The 2015 Myanmar Elections: Impact on Myanmar Sanctions

November 17, 2015

Myanmar went to the polls on November 8, 2015 (the "2015 Elections") to elect members of the upper and lower houses of the national legislature and 14 state and regional legislatures.  The 2015 Elections witnessed participation by the National League for Democracy (the "NLD") (headed by Aung San Suu Kyi), which had boycotted the 2010 general elections.  Based on the preliminary results released through November 15, 2015, the NLD has secured an overwhelming majority of the seats of the national legislature (referred to as the Pyidaungsu Hluttaw).  The members of the newly elected national legislature will elect the next President of Myanmar to lead the new Myanmar Government from April 1, 2016.  Given the majority secured by the NLD, the next President of Myanmar is likely to be a candidate nominated by the NLD.  Under the current constitution of Myanmar, Ms. Suu Kyi is ineligible to become the President of Myanmar (as her sons are not citizens of Myanmar).  However, Ms. Suu Kyi had indicated, even before polls opened, that the new President would be very much a nominee and would operate under her direction and that of the NLD.   

It is significant to note that Myanmar’s armed forces will continue to exercise significant control over political and constitutional reforms in Myanmar even after the 2015 Elections, as a quarter of the seats of these legislatures continue to be reserved for members of the armed forces.  While international monitors have noted serious irregularities and shortcomings in Myanmar’s electoral systems, the conclusion of the 2015 Elections and a smooth transition to the new Myanmar Government would mark a significant step in Myanmar’s political and economic transformation.  The nature of the transition is likely to influence the international sanctions measures applicable to Myanmar, including sanctions imposed by the United States. 

The United States began imposing sanctions in relation to Myanmar in 1997 in response to the Myanmar military junta’s repression of democratic opposition.  These sanctions measures were increased through the passage of the Burmese Freedom and Democracy Act of 2003, Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008 and numerous executive orders issued by the President.  Pursuant to the commencement of democratic reforms in Myanmar (including the conduct of the 2010 general elections), the United States began easing sanctions measures applicable to Myanmar. 

The Myanmar sanctions measures currently imposed by the United States restrict the dealings of United States citizens and permanent residents, wherever located, entities organized under United States federal, state or local laws (including foreign branches) and any person in the United States (collectively "US persons"), and include restrictions on the import of jadeite or rubies mined or extracted from Myanmar, new investment in Myanmar involving the Burmese Ministry of Defense, including the Office of Procurement, any state or non-state armed group, or any entity in which any of the foregoing own a 50 percent or greater interest, and trade in defense articles and defense services with Myanmar. 

US persons are also still prohibited from dealing with Myanmar nationals and entities listed on the "Specially Designated Nationals and Blocked Persons List" (each such entity or individual, an "SDN") administered by the U.S. Office of Foreign Assets Control, most of whom are listed as SDNs based on their association with the Myanmar military junta.  Further, US persons are also prohibited from having dealings with any entity that is 50-percent or more owned by an SDN.  These prohibitions restrict the ability of US persons to tap into one of the fastest-growing markets in the world and impose significant compliance challenges for corporations intending to do business in Myanmar.  For example, the soon-to-be-launched Yangon Stock Exchange ("YSX") is a three-way joint venture, in which the Myanmar Economic Bank, an SDN, has a 51-percent stake.  There are doubts regarding the legal status of the YSX, and various stakeholders will naturally be concerned about dealing with a "sanctioned" entity in the absence of a specific license from OFAC in relation to transactions with the YSX.  While trade between the United States and Myanmar has increased significantly since sanctions began to be eased in 2011, growth in trade numbers and trade financing has been held back by such uncertainties and concerns.

The United States Government has also sought to promote responsible investments by imposing a notification obligation on US persons making certain new investments in Myanmar, and annual reporting obligation on US persons whose aggregate investments exceed $500,000.

While the United States Government has clarified that it seeks to use the information to assess the impact of new investments on the political transition in Myanmar and not to give rise to any liability beyond "that which exists under laws of the United States," concerns in relation to the use of reported information continue to linger for companies that are complying with these obligations. 

The United States Government has welcomed recent developments in Myanmar including the recently inked ceasefire agreement between the Myanmar Government and some of the ethnic armed groups and the conduct of the 2015 Elections.  Senior officials have recently indicated that fair conduct of the 2015 Elections will be beneficial for Myanmar from the perspective of sanctions measures.  We expect a calibrated easing of sanctions to promote better trade and investment ties between Myanmar and the United States.  The easing might include concrete measures to reduce uncertainties for legitimate business transactions and delisting of more Myanmar nationals and entities from the SDN list. 

Gibson, Dunn & Crutcher LLP


Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding the above developments.  Please contact the Gibson Dunn lawyer with whom you usually work, or the authors:

Judith A. Lee – Washington, D.C. (+1 202-887-3591, [email protected])
Robert S. Pé – Hong Kong (+852 2214 3768, [email protected])
Adam M. Smith – Washington, D.C. (+1 202-887-3547, [email protected])
David A. Wolber – Washington, D.C. (+1 202-887-3727, [email protected])
Karthik Ashwin Thiagarajan – Singapore (+65 6507 3636, [email protected])

Please also feel free to contact any of the following leaders and members of the International Trade Group:

United States:
Ronald Kirk – Dallas (+1 214-698-3295, [email protected])
Jose W. Fernandez – New York (+1 212-351-2376, [email protected])
Marcellus A. McRae – Los Angeles (+1 213-229-7675, [email protected])
Daniel P. Chung – Washington, D.C. (+1 202-887-3729, [email protected])
Lindsay M. PaulinWashington, D.C. (+1 202-887-3701, [email protected])

Peter Alexiadis – Brussels (+32 2 554 72 00, [email protected])
Attila Borsos – Brussels (+32 2 554 72 10, [email protected])
Patrick Doris – London (+44 (0)207 071 4276, [email protected])
Penny Madden – London (+44 (0)20 7071 4226, [email protected])
Mark Handley – London (+44 (0)207 071 4277, [email protected])

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