For those who wish to establish their business and to employ labour for work in Myanmar, matters that should be considered and included in the set-up plan might be: How to lawfully employ personnel under the laws of Myanmar, particularly employment of foreign expatriates as skilled labour to work within Myanmar; and the necessity of employing local labour.
Since the enactment of the Foreign Investment Law of 2012, foreign businesses operating within Myanmar have been required to employ local labour for work in their business.
In the case of employment of skilled labour, the law provides a minimum employment of local labour against the total number of skilled labour on a progressive basis, i.e. 25:75 by the end of the second year, 50:50 by the end of the fourth year, and increasing to 75:25 by the end of the sixth year of business operations.
In addition, for any work not requiring skills, the business must employ only local Myanmar labourers for such work. The business is also required to provide training to its Myanmar labour to enhance their work skills and must submit yearly training plans and schedules to the Myanmar Investment Commission (MIC) before January 31 of each year.
“Foreign labour” has not been defined under the Myanmar law, but the relevant Myanmar authority interprets it to mean any person not having Myanmar nationality and working in Myanmar (regardless of whether he or she is employed (or is paid)) by an employer in Myanmar or from abroad.
In order for a foreign labour to lawfully remain and work in Myanmar, the following actions are required: An employment agreement must be made in writing and follow the details and particulars prescribed by law and must be signed within 30 days from the first day of employment; A business visa must be obtained (multiple entry can be granted subject to certain criteria); An application for work permit, stay permit and foreign registration card must be submitted with the relevant authorities (e.g. the Ministry of Labour, the Immigration Office).
A prerequisite to the applications referred above is a recommendation letter from the MIC which will be granted after the MIC has considered the business plan and skills of the foreign labour necessary for the business.
Official fees for the applications referred to above range from K400 to K5,500. The process of application for work permit, stay permit and foreign registration card will normally take not more than two weeks.
Once a foreign labour arrives in Myanmar, a report of his arrival must be submitted to the township office within the area he lives. Certain permits are subject to stated expiry, which can be renewed provided that the application for renewal and payment of renewal fee have been made.
The business that employs five persons or more is required to set up a fund for social security and to register the same with the Social Security Office.
Contributions to the social security fund are required from both the employer and the employee in the amount 5 percent of the employee’s monthly salary (3 percent from the employer and 2 percent from the employee) but not exceeding 5 percent of K300,000 set as the maximum base of calculation of the amount of contribution.
We believe that commitment to compliance with the law is a necessary strategy that should be adopted by businesses aiming for long-term successful investment in Myanmar.
In the next issue, we will reveal another strategy in dealing with regulatory requirements for doing business in Myanmar.
This legal column is provided by Yangon-based Myanmar Premier International Law Office Ltd. The firm can be reached at: nithi_s@siampremier.com. Views and opinions expressed here are the firm’s own and don’t necessarily reflect Myanmar Business Today’s editorial opinion.
