relevant legal framework for real estate and property development in myanmar
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Relevant Legal Framework for Real Estate and Property Development
in Myanmar
By: Kelvin Chia Yangon Ltd 26 July 2013
Land In Myanmar
Area: Largest and least explored land mass on mainland SEA Total: 678,500 sq. km. Land: 657,740 sq. km. (about
50% mountains and forests) Water: 20,760 sq. km.
Strategically located land borders: Total: 5,876 km. Bangladesh: 193 km.; China: 2,185 km.; India: 1,463 km.; Laos: 235 km.; Thailand: 1,800 km. Total Coastline: 2,832 sq. km.
A N D A M A N S E A
B A Y O F B A N G L
KACHIN STATE
CHIN STATE
SHAN STATE
KAYA STATE
K A Y I N S T A T E
M O N S T A T
SAGAING DIV ISION
MAGWAY DIVISION
BAGO DIVISION
YANGON DIVISION
M A N D A L A Y
D I V I S I
O N
A Y E Y A R W A D Y D I V I S I O N
T A N I N T H A R Y I
D I V I S I O N
CHINA
LAOS
THAILAND
INDIA
BANGLADESH
Contents
Overview of Land Laws/Key Features
Investing in Land in Myanmar
Commercial and Residential properties / Hotels
Dealings in Real Property
Features of Land
Restricted to Specific Uses
Commercial/ Industrial/ Residential
Agriculture / Livestock Breeding / Mining / Others
Rights and Title
URBAN - Freehold/Grant Land NON-URBAN - Rights to
Cultivate/Utilize
Constitution
Laws Notifications Policies
Land Administration
Administrators
Allocated or CFW Land
Proposed Use Location Impact on the
State and Resources
Source
Farmland/Cultivable land, fallow land and
waste land (CFW)
Government ministries and state owned organizations
Myanmar entities and citizens
Register Company/ Branch office with the CRO
Applying for a Permit to Trade With the CRO
(Business License)
Establishing a Company
Establishing
a Branch Office
Myanmar
Investment Commission
Approval
Regulated by the Foreign Investment Law
Regulated by the Myanmar Companies Act Executive
Committee
Cabinet Committee
Establishing an Entity
Investing under the FIL
MIC permit is always required for a land related project
Land must be identified for MIC approval
Land lease contract has to be submitted
Land required must not be excessive to the needs
Land can be leased or can be contributed as capital
Commercial/Residential Developments
Commercial Buildings:Project can be 100% foreign investment in BOT system; possible through JV with local partner
Residential Buildings: only through JV with local partner; land to be contributed or leased
Lease period can be 50 +10 + 10 years
Exit through transfer of the lease and building
Limitations on the sale/long term leases of individual units
Draft Condominium Law
Ministry of Construction, YCDC/DHSHD or the Regional Government
Hotels
Ministry of Hotels and Tourism
Project may be wholly foreign owned, joint venture, or BOT
Lease period may be 50 +10 + 10 years
Management contracts are permissible by service companies
Commercial Tax of 5% payable on sale receipts
Foreign Investors and Property
No Foreign Ownership
Limited Rights to Lease / Use
Rights Granted under the Foreign Investment Law
(with an MIC Permit)
Foreign Investors and Property
• Transfer of Immovable Property Restriction Law (TIPRL)
• No dealings of land where a foreign party is involved
General Restriction
• Leases of less than 1 year
• Does not apply to “companies or organizations formed under common interest with the State”
Exceptions to the Restriction
• May lease land where necessary for the investor’s business
• Period of 50+10+10 Years; Longer period for those who invest in a less developed and inaccessible location
Foreign Investment Law (2012)
Investing in Land under the FIL
Application to be submitted and approved by the MIC on a project-basis
Investment in land may be 100% foreign owned – it is sector driven
Certain sectors reserved to locals
Certain sectors are subjected to compulsory joint ventures
Certain sectors are subjected to special conditions
Land rights under the FIL
How?
•Project and Land has been identified ----- Negotiate Lease
From whom?
•Government
•Private companies/ individuals
Duration
•Currently 50+10+10
•Longerperiod to those who invest in a less developed location where difficult to access, for the sake of countrywide development.
Payment
•Rental depends on whether the lessor is the Government or private entity
•Government Approval
•Premium for Government Leases
Standard Terms of a Lease
Initial Term 50 years
Renewal Term
Two consecutive terms of 10 years, May vary based on the types and volume of the
investment
Rental
Government linked - Determined by the MIC and approved by the Union Government
Ministry must charge a land premium Private entities – Market rental to be negotiated
and approved by MIC
Right of transfer
Any sub-lease, mortgage, transfer of share, transfer of business, relating to the land can only be effected with the permission of the MIC.
Such transfer can only be made to a person for the remaining contractual term and only with the approval of the MIC.
Other requirements
Purpose of land use must be clearly specified in the lease.
Standard Terms: Limitations
Activities that are not related to the business as set out in the investment proposal to the MIC
Natural resources in the land cannot be exploited.
If natural resources or antiques are discovered on site, the investor may only continue to use the site with the permission of the MIC. If no permission is granted, the investor will be relocated to another location.
Changes to natural surface, appearance, or altitude of the land can only be undertaken with the approval of the land owner and the chief of the region.
Standard Terms: Termination
Failure of the investor to pay rent
Violation of laws on the part of the investor
If the investor is blacklisted
If the MIC decides that the activities pollute the environment, air and water, or if the residents object due to noise or cultural disturbances
For breach of the terms of the contract
If the investor decides to terminate the business (6 months notice must be provided to the MIC and the full rental for the term as set out in the contract must be paid. The land should be transferred to the owner within a week of the company’s liquidation)
Acquisition Conversion
Land Acquisition Act – Section 78 of the Farmland Law
Government / Private Acquisition
Responsibility for Acquisition
Public Purpose
Compensation – Farmland Law
Agricultural land is not to be used for other purposes.
Land Nationalization Act
La Na 39
Section 78 of the Farmland Law
New Procedures
Mortgages/Disposal
Mortgages Created under the Transfer of Property Act
Foreigners restricted under TIPRL
Permitted with the approval of the MIC
Banking sector issues
Disposal Restricted under TIPRL
Permitted with the approval of the MIC
Income and Capital Gains Tax
[email protected] Unit 1509, 15th Floor Sakura Tower,
339 Bogyoke Aung San Road, Kyauktada Township,
Cheah Swee Gim Director, Kelvin Chia Yangon Ltd.