Overview
On 9 March 2026, the Office of the National Defence and Security Council issued Directive No. 1/2026 (the “Directive“) with the objective of ensuring uniform procedures in relation to the short-term lease or long-term lease of land, buildings, and other assets managed by departments or organizations for the benefit of the State, and to enable the effective implementation of investment activities.
The Directive applies across a broad range of State counterparties. “Department or Organization” is defined to include any Union Ministry, Union-level organization, Nay Pyi Taw Council, or any Region or State Government. In addition to land and buildings, “Other Assets” encompasses movable properties including vehicles, machinery, equipment, and accessories, as well as properties such as shipyards and port jetties. This makes the Directive broadly relevant to investors across manufacturing, logistics, maritime, and infrastructure sectors.
Key Commercial Benefits
1. Long Lease Terms of Up to 40 Years
A Long-term Lease is defined as a continuous lease for a term exceeding five years, up to a total lease term of 30+5+5 years. For long-term lease matters, the initial lease term may be granted for 30 years with extensions of five years at a time, and if further extension is required, two additional extensions of five years each may be granted. This provides investors with a potential maximum aggregate term of 40 years, offering meaningful tenure security for capital-intensive projects.
Investors should note that the Myanmar Investment Law provides for even longer lease terms in certain circumstances. An investor who obtains a Permit or Endorsement from the Myanmar Investment Commission (the “MIC”) has the right to obtain a long-term lease of land or buildings from private land or buildings owned by citizens, or from land or buildings managed or owned by the Government or government departments and organizations. Foreign investors may lease land or buildings for an initial period of up to 50 years from the date of receipt of the MIC Permit or Endorsement, with two consecutive extensions of 10 years each subject to MIC approval, allowing for a potential maximum lease term of 70 years under the MIL framework. The interaction between these two frameworks should be carefully considered when structuring land access arrangements.
2. Three Pathways for Long-Term Access
The Directive establishes three distinct routes by which investors may access State-managed assets on a long-term basis:
- Government Solicited Proposal: A long-term lease for investment through joint venture with an individual, company, or organization may be carried out by way of a government solicited proposal.
- Unsolicited Proposal: A long-term lease for investment through joint venture may also be carried out by submission of an unsolicited proposal without invitation by the Government. If approval in principle is granted, the relevant Department or Organization shall, in accordance with the existing directives and procedures, conduct direct negotiations, invite competitive tenders, or Swiss Challenge tenders. Critically, if no tender applications are submitted, the relevant Department or Organization may designate the individual, company, or organization that originally submitted the proposal as the successful tenderer, providing a meaningful first mover advantage for proactive investors.
- Long-Term Lease without Joint Venture: A long-term lease may also be carried out to an individual, company, or organization without entering into a joint venture arrangement.
3. Concessional Rental Rates for Priority Businesses
One of the most commercially significant features of the Directive is the ability for certain investors to benefit from below-market rental terms. In determining the rental rate, where the business to be carried out is considered a priority business that contributes to the development of State investment and supports the State economy, consideration may be given to relaxing the requirement to determine the rental rate based on the prevailing local market rate. The same flexibility applies equally to short-term leases. Investors operating in sectors aligned with national economic development priorities should formally assess and articulate their eligibility for this concession.
4. Extension Rights for Existing Operators
Where the existing operator of land and buildings leased under a short-term lease agreement submits a well-grounded request for continued lease upon expiry of the lease term, and where the business being carried out is considered a priority business that contributes to the development of State investment and supports the State economy, permission may be granted for extension of the lease, provided that each extension does not exceed five years, and limitations on the number of extensions may also be prescribed.
For long-term leases, if both parties agree to continue the original lease agreement by extension, the Department or Organization shall prepare for extension at least six months prior to the expiry of the contract term. Existing operators should note these lead times and plan well in advance of approaching expiry dates.
Implications for Existing and Future Investments
Existing investments: Businesses already being carried out in accordance with existing directives and procedures before issuance of the Directive, businesses for which tenders have already been invited, and businesses which have reached the stage of contract execution following tender procedures shall continue to be carried out in accordance with the relevant existing directives and procedures. However, from the date of issuance of the Directive, any directives or notifications inconsistent with the Directive shall be superseded by it. Existing investors approaching lease renewals, extensions, or modifications should therefore assess their arrangements against the new framework without delay. Where investors seek to modify leased assets during the lease term, prior approval from the Office of the National Defence and Security Council is required before any alteration, expansion, construction, repair, or upgrade may be carried out.
Future investments: All three long-term lease procedures under the Directive require engagement with the MIC. Investors shall, through the relevant Department or Organization, submit an application to the MIC, which shall examine and facilitate alignment of the business structure, including the appropriateness of the investment structure, contractual framework, and implementation methods of the project, before the lease agreement can be executed. Investors should note that short-term leases of five years or less do not require a MIC Permit under the Myanmar Investment Law, whereas long-term leases will. Importantly, Land Rights Authorization and Tax Incentive applications may be submitted concurrently with a Permit or Endorsement application, enabling investors to consolidate and accelerate the overall approval process.
Recommended Actions
Investors with existing or prospective interests in State-managed land, buildings, or other assets in Myanmar should review their lease arrangements against the new Directive’s procedural requirements, assess their priority business status for eligibility for concessional rental rates, and consider the unsolicited proposal route as a proactive strategy to secure preferred access to specific assets. Given the multi-agency consultation process and tiered approval requirements that must be completed before a long-term lease agreement can be executed, investors are strongly advised to engage legal counsel early, submit Land Rights Authorization and Tax Incentive applications concurrently with their Permit or Endorsement applications to the MIC, and verify in advance any applicable international sanctions exposure that may affect the proposed transaction or investment.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
