Doing Business in Myanmar

TIN AYE HAN, DEPUTY DIRECTOR, DICA, REPUBLIC OF THE UNION OF MYANMAR

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Contents

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Formation of MIC

Mode of Doing Business

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Incorporation of company

Policies of MIC

Criterion of MIC

Provisions of FILaw

New Foreign Investment Law

enacted on 2nd November

2012.

Procedures were issued on

31st Janauary 2013.

Formation of Investment Commission According to the Notification No(70/2012) dated on 23rd September 2012,in order

to monitor the provisions of the existing Investment Laws, the government of the Republic of the Union of Myanmar reorganizes the Myanmar Investment Commission as follows:

H.E U Soe Thane Union Minister for President Office (3)

Chairman

H.E U Aung Min Union Minister for President Office (4)

Member

H.E U Hla Htun Union Minister for President Office (6)

Member

Dr Htun Shin Union Attorney General Union Attorney General’s Office

Member

Dr. Aung Htun Thet Economist

Member

U Nyunt Tin Ambassador (Retired)

Member

U Win Khaing Chairman of the Myanmar Engineering Association

Member

Daw Mya Thuza Advisor

Member

Daw Khine Khine Nwe Entrepreneur

Member

H. E U Tin Naing Thein Union Minsiter for the President Office (5)

Secretary

H. E Thura U Thaung Lwin Deputy Minister for Rail Transportation

Joint Secretary

Formation of Investment Commission (Cont.)

Policies of MIC

Not to affect on:

interest of State and people

National dignity

Sovereignty

Environment

Criterion for Foreign Investment

Safeguard of environment conservation

Transparency and accountability in financial matters

Create job opportunities

Abide existing labor law

Support corporate social responsibilities consistent with regional and international standard and agreements

Transfer of Technology

Encourage and create level playing field among investors

Provisions of New Foreign Investment Law

Form of Investment

100% Foreign Owned

Joint Venture

A Citizen or

Concerned Government Organization

Any System contained in the Contract

agreed by both parties

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Economic Activities

Prohibited economic activities

Economic activities to be carried out by JV system

Economic activities opened with restriction

- 100% or JV basis

- JV with Government

If investor does JV with local person in prohibited or restricted activity, foreign equity must not be more than 80%

Application for Permit

The MIC;-

(a) May accept or refuse the proposal within 15 days

(b) Shall allow or refuse the proposal within 90 days to the person who submit the proposal if the proposal is accepted.

Application Procedure

Fill up prescribed form(1) signed by promoter

100 % Draft contract or JV Contract

Draft Lease agreement

EIA/SIA report ( big project)

For resource-based industry, submit through concerned Ministries

For non-resource based, submit directly to MIC

Technical Team

Officials from MNPED : DICA, PAPRD Ministry of Finance & revenue: Customs, Internal Revenue Dept Ministry of labour: Ministry of Electric Power Ministry of Construction: DHSHD Ministry of Industry Ministry of Commerce Ministry of Conservation and Forest

If necessary, to be included experts from respective Ministries

Appointment of Staff and Workers

Appoint Citizens employees, technicians and service personnel for skilled businesses as follows : (a) First 2 years 25% (b) Second 2 years 50%

(c) Third 2 years 75%

Appointment of Staff and Workers (Cont.)

The foreigners who work at the investment business under the permit shall submit and apply for the work permit and the local residence permit issued by the Union.

The investor shall: (a) Conclude an employment agreement (b) Carry out to enjoy the rights contained in the existing labour laws and

rules and employment agreement; (c) Settle the disputes in accord with the relevant existing laws.

Exemptions and Reliefs

5 years tax holiday

Further tax exemption/relief for an appropriate

period in case if it is considered beneficial for the

State

Exemptions and Reliefs (Cont.)

Exemption or relief from income tax on profit which is reinvested within one year.

Right to accelerate depreciation in respect of capital assets used in business, at the rate fixed by the State for the purpose of income-tax assessment.

Relief from income tax up to 50 percent on the profit from exports.

Right to pay income tax of the foreign employees at the rate applicable to the citizens of Myanmar.

Right to deduct the research and development expenditure.

Right to carry forward and set off losses up to 3 consecutive years, from the year the loss is sustained.

Exemptions and Reliefs (Cont.)

Imported machinery & equipment - construction period

Imported raw material - first 3 years of

commercial production

Exemption/Relief of Customs Duties and/or Other Internal Taxes

Exemptions and Reliefs (Cont.)

Imported machinery & equipment

(volume of investment is increased and original investment business is expanded during the permitted)

Exemption/Relief of Customs Duties and/or Other Internal Taxes

Exemption/Relief of Commercial Tax

Exports

Guarantees

No nationalization and expropriation.

No termination during the permitted period.

Right to repatriation.

Right to Use Land

50 Years (For Initial Period)

10 Years (First Renewal)

10 Years (Second Renewal)

Depending on the business, type of

business and investment amount

Land Lease

Right to Transfer Foreign Currency

Through The Banks that can Operate the Foreign

Banking

Foreign currency

entitled to by the person

Foreign currency

permitted for withdrawal by

the MIC

Net Profit

Legitimate Balance

Miscellaneous

Investors under the 1988 FIL shall be deemed as investors under the 2012 FIL

Notwithstanding anything in any existing law, matters relating to any provision of this Law shall be carried out in accord with this Law. In a conflict between the FIL and an international treaty

ratified by Myanmar, the international treaty shall prevail.

Mode of Doing Business

Business

MIC

Company Incorporation

Permit Start enjoy incentives

Registration/ Permit

Start no incentives

Incorporation of Companies

Laws related to incorporation of companies - The Myanmar Companies Act 1914, - Special Companies Act 1950, - Myanmar Companies (Amendment) Act 1955 and - Myanmar Companies regulations 1957.

Incorporation of Foreign Companies

Types of Businesses

1. Industry and Manufacturing

2. Hotel

3. Construction

4. Services

5. Travels & Tours

6. Bank Representative

7. Insurance Representative

Note: It is required to acquire the permit of MIC for initiating the businesses of Industry

and Manufacturing and Hotel.

Incorporation of Joint Venture Company

• The Myanmar Companies Act

Foreigner/Foreign Company + Myanmar Citizen/Company

• The 1950 Special Company Act

Foreigner/Foreign Company + Myanmar Government /

SOE

Business Permit

According to the Section 27 (A) of the Myanmar Companies Act,

No foreign company shall carry on or continue its business in the Republic of the Union of Myanmar unless it has obtained a permit from the Ministry of National Planning and Economic Development.

Therefore, the foreign companies must follow the

laws, rules, regulations and procedures for applying permit, the basic principles of allowing permit and the formal requirements.

Capital Brought In

Industry and Manufacturing Business

Hotel Business

Construction Business

Services

Travels and Tours

Bank Representative

Insurance Representative

US$ 150000

US$ 50000

Settlement of Dispute

For more information;

www.dica.gov.mm

Thank You

TIN AYE HAN, DEPUTY DIRECTOR, DICA, REPUBLIC OF THE UNION OF MYANMAR