Myanmar Postcard - 6 October 2020

E-tax payment system now compulsory for certain businesses

From 1 October 2020 – the start of the new Myanmar tax year – Yangon firms will be required to make commercial, corporate income, capital gains and specific goods tax payments due to the Internal Revenue Department (IRD) electronically. For these entities, the previous manual system of tax passbooks and payment using cash or cheque at the local tax office will no longer be supported. The move, which is part of Myanmar’s Integrated Tax Administration System, is said to mitigate certain COVID-related risks and increase tax payment efficiency.

At present, individual tax payers cannot use the e-payment system, however, it is understood that employers may soon be able to make e-payment of tax on behalf of their employees in respect of personal income tax.

The e-payment system requires the corporate tax payer to register for a 9 digit TIN (Tax Payer Identification Number). Once registered, electronic tax payments are supported via selected digital wallets, mobile banking and e-/i-banking facilities with certain Myanmar domestic banks and Myanmar Payment Union corporate debMM-it cards using the TIN and by customer credit transfer using CBM-NET (Central Bank of Myanmar Financial Network System) with a local bank account (following a further tax office registration). Payments may also be made through the IRD’s proprietary online payment platform and a dedicated app. Once payment has been successfully received, a soft copy tax receipt will be generated and sent to the payer’s registered email address.

The IRD first implemented an optional electronic payment system in 2018 and payment channels were expanded earlier this year. A pilot tax return e-filing system is also available to those corporates who wish to use it although it does not currently support corporate income tax filings.

Updates on 4 infrastructure projects in Myanmar

August and September 2020 saw developments on four infrastructure projects in Myanmar: 1. The Magwe-Shwe Taung Gas Pipeline; 2. The Yangon Elevated Expressway; 3. Yangon’s Industrial Megacity; and 4. The Myanmar-Singapore Industrial Park in Hlegu township.

We set out summaries of the projects below.

Magwe-Shwe Taung Gas Pipeline: The Magwe-Shwe Taung gas pipeline was originally constructed in 1980 using a 14-inch diameter pipe. With the loan from the South Korean government totalling approximately USD 131 million, the pipeline is set to be upgraded with a 20-inch steel pipe and lengthened to 228 kilometres, from 191 kilometres. The loan will be for 40 years, at a rate of 0.01% and was discussed during South Korean President Moon Jae-in’s visit to Myanmar in September 2019. The new pipeline is expected to be able to send gas to the natural gas-fired power station in Shwe Taung (Bago region) to raise the capacity of the Shwe Taung turbine plan from 55.35 megawatt to 70 megawatt. Completion of the new pipeline is expected in 2023.

Yangon Elevated Expressway: The final stage of the tender selection process for the Yangon Elevated Expressway is well underway and a winner is expected to be announced at the end of October 2020. The Yangon Elevated Expressway will be 27.5 kilometres in length and will compromise of 4 lanes, passing through 8 townships – Mingalar Taung Nyunt, Tamwe, Thingangyun, South Okkalapa, North Okkapala, Mayangone, Mingaladon and Insein. The project is valued at USD 900 million and once the winner of the tender is announced, work is expected to commence in early 2021. Proposals for the expressway were first called in early 2018 with 53 companies expressing interest and by late 2018, submissions were received from 12 consortium groups. Reportedly, the Expressway Committee of the Ministry of Construction had narrowed down the 3 final bidders, hailing from China, Japan and Thailand.

Yangon’s Industrial Megacity: German consulting firm Roland Berger has been appointed by the Myanmar government to handle and oversee the tendering process of U Phyo Min Thein’s industrial megacity project, which will compromise of an industrial park and various infrastructure proposals. The project was launched by the regional government in March 2018, targeting investments up to USD 1.5 billion into the project. The first phase will cover approximately 88.30 square kilometres of the land on the western bank of the Yangon River, with Roland Berger assisting the developer, New Yangon City Development, in the Swiss Challenge tender process to challenge the pre-ordained China Communications Construction Company for the bid.

