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Recent local experiences with structuring PPP Edwin Vanderbruggen

27 November 2014

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VDB Loi offices

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Legal team in Myanmar

2 Partners (full time Myanmar residents)

40 Fee earners (includes 18 expats) (full time Myanmar residents only)

60 Staff in total in Myanmar

Core expertise

• Foreign investment, Corporate

M&A

• Real estate law

• Licensing and regulatory

• International trade

• Secured lending

• Taxation

Sectors with outstanding experience

• TMT

• Oil and gas

• Real estate and infrastructure

• Power

• Consumer

Yangon

Level 8, Centrepoint Towers, No. 65, Sule Pagoda Road & Merchant Street, Kyauktada Township

Nay Pyi Taw No. S-204, Tha Pyay Kone Ward, Zabu Thiri Township

Offices in Myanmar Other offices in the region

Cambodia

Level 6 Phnom Penh Tower, 445 Monivong Boulevard, Phnom Penh

Indonesia

Equity Tower, 35th Floor, SCBD, Jl. Jend. Sudirman Kav. 52-53, Jakarta 12190

Lao

5th Floor, Alounmai Tower, 23 Singha Road, Saysettha District, Vientiane

Singapore

16 Collyer Quay , #21-00 Hitachi Tower, Singapore, 049318

Vietnam

Level 20, Unit 4, Bitexco Financial Tower, 2 Hai Trieu Street, District 1, Ho Chi Minh City

edwin@VDB-Loi.com

jean@VDB-Loi.com

www.VDB-Loi.com

Quick overview of our Myanmar practice

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Overview of selected team members

Note: We have selected a number of our professionals for this overview. For a complete list, contact us.

Licensing Team

Ngwe Lin Myat Chit CONSULTANT, Yangon

Lin is a seasoned consultant with

experience working overseas at global

professional service firms. She holds a

Bachelor’s in Commerce from the

University of Newcastle. Lin advises

clients on market entry and licensing.

She has advised multinationals.

Thuan Pham DIRECTOR, Yangon

Thuan is an experienced tax and

accounting advisor with a degree in

economics. He has over 12 years of

work experience, most recently with

Mazars, Ernst & Young and DFDL. He

has been based in Myanmar since

2013, where he advises on the

licensing and tax implications.

May May Kyi DIRECTOR

May holds a bachelor’s degree in

Commerce from the Yangon Institute of

Economics, and is an experienced

advisor on Myanmar customs duty,

supply chains and international trade.

She is highly experienced in importation

and corporate compliance.

Nay Pyi Taw Team U Myo Nyunt SENIOR Counsel, Yangon

U Myo Nyunt is an advocate to the

Supreme Court of Myanmar and is

one of Myanmar’s most

distinguished senior lawyers. A noted

author on Myanmar law, he was

formerly the Director of the Supreme

Court and an appellate judge.

Senior Legal Team

Helen Sullivan-Looney SENIOR LEGAL ASSOCIATE, Yangon

Helen is a qualified attorney with a

master’s degree in international law

and has worked in the legal field for

the past 11 years. Her practice

focuses on investment, corporate

and commercial law.

Aung Soe Moe SENIOR LEGAL ASSOCIATE

Aung is an experienced Myanmar

qualified attorney with a Bachelor’s

of Law degree from Dagon

University. He has unique and

extensive experience in

telecommunications, land and

licensing issues in Myanmar.

Chen Xi LEGAL ASSOCIATE, Yangon

Xi is a Chinese-qualified lawyer who

graduated from Peking University’s

prestigious school of law. She has a

master’s degree in corporate and

financial service law from the National

University of Singapore. A fluent

Japanese speaker, she spent 3 years

with Mori Hamada & Matsumoto. She

is an associate in our legal team

focusing on investment and real

estate.

Cynthia Herman TAX MANAGER, Yangon

Cynthia qualified as a Chartered

Accountant with Ernst & Young in

London, and is a member of the

Institute of Chartered Accountants

of Scotland. She also holds a master’s

degree in Mechanical Engineering with

Business Finance (University College

London, UK).

Tax Team

Chris Sheridan LEGAL ASSOCIATE, Yangon

A barrister and a solicitor admitted in

Australia, Chris has a solid

background in commercial practice

for a wide range of sectors including

financial services, resources and

finance. At VDB Loi, Chris advices

foreign investors on commercial and

corporate law, M&A, real estate law

and dispute resolution.

Nar Wah SENIOR LEGAL ASSOCIATE, Nay Pyi

Taw

Nar Wah, a Myanmar-qualified

lawyer, is an associate on VDB Loi‘s

legal team. She has an exceptional

educational and career background in

both law and accounting. She spent

more than seven years working in

Singapore.

