United States: New Burma Act Would Hinder US Investment In Myanmar

In late October, a bipartisan coalition of lawmakers introduced legislation in both houses of Congress that would impose sanctions targeting certain members of Myanmar's military. The legislation was developed in response to alleged human rights violations committed against the Rohingya people, a minority group that predominantly lives in western Myanmar, at the hands of Burmese military leaders. If enacted, the Burma Act of 20171 would mark a pullback of the easing of U.S. sanctions policy against Myanmar; President Barack Obama formally terminated the United States' Burmese sanctions program just over one year ago, in October 2016. Because of the Burmese military's extensive investments and connections throughout the country's economy, the Burma Act would present a challenge for prospective U.S. investors in Myanmar.

History of U.S. Sanctions Targeting Burma/Myanmar

The United States first imposed sanctions against Burma in 1997 in response to large-scale repression of democratic demonstrators. The initial sanctions introduced by President Bill Clinton prohibited new investment in Burma by U.S. persons and forbid U.S. persons2 from facilitating or approving new investment in Burma by non-U.S. persons. The George W. Bush administration strengthened U.S. sanctions targeting Burma through the issuance of three additional executive orders and the signing of two new laws. At its height, the Burma sanctions program:

  • Prohibited imports into the United States of Burmese-origin products;
  • Prohibited the export of financial services to Burma by any party from the United States or by a U.S. person, wherever located; and
  • Blocked the property and interests in property for a steadily widening list of individuals and entities, including Burmese government officials and entities owned or controlled by Burmese government officials or the government of Burma.3

Following Myanmar's election of a quasi-democratic government in 2010, and the subsequent release from house arrest of State Counselor Aung San Suu Kyi, the Obama administration issued a series of executive orders that eased certain aspects of the Burmese sanctions, including revoking the ban on the importation of Burmese-origin goods into the United States.

On Oct. 7, 2016, President Obama issued an executive order formally terminating the Burmese sanctions program. Following issuance of the executive order, the Office of Foreign Assets Control removed all individuals and entities targeted by the Burmese sanctions regulations (BSR) from the specially designated nationals and blocked persons (SDN) list and unblocked all property and interests in property previously blocked pursuant to the BSR. Certain Burmese individuals and entities remained on the SDN List pursuant to other sanctions programs.

Despite termination of the Burmese sanctions program, Myanmar continues to be a challenging business environment for non-Burmese investors and companies. Notwithstanding these challenges, some investors have deployed capital in Myanmar in sectors such as infrastructure and tourism.4 These include foreign subsidiaries of U.S. companies, such as portfolio companies of multinational private equity firms with sales in Myanmar that, even without a physical presence, are reliant on local Burmese partners for distribution and other services.

Overview of Current Legislation

The Burma Act would impose restrictions on U.S. persons' dealings with — and provision of support for — members of the Burmese military.5 These include the following:

  • Prohibition against the provision of security assistance or engagement in military-to-military programs with the armed forces or security forces of Burma; and by extension, the Burmese economy more broadly.
  • Reinstatement of import restrictions on jadeite and rubies from Burma.
  • Designation of — and imposition of visa bans targeting — senior officials of the Burmese military or security forces who (1) played a direct and substantial role in the commission of human rights abuses; or (2) failed to investigate human rights abuses committed by subordinates.

In addition, the Burma Act would authorize the U.S. Treasury Department to restrict the opening or maintenance in the United States of correspondent or payable-through accounts by U.S. financial institutions on behalf of a foreign financial institution that holds property or conducts transactions on behalf of any senior official of the Burmese military or security forces that meets the above description.6

Consistent with the proposed legislation, at a Nov. 15, 2017, news conference in Yangon, Myanmar, Secretary of State Rex Tillerson stated that, while he would not recommend "broad-based economic sanctions" against Myanmar, targeted sanctions against people responsible for commission of human rights abuses might be appropriate. Both the Burma Act and Secretary Tillerson's comments are representative of the trend in U.S. sanctions policy in favor of sanctions that target specific actors and categories of transactions rather than broad country-based restrictions.

Unlike the United States, to date, the European Union has not introduced new sanctions on Myanmar. However, the EU's existing arms embargo on Myanmar remains in place (currently effective until April 30, 2018), and on Oct. 16, 2017, the Council of the European Union called for an end to alleged human rights violations and said it "may consider additional measures" if no improvements are made.7

Additional Challenges to U.S. Investors in Myanmar

Some experts estimate that the Burmese military controls up to 50 percent of the country's economy (and that an additional 20 percent of the economy is controlled by individuals and entities targeted under separate sanctions programs).8 As a practical matter, enactment of the Burma Act in its current form would mean that a significant portion of the Burmese economy would be "off limits" to U.S. investors and businesses, either directly or because the partners, distributors, contractors and other entities on which they rely are owned or controlled by members of the Burmese military.

