In Myanmar, the legal framework governing real estate ownership is based on the principle that the state retains ultimate ownership of all land. Article 37(a) of the Constitution states:
"The Union is the ultimate owner of all lands and all natural resources above and below the ground, above and beneath the water and in the atmosphere in the Union."
This highlights the country's policy where the government controls land resources and grants rights of land use, rather than transferring ownership. Consequently, private individuals and entities can obtain land use rights through grants, leases, and permits, but the state retains ownership. This article explores how foreign investors can lease land in Myanmar despite ownership restrictions.

Categories of Land in Myanmar

Myanmar has various types of land, each designated for specific uses. These include:

• Freehold land
• Grant land
• Farm/agricultural land
• Garden land
• Grazing land
• Vacant, fallow, and virgin land
• Forest land
• Town land
• Village land
• Monastery land
• Land used for state defense and security

Each land type has its own legal and regulatory framework, with specific usage rights and restrictions. While most land categories are reserved for citizens or government use, only a limited number of land types may be leased to foreigners or foreign-owned entities.

The following outlines the most important land types that foreigners or foreign-owned companies can lease in Myanmar.

1. Freehold Land

Known as "ancestral land" in Myanmar, freehold land is privately owned, transferable, and leasable. For plots under a quarter acre, there is no rent requirement. The government can reclaim freehold land for state interests under the Land Acquisition Act of 1894, with compensation provided.

2. Grant Land

Grant land is government-owned but leased to Myanmar citizens or 100% Myanmar-owned companies for periods of 30, 60, or 90 years, depending on the intended land use. These leases can be extended upon application and are transferable and leasable to Myanmar nationals or 100% Myanmar-owned companies. Grant land is common within urban areas in Myanmar.

3. Farmland

Farmland is owned by the government and allocated to Myanmar citizens for agricultural purposes under the Farmland Law of 2012. The Ministry of Agriculture, Livestock, and Irrigation can authorise its use for non-agricultural purposes, such as commercial real estate development, with the appropriate permits.

Land Use Restrictions for Foreigners in Myanmar

Foreign ownership of land in Myanmar is restricted under the Transfer of Property Act of 1882 and the Transfer of Immovable Property Restriction Act of 1987 (TIPRA). These laws prohibit foreign nationals and foreign-owned companies from owning land or immovable property. Furthermore, leases to foreigners cannot exceed one year, and any lease beyond this period requires approval from the Myanmar Investment Commission (MIC).

Under the Myanmar Companies Law of 2017, a "foreign company" is defined as a Myanmar-incorporated company in which more than 35% of shares are owned by foreign nationals or companies. The TIPRA applies to all foreign-owned companies, even if the foreign ownership is as low as one share.

Nominee structures, where a foreigner uses a local proxy to circumvent ownership restrictions, are strictly prohibited and can lead to significant penalties.

Land Use Rights under the Myanmar Investment Law

Foreign investors wishing to lease land for long-term projects can apply for a Land-Rights Authorization under the Myanmar Investment Law of 2016. To do so, they must first obtain a:

• Permit or
• Endorsement
  from the Myanmar Investment Commission (MIC).

The MIC allows land leases of up to 50 years, with two possible 10-year extensions. In certain cases, the MIC may approve longer leases to encourage development in slower-growth areas.

Application Process for Permit:

1. Submit Proposal: The investor submits a proposal for the investment permit.
2. Proposal Review: The MIC will review the proposal and decide within 60 days. If the proposal is incomplete, a rejection notice will be issued within 15 working days.
3. Issuance of Permit: If the proposal is approved, the investment permit will be issued within 10 working days.
4. Rejection Notice: If rejected, the MIC will send an explanation within 5 working days.

Application Process for Endorsement:

1. Submit Endorsement Application: The investor applies for an MIC endorsement.
2. Application Review: The MIC reviews the application and makes a decision within 30 days. If the application is incomplete, it will be rejected within 15 working days.
3. Issuance of Endorsement: If approved, the MIC issues the endorsement within 10 working days.
4. Rejection Notice: If rejected, a notice with the reasons will be sent within 5 working days.

Land-Rights Authorisation Application Process

A Land-Rights Authorisation is a separate process, even if applied for with a Permit or Endorsement.

Application Requirements:

1. Property details (area, type, location) and landlord identity.
2. Any necessary state/regional government approvals.
3. Whether the land use will alter the property’s topography.
4. A draft lease agreement and the requested lease duration.

Review Process:

1. The MIC or relevant State/Regional Committee evaluates the application within 30 days.
2. If approved, the land-rights authorization will be issued within 10 working days.
3. A copy of the authorization will be sent to the State/Regional Government and relevant ministries.
4. Failure to provide additional requested information on time may lead to application expiration.