Nishant Choudhary SENIOR LEGAL ASSOCIATE

Nishant is an experienced lawyer

qualified in India with an extensive

background in finance and securities.

He assists finance institutions

navigate the emerging regulatory

framework of foreign and secured

lending in Myanmar. Nishant also

advises on corporate M&A and

restructuring in a wide range of

industries.

Divyasree Damaraju LEGAL ASSOCIATE, Yangon

A qualified company secretary, Divya leads a team of compliance professionals to assist clients with all corporate matters such as incorporations, preparing and maintaining statutory books and registers, and all corporate filings.

Natalie Matranga SENIOR LEGAL ASSOCIATE, Yangon

Natalie Matranga is a solicitor

qualified in England and Wales with

10 year experience in private practice

in the United Kingdom and an

additional 3 years working in Asia in

the international litigation sphere.

Kap Sian Siam LEGAL ASSOCIATE, Yangon

Kapsian is an experienced Myanmar

qualified attorney with a Bachelor’s

of Law degree, formerly working

with Rajah & Tann LLP. He has

extensive experience in commercial,

land and licensing issues in

Myanmar.

Khin Pearl Yuki Aung LEGAL ASSOCIATE, Yangon

Yuki holds a Bachelor’s degree in Law from the Yangon University and is currently studying in a Diploma in Business Law.

Theint Nandar Aung LEGAL ASSOCIATE, Nay Pyi Taw

A lawyer with several years of

experience, Theint previously

worked with a leading law firm in

Myanmar, handling commercial

matters, litigation and land issues for

international clients.

Ricardo Cabello MANAGER, Yangon

Ricardo, who qualified as a CPA with

Ernst & Young, is assisting our clients

with their licensing and compliance

requirements. With a solid

background in auditing and extensive

international experience throughout

Asia, he helps investors navigate

Myanmar compliance requirements

Su Sandar Zaw CONSULTANT, Yangon

Su, who is in the process of obtaining

her qualification as a Myanmar CPA,

in addition to having several years of

audit experience in Myanmar, was a

finance executive in Singapore for the

past six years. She uses her

experience and knowledge to assist

clients.

Jonathan Linton CONSULTANT

Jon Linton is a consultant in our licensing

team. Based full time in our Nay Pyi Taw

office, Jon liaises with various

Government agencies to assist clients

with their investment projects,

importation, construction and various

regulatory issues in Myanmar.

Nay Nwai Linn TAX CONSULTANT, Yangon

Nay has six years of experience in

accounting and finance working for

international enterprises in Myanmar.

She held responsibilities for managing

financial, tax and accounting

operations.

Team Leader

Jean Loi

MANAGING PARTNER,

Yangon

Team Leader

Edwin Vanderbruggen

PARTNER, Yangon

Legal Team

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3

Government of Korea

Advised the Government of Korea on its bid for the construction and operation of Hanthawaddy International Airport, including on registering and implementing international financing for infrastructure projects, Myanmar law issues, and the corporate structure

1 Pan Asia Towers

Assisted on the deployment of 1,250

telecom towers in Myanmar • Assisted

with the perfection of security

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Government of the Union of Myanmar

Advising the ministry of Energy on the privatization of midstream oil and gas infrastructure and the tender for a sub-sea pipeline

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Government of Japan

Advised on the development and construction of the Thilawa Special Economic Zone, a joint venture with the Myanmar Government.

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Myanmar Integrated Port joint venture

with Boustead and Wah Seong Group

Advised on the strategic investment in a 150,000 sq.m sea port at the Thilawa port

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We selected a number of projects we worked on. For a full list, contact us.

5 Sumitomo Corporation

Acting for Sumitomo Corporation on the

development and financing of a 500MW

power plant project in Myanmar, including

licensing, contracts to be concluded with the

Government, structuring of the equity and

debt, corporate law issues, and taxation

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Our team’s experience with infrastructure and transportation in Myanmar

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1. Introduction: what is the current PPP status in Myanmar?