For U.S. companies and investors currently doing business in Myanmar, the new sanctions designations contemplated by the Burma Act may result in a greater need to reevaluate crucial in-country partnerships or contractual relationships.9 Notably, U.S. companies are prohibited from doing business with any entity in which an SDN — or multiple SDNs taken together — hold a 50 percent or greater ownership interest. This aptly named "50 Percent Rule" means that U.S. companies are prohibited from dealing with certain entities — majority owned by one or more SDNs — that are not, themselves, included on the SDN list. OFAC also advises U.S. persons to proceed with caution when dealing with entities that are controlled by SDNs through means other than an ownership interest.

What Next?

Regardless of whether it becomes law, the introduction of the Burma Act is a useful reminder that U.S. sanctions policy can — and sometimes does — change quickly and is not always driven by the executive branch. In contrast to traditional military solutions, sanctions allow the U.S. government to increase — or decrease — pressure on a targeted country, entity or individual with relative ease.10

The unfortunate tradeoffs of flexibility in sanctions policy are increased uncertainty and compliance costs for U.S. companies, investors, their subsidiaries, and controlled interests doing business in politically turbulent economies, including Myanmar. These same concerns can also apply for non-U.S. companies that use the U.S. financial system to transact in such economies. Among other challenges, companies must continually monitor updates to U.S. sanctions regimes and ensure that their internal controls (including policies, due diligence requirements, restricted party and restricted country screening procedures) reflect the current state of play with respect to U.S. sanctions policy, including potential legislative and executive developments, to avoid harm to their business interests when changes occur unexpectedly. U.S. companies and investors may benefit from pursuing structural protections at the negotiation stage (e.g., contractual termination rights) when approaching business opportunities with parties or in regions that could foreseeably become future sanctions targets.

The Burma Act still is in its preliminary stage; however, U.S. companies and investors who are conducting — or contemplating — business in Myanmar should monitor the situation closely (as we will).


1. The House of Representatives bill is entitled the "BURMA Act of 2017," while the Senate bill is entitled the "Burma Human Rights and Freedom Act of 2017."

2. "U.S. persons" generally include U.S. citizens and permanent residents, wherever they are located in the world; persons physically located in the United States, regardless of nationality; and U.S.-organized entities and their foreign branches.

3. Unlike U.S. sanctions targeting Cuba or Iran, the Burmese Sanctions Regulations ("BSR") were not "comprehensive sanctions," as U.S. persons were permitted to export products and non-financial services to Burma (provided that the transactions did not involve parties targeted by U.S. list-based sanctions).

4. See Reuters, IFC Myanmar investment to rise to $ bln in three years, (Dec. 12, 2014), https://www.reuters.com/article/myanmar-ifc/ifc-myanmar-investment-to-rise-to-1-bln-in-three-years-idUSL3N0TW3RK20141212; Institutional Investor, Investors Have High Hopes as Myanmar Prepares to Pick a President, (Mar. 8, 2016), https://www.institutionalinvestor.com/article/b14z9pc3bm81cb/investors-have-high-hopes-as-myanmar-prepares-to-pick-a-president; Deal Street Asia, Myanmar is a land of opportunities & presents a long-term growth strategy, (Mar. 6, 2016), https://www.dealstreetasia.com/stories/32340-32340/

5. This description is based on House and Senate bills found at https://democrats-foreignaffairs.house.gov/sites/democrats.foreignaffairs.house.gov/files/Taiwan%20Leg.pdf; https://www.congress.gov/bill/115th-congress/senate-bill/2060/text.

6. See PBS, Tillerson says U.S. considers individual sanctions for Myanmar, (Nov. 15, 2017), https://www.pbs.org/newshour/world/tillerson-says-u-s-considers-individual-sanctions-for-myanmar; NYTimes, Rex Tillerson Tells Myanmar Leaders to Investigate Attacks on Rohingya, (Nov. 15, 2017), https://www.nytimes.com/2017/11/15/world/asia/rex-tillerson-myanmar-aung-san-suu-kyi.html

7. Council of the European Union, Press Release, Myanmar/Burma: Council adopts conclusions, (Oct. 16, 2017), http://www.consilium.europa.eu/en/press/press-releases/2017/10/16/myanmar-burma-conclusions/#

8. WSJ, Buzz Over Post-Sanctions Myanmar Fades for Many U.S. Investors, (Aug. 28, 2015), https://www.wsj.com/articles/buzz-over-post-sanctions-myanmar-fades-for-many-u-s-investors-1440796685; See also Financial Times, Myanmar: the military-commercial complex (Feb. 2, 2017), https://www.ft.com/content/c6fe7dce-d26a-11e6-b06b-680c49b4b4c0

9. The prohibitions of the Burma Act generally would not extend to foreign-organized subsidiaries that are owned or controlled by U.S.-organized investors or businesses.

10. As a general matter, sanctions imposed by Congressional act are more difficult to amend than sanctions imposed by executive order.

Originally published by Law360 on December 4, 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions