Amendments to the Mines Law represent progress over previous legislation but fail to deliver the legal changes required by foreign mining companies, says an analysis by law firm Charltons.
The amendments bring Myanmar law closer to, but not completely in line with, accepted international standards and were “a step in the right direction”, Charltons said in the analysis published last week.
It followed the passage of the 2015 Mines Law by the Union parliament on December 24 to amend an outdated 1994 law.
Charltons said revised royalty rates remained uncompetitive, as was the royalty calculation method based on mineral content.
“Miners would prefer to see royalty payments based on net sales proceeds as this would help offset price volatility,” said Charltons, a Hong Kong-based law firm that opened an office in Yangon in late 2012.
It also said that although the 2015 Mines Law provided a guarantee to explorers in respect of exploration permits it otherwise failed to incentivise exploration stage companies.
The government had first said it intended amending the law in 2012.
“The protracted delay in introducing amending legislation has contributed to a stall in foreign direct investment in mining in Myanmar,” Charltons said.
It said FDI in mining for the fiscal year to last March 31 was US$6.26 million, compared with $3.22 billion in the oil and gas sector for the same period.
Following the passage of the law, the government has 90 days to draft the rules and regulations to implement the amended legislation.
“A more complete analysis of Myanmar’s new mining regime will only be possible after the 2016 Mine Rules have been issued,” Charltons said.