Myanmar plans to launch an electronic company-registry system this year and boost its efforts to reduce red tape for businesses after it amended its Companies Act last month to attract foreign investment.
“Within six to seven months, Myanmar will establish an electronic company-registry system similar to what we have seen in Hong Kong,” Robert San Pe, senior legal adviser to State Counselor Aung San Suu Kyi, told Asia Times in a recent interview in Hong Kong.
The establishment of the system will be a massive step for Myanmar to encourage foreign investment, he said. “Until now, everything has been done with paper copies.”
Besides the new registry system, the Myanmar government is getting rid of some unnecessary formalities and trying to make it easier for its businesses to operate and function in a global economy.
“A company can now choose to say ‘this company seal is crucial for the execution of a document,’ or simply say ‘we don’t have a company seal,’” Pe said, adding that it was part of a general change of approach.
Companies Act amendment
On December 6, Myanmar President Htin Kyaw signed approval of an amendment of the Myanmar Companies Act for the first time since 1940.
The amendments mean a foreigner can now own a 35% stake in a Myanmar company. In the past, a company would be treated as foreign if even one of its shareholders was a foreigner. The change of the company law also allows foreigners to invest in Myanmar’s listed companies.
“One of the historical problems in Myanmar has been that there was so much red tape.… Someone might have had to write 60 letters to get a permit. It just wasn’t investor-friendly,” Pe said.
To cut red tape at the Thilawa Special Economic Zone, the government has assigned officials from a dozen key ministries to a one-stop service center there, helping about 100 foreign investors so far to obtain almost all the necessary regulatory approvals, Pe said.
The government may replicate its Thilawa experience in other parts of Myanmar, he said.
On May 14, 2017, Suu Kyi was among 29 country leaders to attend the Belt and Road Forum for International Cooperation in Beijing. On May 16, she met with Chinese President Xi Jinping at the Great Hall of the People, where he reiterated that China and Myanmar had enjoyed a time-honored “Pauk-Phaw” (fraternal) friendship.
Xi also said China was willing to enhance its cooperation with Myanmar under the Belt and Road Initiative and realize common development, which would bring more tangible benefits to the two peoples, according to a statement on the website of China’s Ministry of Foreign Affairs.
On December 1, Suu Ky met with Xi again in Beijing at the World Political Parties High Level Meeting. They discussed the construction of a China-Myanmar economic corridor, Xinhua reported.
On December 24, China was among the 10 countries that voted against a resolution adopted by the United Nations General Assembly to urge Myanmar to end a military campaign against Muslim Rohingya.
“Myanmar has recently faced some international criticism. It very much appreciates China’s support,” Pe said. “Myanmar is keen to foster its relations with China. Right now, its relations with China seem to be more important than ever.
“Myanmar understands that it can offer some things of great value to China. Strategically, its location is very important. China obviously wants a route down to the Indian Ocean, and Myanmar can offer that.”
Pe said it was important to make sure that agreements signed by governments and companies in both countries are equal and fair, while all relevant parties are well advised. He also said it was important to ensure that Myanmar officials understand what law they are responsible for and that they follow it.
“My role is to make law relevant,” Pe said.
Hong Kong’s role in Myanmar
On January 15, Pe joined in a plenary session at the Asian Financial Forum in Hong Kong. He also attended an event organized by the Hong Kong Myanmar Chamber of Commerce the following day. During his Hong Kong visit, he had a meeting with the city’s financial secretary, Paul Chan Mo-po.
“Over the last four years, Myanmar has adopted up-to-date international laws and regulations for the financial sector but it needs help in actually enforcing them,” Pe said.
Myanmar’s banks need to set up compliance teams and in-house legal teams, while the central bank and regulators also need help in developing the ability to enforce regulations, he said. “That’s one area of many where Hong Kong can help.”
Pe said he hoped that some Myanmar government officials can visit the Hong Kong Monetary Authority, Securities and Futures Commission and other financial institutions to learn good practice.
He said Myanmar needed to improve the implementation and enforcement of its regulations before it can restructure its banking sector, which could involve merging small banks and allowing more foreign players into the market.
At present, it is difficult for businesses and companies to get access to capital from local banks, while local people also don’t put their money in banks but instead buy gold bars, gems and real estate. Only 30% of the population in Myanmar have bank accounts as many people don’t have confidence in the banks.