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Focus: US eases sanctions on Myanmar

27 July 2012

In brief: The US has recently eased its Myanmar sanctions regime to make it possible for US entities and individuals to invest in, and export financial services to, Myanmar for the first time in 15 years.  In this article, members of our Myanmar team (Partners Marae Ciantar , Stuart Bedford (view CV) and Joseph Armao, and Senior Associate Rachel Nicolson (view CV)) provide an overview of the changes to the US sanctions regime and anticipated further developments relating to Myanmar.

How does it affect you?

  • Those who were previously prohibited by US sanctions from investing or operating in Myanmar, exporting financial services, or financing, facilitating or guaranteeing other transactions relating to Myanmar, may be able to do so as a result of the easing of sanctions.
  • However, it is important to be aware that certain sanctions imposed by the US and other states remain in effect, and the US has introduced ongoing reporting conditions for new investments in Myanmar exceeding US$500,000 or involving the Myanma Oil and Gas Enterprise. Accordingly, those considering investing in Myanmar or engaging in transactions relating to Myanmar should be diligent in relation to ongoing sanctions, conditions and restrictions that remain in effect.


Myanmar is an emerging market in Asia that offers significant potential for foreign investment. It is rich in natural resources, has a large population (approximately 60 million), and has significant energy and infrastructure needs.

However, due to its political situation, Myanmar has been subject to an extensive international sanctions regime for many years. Since 1988, the US sanctions regime has prohibited certain transactions with Myanmar originating from the US or by any US citizen or permanent resident, person in the US, or entity organised under the laws of the US, including any foreign branches (US persons).

This regime was strengthened from 1997–2008 to block the assets of certain specified individuals and entities associated with the Myanmar regime, and to prohibit, among other things, the importation into the US of Myanmar products, the exportation or re-exportation of financial services to Myanmar, and any new investment in Myanmar. As a result of these and other unilateral sanctions imposed by various countries, international economic activity connected with Myanmar has been limited significantly for the past two decades.

Recent moves by Myanmar towards democratisation has led the US and the international community to consider easing these sanctions on Myanmar. In May 2012, the US announced that certain restrictions on finance and investment would be suspended. On 11 July 2012, the US issued two General Licences formally authorising new investment in Myanmar and the exportation of financial services to Myanmar, subject to certain conditions and reporting requirements.

It is important to note that, unlike certain other members of the international community, the US Government has chosen to keep in effect its Myanmar sanctions regulations, and to issue General Licences authorising certain financial services and new investment in Myanmar, as opposed to repealing the regulations. As such, should the General Licences be revoked for any reason, the existing US sanctions regulations would once again be fully applicable as they were previously.

The EU, Canada, Japan and Australia have also eased or temporarily suspended sanctions against Myanmar in recent months.

Sanctions eased: new investment

US persons are now generally permitted to make new investments in Myanmar. This has not been permitted since 1997.

New investments include certain activities relating to another person's investment, including the purchase of shares in, the receipt of earnings from, or the guarantee or supervision of, another person's investment. Thus, international investors in Myanmar are now able to seek this kind of participation in their investments from the US, including US parent companies, guarantors and financiers, subject to the exceptions below.

Reporting on human rights, environmental and related issues.

Any aggregate new investment by a US person that exceeds US$500,000 will be subject to specific reporting requirements. These requirements involve annual reporting to the US State Department on policies and procedures with respect to human and workers' rights, environmental stewardship, land acquisitions, and arrangements with security service providers. These reports will be made public in part, while commercially sensitive information will be kept confidential.

Any new investment involving an agreement with the Myanma Oil and Gas Enterprise must be reported to the US State Department within 60 days of that investment. Annual payments of more than US$10,000 to Myanmar Government entities must also be reported.

These requirements are currently undergoing US regulatory approval and have not yet been finalised.

Sanctions eased: financial services

Financial services are now permitted to be exported and re-exported to Myanmar by US persons and from the US, subject to the exceptions below. Financial services include (amongst other things) the transfer of funds between the US and Myanmar, as well as the provision of loans, guarantees, credit, insurance, and investment/banking services.

Financial transactions in support of humanitarian, religious and not-for-profit activities in Myanmar were permitted under an easing of the sanctions announced by the US earlier this year and remain so. Similarly, personal, non-commercial remittances to Myanmar are still permitted.

The exceptions

Designated Individuals

The US Treasury Department's Office of Foreign Assets Control maintains a list of 'Specially Designated Nationals' (SDNs), whose US-based assets are blocked and to whom it is prohibited to provide funds. This prohibition extends to any entity in which such individuals hold a 50% or greater stake.

New investments by US persons, and financial services exported from the US or by US persons are still prohibited if they involve the direct or indirect transfer of money to these individuals or entities. This has the effect of prohibiting any agreement (such as a joint venture, lease or sales agreement) with, or transfer of finance to, these individuals or entities.


Transactions are also prohibited if they involve the direct or indirect provision of financial services to the Myanmar Ministry of Defence, the Office of Procurement, the military, any state or non-state armed group, or any company in which these groups hold more than a 50% stake. Additionally, new investment by US persons is not permitted if it involves any agreement with any of these entities.

Some other sanctions remain in effect

In addition to the restrictions relating to SDNs, other sanctions remain in effect.


On 11 July 2012, the US Senate Finance Committee voted to continue the US ban on imports from Myanmar. The ban will continue for another three years, in an effort to place continued pressure on the Myanmar Government. This ban on importation encompasses all products and resources from Myanmar.

Power to designate

While easing previous sanctions, the US also issued an Executive Order that gave it the power to impose further sanctions on persons or organisations that threaten the peace, security, or stability of Myanmar, obstruct the political reform process, or are involved in human rights abuses.

Other developments

The legal and regulatory regime applicable to investment in Myanmar is anticipated to undergo substantial change in the near future. A number of key laws are under review as part of the Government's restructuring and development policies, including the Foreign Investment Law. Amendments to the Foreign Investment Law intended to further facilitate and encourage international investment are expected shortly.

Other possible developments being closely monitored by potential investors include the negotiation of new bilateral investment treaties between Myanmar and other countries (currently Myanmar has concluded few such treaties) and the potential accession of Myanmar to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.


The changing US sanctions on Myanmar create an opportunity for companies and individuals previously affected by the sanctions to invest in Myanmar or undertake commercial activities associated with Myanmar, an exciting emerging market for international investors.

However, investors and financiers must still be diligent in relation to ongoing sanctions, dealings with SDNs and new investment reporting requirements. It is essential that those wishing to invest in Myanmar conduct due diligence on any person or entity with which they deal, to avoid possible breaches of US and other sanctions and embargoes which remain in effect.

Allens and Linklaters have a team of partners and lawyers who focus on Myanmar, and we are committed to assisting our clients with investments in this dynamic emerging market.

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