Eric Rose comments on DICA Announcements concerning the employment of foreign experts in Myanmar

Myanmar Times , Oct 31, 2017 by:  THOMPSON CHAU

ELEMENTS of the draft foreigner laws are back, in another form, to haunt businesses and investors. The government’s newly expanded requirements on hiring foreign employees have been criticised as “burdensome and disruptive” and “another incarnation” of the draft foreigner laws which were submitted to the legislature in February. A leading legal expert has described the changes as “a possibly good intention” which “has gotten lost in a bureaucratic regulatory nightmare without any sunshine ability to improve the draft regulations”.

Two announcements released by the Directorate of Investment and Company Administration (DICA) in early last month entered into force on October 21, the “Appointment of foreign experts” (AFE) and “Announcement for companies” (AC). The AFE will bring about considerable difficulties regarding applications for employing foreigners in Myanmar, but the authorities have yet to spell out the details and process.

Appointment of foreign experts

According to law firm DFDL, limited information is currently available as to the exact criteria and process to secure approval. For example, there is no guidance as to whether this applies to short, medium or long-term appointments, or to all kinds of appointments. Additionally, definitions distinguishing “foreign employees” from “foreign experts” are not clearly set out in the current legal framework. However, technicians, senior management level positions, and foreign consultants can be considered as “foreign experts”.

A Myanmar Investment Commission (MIC) company must submit a work permit application in advance for the appointment of a foreign expert, or within seven days of the foreign expert’s arrival in the country. The employer must also notify the MIC together with documentary evidence of resignation and departure airline ticket if the foreign expert resigns prior to, or at the end of the permitted period in Myanmar.

Such a demand will present difficulties in practical terms, according to DFDL.

“This requirement indicates that the intended period of stay must be known from the outset of the foreign expert’s entry into the country, something which may be difficult to confirm,” the law firm noted in its analysis released last week.

Additionally, if an employer intends to appoint a new foreign expert in place of one who just resigned, evidence must be submitted that the former expert has left the country. Such a measure is highly problematic.

DFDL and another law firm Herzfeld Rubin Meyer & Rose (HRMR) argued that this requirement does not consider circumstances such as when the foreigner remained in the country in order to move to another company or, when an MIC company employer may not be able to demonstrate that the foreign expert has exited Myanmar.

“Though a similar work permit requirement existed previously, many MIC permit/endorsement companies view the newly expanded requirement as burdensome and disruptive,” DFDL complained.

“Is the burden on the former employer to positively verify that the resigning expert has left the country? How can a company do that?” Eric Rose, lead director of HRMR, questioned.

Announcement for companies

The AC is expanding requirements to members of the board of directors of a foreign company incorporated in Myanmar, as well as their family members.

Mr Rose queried why foreigners would be exempted from these requirements if they were members of the board of a Myanmar company, as opposed to a foreign entity.

“Under what authority does DICA reject applications for visas submitted less than three weeks before the expiration of the relevant visa? Is this requirement in addition to the requirements of the Ministry of Labour and Immigration?” the legal expert continued.

Confusion arises

DFDL said that this announcement does not apply to foreign employees of DICA “service” companies. Foreign employees of companies without an MIC permit or endorsement are only required to obtain a business visa. A valid business visa holder intending to work in Myanmar for an extended duration must apply for a longer stay and multiple-entry visa, and can apply for a stay permit.

However, according to HRMR, the AFE is likely to apply to all foreign and domestic investors wishing to hire foreign experts, not only those which have MIC permits. Trading companies are not covered by the announcement.

Mr Rose told The Myanmar Times that it is unclear under which legal authority DICA issued these announcements, which are not permissive, but mandatory, to non-MIC permitted companies.

“They have been couched to look like they are facilitations to investors to have DICA operate as a ‘one-stop’ facility for having foreigners register and apply for all permits in one place. Yet, any applications for foreigners employed by trading companies will be deferred to the Ministry of Commerce.

“Second, I am hard pressed to find the legal authority which allows DICA to request an ‘Application Letter’, which appears to give DICA the right to approve or deny said ‘application’,” Mr Rose explained.

This approval is in addition to those required under Myanmar Investment Law Section 51(a), and Myanmar Investment Rules Section 206, which stipulates that an investor must obtain approval from the MIC when appointing foreign nationals to these roles. The employer must submit each foreign expert’s passport, evidence of expertise, or degree and curriculum vitae to the commission.

“Regulatory nightmare”

William Greenlee from DFDL, who’s chair of American Chamber of Commerce Myanmar's legal committee, told The Myanmar Times that the requirement will not be enforced right away.

If enforced this new requirement on foreign employees will negatively impact foreign investment in Myanmar.
- William Greenlee, DFDL

“I do not think this new requirement will at least immediately be enforced. From a practical level there simply is not yet sufficient details to enforce it,” he observed.

Eric Rose added that those announcements have not been published in advance, discussed with the companies and workers affected and have no legal basis other than as applicable under Rule 206 of the Investment Rules to MIC-permitted companies.

In a nutshell, this is yet another incarnation of the draft law concerning foreigners, and the draft law concerning foreign workers which were rejected by the Hluttaw in February.
- Eric Rose, Herzfeld Rubin Meyer & Rose

“Once again, we believe that a possibly good intention [i.e. to offer a one-stop facility for employing foreign workers by local and foreign companies] has gotten lost in a bureaucratic regulatory nightmare without any sunshine ability to improve the draft regulations,” he stated.

The HRMR lawyer was referring to the Law Concerning Foreigners and the Foreign Workers Law which were sent to the Hluttaw Joint Bill Committee in January. The draft laws triggered a backlash from the business community, with objections from nine foreign business chambers, together with numerous embassies and members of Union of Myanmar Federation of Chambers of Commerce and Industry, DICA and MIC.

Not everyone is negative on the changes though. Chin-Po Tseng, partner of Thanlwin Legal, is positive about the new policy.

“DICA’s efforts to ease the stay of foreign experts, the granting of stay permits and visa extensions, are indicators of a willingness to accept foreign expertise. The streamlining of these procedures will give foreign talent the comfort to develop greater initiatives in Myanmar,” he remarked.

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