Land Use Rights under the Special Economic Zone Law

Under the Special Economic Zone Law of 2014, Section 79, foreign-owned companies within SEZs can lease land for up to 75 years. This lease consists of 50 years, with an additional 25-year extension. SEZs offer various incentives to encourage foreign investment, such as tax exemptions and reduced regulations.

Registration of Lease Agreements with the ORD

In common law, a deed is a written document that must be executed with a certain level of formality, beyond a simple signature. It serves to pass or confirm an interest, right, or property, or create an obligation binding on a person. Importantly, deeds are generally enforceable even in the absence of consideration (something of value exchanged).

Registration Requirements for Lease Agreements

The registration of deeds, including lease agreements, is governed by the Deed Registration Law of 2018, which replaced the previous Registration Act of 1908. According to this law:

• Mandatory Registration:
  Leases for immovable property that are longer than one year or that involve annual rent must be registered with the Office of the Registration of Deeds (ORD) within 120 days of execution.
• Optional Registration:
  Leases up to one year or without annual rent are optional for registration, as per Section 17(c) of the law.

If a lease agreement is registered after the 120-day deadline, late registration may still be allowed, but it will incur a fine.

Effect of Registration

Once a lease agreement is registered, it becomes legally binding and has the following implications:

1. Overrides Oral Agreements:
   Under Section 47 of the Deed Registration Law, a registered deed will take precedence over any oral agreement or prior unregistered declaration related to the property. If there are any discrepancies between the registered deed and an oral agreement, the registered document will govern.
2. Priority over Unregistered Documents:
   According to Section 50, if a lease is duly registered, it will take precedence over any unregistered documents related to the same property. This means that registering the lease with the ORD protects the lessee from potential disputes and prevents the landlord from leasing the property to another party.

Required Documentation for Registration

To register a lease agreement, the following documents are typically required:

1. Lease Agreement: The original signed lease document.
2. Proof of Identity: For both the lessor and lessee.
3. Land Ownership Documents: To confirm the lessor's legal right to lease the property.
4. Additional Corporate Documents (if applicable): If the lessor or lessee is a corporation, additional paperwork such as a board resolution and certificate of incorporation may be required.

Registration Fees

For leases longer than one year, there is a registration charge equal to 0.5% of the average annual rent. Once registered, the original lease agreement is returned to the parties with a registration number attached, signifying its official registration with the ORD.

Stamp Duty for Leases in Myanmar

The Stamp Act of 1899 governs the payment of stamp duty on legal documents, including lease agreements. Stamp duty must be paid before or at the time of signing the document, unless the agreement is executed outside Myanmar. Failure to pay stamp duty on time or in full can result in a penalty of up to three times the amount owed.

Under Section 35(a) of the Stamp Act, failure to affix the appropriate stamp duty to a lease agreement will prevent its registration and its acceptance as evidence in legal proceedings. Therefore, it is essential to ensure that the required stamp duty is paid to the Internal Revenue Department (IRD), part of the Ministry of Finance and Planning, before registering the lease agreement.

Stamp Duty Rates for Leases:

• 0.5% of the total lease amount for leases up to 1 year.
• 0.5% of the annual rent for leases between 1 and 3 years.
• 2% of the annual rent for leases over 3 years.
• 2% of the rent to be paid for the first ten years for leases of an unspecified term.
• 2% of any deposit paid in addition to the rent.

How We Can Assist

Navigating the complexities of land leasing laws in Myanmar can be challenging, especially for foreign investors. At Law Hero, we specialize in guiding clients through Myanmar’s intricate legal and regulatory landscape. Our team is dedicated to ensuring your land lease transactions are seamless, compliant, and aligned with Myanmar’s legal framework.

Our Services Include:

• Expert Consultation on Land Use Rights: We provide detailed advice on the different types of land available for lease in Myanmar, including freehold, grant, and government-owned land, helping you identify the best options for your investment needs.
• Securing Necessary Permits and Approvals: We assist with obtaining permits and endorsements from the Myanmar Investment Commission (MIC), including long-term land rights authorizations, so you can secure the land you need for your project.
• Navigating the Application Process: From submitting proposals for investment permits to facilitating the endorsement process, we manage the documentation and procedures required by the MIC, ensuring a smooth and efficient approval timeline.
• Lease Agreement Drafting and Registration: Our legal team drafts clear, compliant lease agreements and handles the registration process with the Office of the Registration of Deeds (ORD). We ensure your lease is legally enforceable and protected against disputes.
• Compliance with Stamp Duty and Other Legal Obligations: We guide you through the payment of stamp duty, ensuring that your lease agreement meets all requirements to avoid penalties.
• Representation in Special Economic Zones (SEZs): We offer specialized assistance for investors looking to lease land within SEZs, including advice on the additional benefits, tax incentives, and regulatory advantages offered in these zones.