Most Read Contributor in Hong Kong, September 2016
Ownership of land in Myanmar is vested either in the Government, usually through various Ministries, or in the private sector. The use of Government Land is co-ordinated through the Office of the Department of Human Settlement and Housing Development. This department is, for example, responsible for negotiating the establishment of an Industrial Park outside Yangon financed by Japanese industrial giants Mitsui.
As I have referred to in detail earlier on, once the basis of a JV project is agreed the documentation is passed to the FIC for the issue of promotional privileges including the right to establish the JV vehicle as a Myanmar legal entity. It is important to note, however, that the Government does not issue a formal lease to the JV company but rather grants a "right to use" as recorded in the approved JV documents. In relation to potentially large projects which are not self-financed by the foreign partner this will have implications for bank financing where the assignability of a lease is often fundamental to the availability of financing.
The position for privately held land is rather different. Myanmar recognises the legal concepts of freehold and leasehold properties. The relevant legislation passed in 1987 is The Law on Immovable Properties Act.
Ownership of freehold or leasehold is evidenced by land certificates or lease documents, the system being one inherited from the British. Unlike the UK system which has some time ago been updated to provide for central registration, title in Myanmar still vests in the person in possession of the deeds. The Yangon City Development Committee (YCDC) maintains a record of privately held land.
Private citizens in Myanmar may grant leases over land to foreigners but these may not exceed 12 months. However a private citizen with FIC approval may lease property to a foreign JV for 30 years. The form of lease issued to the JV (as opposed to the Government right to use) could potentially be surrendered into the possession of a lender as security for a loan. Furthermore the lender may issue a caution letter to the YCDC advising then of the existence of the lease and requesting that they authorise no dealings in the land without taking note of the existence of the lease. This approach offers a level of security not available in Government land related joint ventures. Those familiar with English land law will recognise the physical deposit of title deeds as a "puisne mortgage".
NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".
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