2. Port terminal projects

3. Cultural and sports facilities

4. Telecom network infrastructure

5. Joint ventures with SOEs for public utilities

6. Key legal issues

Contents

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Key Laws and Regulations

Legal Source Year Enacted

Upper Myanmar Land and Revenue Regulation Act 1889

Lower Myanmar Town and Village Lands Act 1898

Myanmar Contract Act 1872

Myanmar Companies Act 1913

Land and Revenue Act 1876

Transfer of Property Act 1882

Transfer of Immovable Property Restriction Act 1987

Foreign Investment Law 2012

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Port Terminal Projects

Foreign shareholders

Ministry of Transportation

Terminal Company

Myanmar Port Authority

Facilities Land use

Port terminal agreement

Lease

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Port Terminal Projects

Foreign shareholders

Ministry of Transportation

Terminal Company

Myanmar Port Authority

Facilities Land use

Port terminal agreement

Lease

Key Points Design and construct the wharf Port services and facilities Manufacturing activity Transfer to MPA (e.g. 25 year) Land premium + annual rent Annual rent calculation Tariff by MPA

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Port Terminal Projects

Foreign shareholders

Ministry of Transportation

Terminal Company

Myanmar Port Authority

Facilities Land use

Port terminal agreement

Lease

Legal issues to consider MIC Permit Foreign ownership restrictions Land rights Financing and security Foreign exchange Profit extraction Importation Construction permits

MIC

MIC Permit

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Cultural and sports facilities

MIC Permit

Foreign Investor

Joint Venture Co

Myanmar

Myanmar Investment

Commission

LAND (Gov Lease)

Construction of Cultural and Sports Convention

Center

Government Lease

Ministry

Key Terms of the Build-Operate-Transfer

- MOU - Feasibility study - Purpose of the BOT - Upfront payment “Premium”

(payment terms) - Annual land use fee (% of

income of fixed fee) - No sub-lease allowed - Pay taxes, fees - Who owns the construction? - Environmental issues - Extensions of initial lease

period - Stamp Duty - Deed Registration Office

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Telecommunications network infrastructure

Shareholding

Foreign Investor

Joint Venture Co

Myanmar

Ministry of Transport

SOE

Network assets

Network assets

Ministry of Rail

Transportation

Shareholding

BOT contract

BOT contract

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Telecommunications network infrastructure

Foreign Investor

Joint Venture Co

Myanmar

Ministry of Transport

SOE

Network assets

Network assets

Ministry of Rail

Transportation

Shareholding

BOT contract

BOT contract

Key Points Valuation of existing network assets Due diligence of network assets Competition issues “Cost oriented pricing” under Myanmar draft Interconnection and Access Rules Master Services / Lease Agreement with operators

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Telecommunications network infrastructure

Foreign Investor

Joint Venture Co

Myanmar

Ministry of Transport

SOE

Network assets

Network assets

Ministry of Rail

Transportation

Shareholding

BOT contract

BOT contract

Master Services / Lease Agreement with operators Site acquisition Deviations Electricity Other services

Mobile Network Operators

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Joint Venture with SOE

MIC Permit

Foreign Investor (after tender)

Joint Venture Co

Myanmar

Myanmar Investment

Commission

Existing Business

Capital + Loan

State Owned Enterprise

Joint Venture Agreement

Capital (Land + Existing Business)

Rehabilitation and Construction

Land Use Right

Sale of Output

Buyers

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Right to sub-lease

Usually, leases and BOT contracts provide that the land may not be subleased

or assigned

Termination rights

Often, the rights for the Government to terminate

the agreement, even without compensation,

are very wide

Force Majeure

In some agreements, the rules on FM and the consequences in

terms of damages are not defined well

Right to mortgage

Usually, leases and BOT contracts provide that

the land may not be mortgaged

Key legal challenges

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Foreign Investor

Government or SOE

Myanmar

Shareholding ratio, capital, dilution and financing

Governance and management

Waiver of sovereign immunity:

Does a SOE have sovereign immunity?

Dispute settlement mechanism: NYC not yet ratified;

Seat in Myanmar?

Typical challenges for JVAs with SOEs

Typical Challenges

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Selected thought leadership

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Jean Loi is widely recognized as one of the region’s most experienced professional advisors with a CPA background. She was formerly a partner with PricewaterhouseCoopers in Southeast Asia. As the managing partner of VDB Loi, Jean has extensive experience with licensing energy, power, property and consumer product projects. Her Myanmar tax experience is unsurpassed. She lives in Yangon.

Edwin was formerly with Loyens & Loeff and a partner at DFDL. He has 21 years of experience as a legal advisor academic and government consultant. Edwin has extensive experience in a wide range of property projects. He assisted in securing the licenses for a 250M$ mixed use development in Dagon Township, and helped negotiate government leases and BOTs for a number of developments. He advises on the construction of 3 residential towers by an EU multinational and is lead local counsel for a 2.5B$ satellite city for a consortium of Japanese investors. He lives full time in Yangon.

Jean Loi Managing Partner Jean@vdb-loi.com

Edwin Vanderbruggen Partner Edwin@vdb-loi.com

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