Myanmar-Singapore Industrial Park: Sembcorp Development, a wholly-owned subsidiary of Singapore utilities company, Sembcorp Industries, has announced that it will develop its first integrated urban development in Myanmar, dubbed the Myanmar-Singapore Industrial Park. The joint venture company, formed between Sembcorp Development (owning 50.6%) and Myanmar Singapore (Hlegu) Industrial Park (owning the other 49.4%) is set to lease 436 hectares of land in the Hlegu township to develop the industrial park which will compromise of industrial, residential and commercial developments, over a period of 9 years.

Chinese companies sweep up solar tender wins

Following our August 2020 postcard, the Myanmar Times have reported that Chinese companies and their consortia have won the bid to build 28 out of 29 solar pants tendered by the Ministry of Electricity and Energy. The remaining bid was taken by Germany’s solar plant builder, Ib Vogt.

The tender invited companies to bid for the construction of ground-mounted solar plants capable of generating 1060MW of power in Yangon, Nay Pyi Yaw, Ayeyarwady, Magwe, Mandalay, Bago and Sagaing. Reportedly, a total of 155 bids were submitted for the 30 sites with more than half of the bids coming from Chinese companies.

Sungrow won nine bids, with China Machinery Engineering Corp and SPIC winning eight and four bids respectively. Longi, the Chinese photovoltaic company and the Chinese consortium formed with Myanmar conglomerate Shwe Taung each won three bids. The Myanmar Times have reported that the average winning price was at USD 0.0422 per unit, much lower than the average bidding price at USD 0.0508. The bidding price ranged between USD 0.0366 to USD 0.1051. According to the tender process, the bid will be won by the lowest bidder, regardless of the technical aspect of the proposals.

The winners will now have six months to build the plants.

Yangon COVID lockdown

The Ministry for Health and Sports on 20 September 2020, by way of Order 107/2020 announced a further lockdown in Yangon following record rise in COVID-19 cases. Residents in all municipal townships except Kokokyun are now under stay-at-home order.

The order imposes prevention measures in work place: in private businesses, all employees must stay and work at home, with the exception of those in essential businesses (banking and finance, petrol stations, food and cold storage, drinking water and medical equipment manufacturing and sales). In government, public servants will work two weeks at the office and two weeks at home. Workers in CMP factories and workplaces are not allowed to go to work from 24 September 2020 to 7 October 2020.

In relation to households and individuals, only one person per household is allowed to leave home for supplies and only two people per household is allowed to leave home for medical treatment. Mask must be worn when going outside. There are also strict travel restrictions in place. Within a ward, only one passenger is allowed in a vehicle when shopping for supplies, and two passengers are allowed to travel to a hospital or clinic. All travels between wards must be authorised. There are currently in placed spot health checks over all of Yangon and authorities may order persons suspected of having COVID-19 into quarantine.

Trademark law soft opening

The Ministry of Commerce announced that the Myanmar Office of Intellectual Property ("OIP") is ready to start operations on 1 October 2020 through a "Soft Opening” period.

The OIP will implement the new Myanmar Trade Marks Law enacted in January 2019, the first official trademark law to exist in Myanmar. The new regime establishes a comprehensive trademark registration and protection system, and is welcomed by domestic and foreign investors. Amongst other things, the new law would see Myanmar shift from a ‘first-to-use’ system to a ’first-to-file’ system, aligning Myanmar with other Asian countries.

Under the current system, the registration of marks are filed at the Registry of Deeds. The purpose of the Soft Opening period is to give priority to existing trademark owners to re-file their trademark applications with the OIP. All applications filed during the Soft Opening period will bear the same filing date. Since the existing marks recorded under the old regime will not be automatically re-registered, it is important for existing rights holders to prepare the necessary documents and information for re-filing of all their marks during the Soft Opening.

The Soft Opening period is anticipated to last for at least 6 months until the Grand Opening, after which all new applications may be eligible for filing.