While Myanmar’s economy is still largely dependent on agriculture, the laws of Myanmar actually do provide a broad framework for diverse use of land and varying terms for permitted land use, in each case.
While there are other permitted land uses in
Myanmar, this article will focus on only three types of land use and
their varying terms in the context of local-foreign joint ventures as
permitted under the new Foreign Investment Law, in force since November
2012.
Agriculture
Under the Foreign
Investment Rules, foreigners may be permitted to conduct agricultural
business on a commercial scale on vacant, fallow and virgin land in
joint venture with Myanmar citizens for an initial term of up to 30
years, with extensions to be permitted based on the amount of
investment. The right to lease here is subject to the approval of the
Central Committee for the Management of Vacant, Fallow and Virgin Land,
formed under the Vacant, Fallow and Virgin Land Management Law, in force
since March 2012. Industrial crops such as rubber, sugar cane, palm oil
and jatropha curcas are usually grown on vacant, fallow and virgin land
in Myanmar. As for the use of farmland, the foreign investor is only
allowed to carry out contract farming in joint venture with Myanmar
citizens entitled to use the farmland for the cultivation of seasonal
crops (for example, corn, ground nuts, beans and pulses) under the
Farmland Law, in force since August 2012. Clarification in the law needs
to be provided as to the precise types of agricultural business which
can be conducted by Myanmar citizens only.
Real estate development
In
relation to the development of real estate, the foreign investor will
be required to enter into a joint venture with Myanmar citizens, as
regards most types of developments, save for the development of hotels
with ratings of three stars and above and the development of commercial
buildings on a build, operate and transfer basis, with the approval of
the landowner, the Ministry of Construction and the Myanmar Investment
Commission. With the prior permission of the landowner and that of the
Myanmar Investment Commission, the foreign investor may be allowed to
lease land in Myanmar up to an initial term of 50 years with two
consecutive term extensions of 10 years each, depending on the volume of
investment and compliance with Myanmar laws and regulations.
Warehousing services
In
relation to the provision of warehousing services or logistics,
foreigners are only permitted to conduct large-scale warehousing
activities in joint venture with Myanmar citizens under the Foreign
Investment Law. At this juncture, clarification in the law needs to be
provided as regards the meaning of “large-scale”. Similar to leases of
land for real estate development, the joint venture company may be
allowed to lease land for up to an initial term of 50 years with two
consecutive term extensions of 10 years each, depending on the volume of
investment for the purposes of conducting warehousing services
activities, with the prior permission of the landowner and the Myanmar
Investment Commission.
At the end of the day, the Myanmar
Investment Commission has broad discretion to determine and prescribe
the category of investment, the amount of investment required and the
term of permitted land use. On the other hand, the investor shall be
required to abide by all the terms and conditions upon which the
investment permit has been granted.
Wint Thandar Oo is a partner and Tin Sein a senior associate with Polastri Wint & Partners Legal & Tax Advisors.
source: The Myanmar Times
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