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Proposed new telecommunications law in Myanmar where are the opportunities and risks for Japanese investors?
Introduction
Recent press reports suggest that Myanmar is planning to pass a new law to liberalise its telecoms market to both private domestic and foreign operators and investors. Prior to this new law coming into effect, there is also a proposal to firstly allow private domestic companies to provide telecom services.
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Background
Myanmar has a population of over 53 million and yet the 2010 statistics of the International Telecommunication Union (ITU) show that the fixed telephone subscription rate, mobile cellular subscription rate and internet penetration rates of Myanmar are 1.26%, 1.24 % and 0.2% respectively. The market is currently dominated by the Myanmar Posts and Telecommunications which has monopoly in all telecom services in Myanmar, including fixed and mobile services. The Myanmar Government is keen to promote the development of these untapped telecoms markets, and has set the targets of achieving a 50% wireless penetration rate by 2015. To catch up with the demand for new telephone lines, it was estimated back in 2010 that more than 500,000 new telephone lines would need to be installed. This represents a capital investment of around US$600 million, which can only be available if foreign investors are involved.
Contacts
Graeme Preston
Senior Associate Technology, Media and Telecommunications Registered Foreign Lawyer Tel: +81 3 5412 5485 E: graeme.preston@herbertsmith.com
Nick Fawcett
Associate - Technology, Media and Telecommunications Tel: +81 3 5412 5406 E: nicholas.fawcett@herbertsmith.com
Gavin Margetson
Partner Registered Foreign Lawyer Tel: +81 3 5412 5410 E: gavin.margetson@herbertsmith.com
In addition to equity restrictions, it is unclear at this stage if restrictions in terms of foreign control or the number of telecoms markets which a foreign investor may be allowed to participate in may also be imposed on the foreign investors. 2. Foreign investment restrictions: Although press reports have suggested that four licences will be issued, again, it is unclear at this stage whether a foreign investor will be allowed to participate in the more lucrative facility-based telecom market, in particular, the mobile market, or whether foreign investors are only permitted to participate in servicebased telecoms market (e.g. provision of VoIP or internet access). Perhaps the special orders which are intended to facilitate the liberalisation of the market for private domestic companies may shed some light on the potential restrictions which foreign investors may ultimately be subject to.
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