transparency in the actions of the board of directors, encouraging the corporate social responsibility of stakeholders and improving the companies' disclosure breath and the equitable treatment of the shareholders.
All in all, this scorecard looks to be an excellent initiative to heighten awareness on good corporate governance practices and how to achieve it. It is important for Myanmar companies to develop a keen understanding of internationally accepted best practices and to focus on these areas of development as they seek to expand their business and reach into regional markets and beyond.
Casinos will soon be able to legally operate in Myanmar as the Gambling Law 2018 (Pyidaungsu Hluttaw Law No. 13/2019) was recently enacted on 7 May 2019, replacing the old law from 1986.
The new law was spearheaded by a petition made by the Ministry of Hotels and Tourism to the Ministry of Home Affairs to boost the service industry and to cater to foreigners and tourists visiting Myanmar. The enactment of the Gambling Law paves the way for investors looking to invest in the “casino” business as legal channels for the operation of such facilities are finally opened.
Under the old law, there was a blanket ban on all forms of gambling across Myanmar. Under the new law, only foreigners will be able to gamble at the local casinos located at selected hotels popular with tourists. Myanmar nationals will be prohibited from gambling. To ensure compliance, the venues will require passport identification.
However, moving forward, in order for the Myanmar economy to truly benefit from the liberalisation of the gaming market, necessary rules and regulations as well as proper mechanisms and systems will need to be implemented for better clarity and purpose. There is currently still uncertainty in several areas, including operational rules and the permissibility of the operation and investment in the “casino” business by Myanmar nationals.
It would be interesting to review the subsequent notifications and regulations that are to be issued by the Ministry in the upcoming period to appreciate the full extent of casino liberalisation in Myanmar.
The Ministry of Planning and Finance on 14 May 2019 issued a notification regarding timing of stamp duty payments.
The notification set out and explained the existing rules on stamp duty payments covering the following.
Stamp duty payment must be made for all contracts that requires such payment before or upon the formation of the contract if the said contract is to be formed in Myanmar. However, if a contract was formed outside of Myanmar and that it does not relate to a form of transfer of payment or a payment contract, contracts requiring stamp duty payments must apply to the township revenue office for relevant stamping within 3 months of the contract being first accepted in the country.
Under section 35 of the Myanmar Stamp Act 1899, no instrument chargeable with duty shall be admitted in evidence for any purpose by any person nor can they be authenticated by anyone including public officers unless such instrument is duly stamped (save for certain exceptions).
The notification also affirmed that there are penalties against responsible persons if the township Revenue Officer determines that stamp duty payment was underpaid. This includes payment of penalty fees of up to ten times the actual value.
The Central Bank of Myanmar has announced that cryptocurrencies are not recognised as official currencies, and that financial institutions in the country are not allowed to accept or facilitate transactions involving their use.
This news comes in spite of the growing use of digital currencies both locally and globally, and appears to be driven by concerns surrounding price volatility, the lack of consumer protection, and the targeting of these products towards the uninformed or impoverished.
Commentators in the region have noted that no law restricting trading in digital currencies has yet been passed, making it difficult to say that such action is illegal – however there is speculation that this move may be part of an effort to rein in the unpredictable investment, perhaps with a view to establishing a clearer regulatory regime.
Only 17 countries at present, including the US, Singapore, Japan, the UK, Germany, Switzerland, and Hong Kong, officially allow transactions in digital currencies and have enacted laws to protect users from fraud. It remains to be seen whether Myanmar will adopt a permissive or restrictive regime to govern cryptocurrencies.