Reforms Related with Investment

Issued the notification No. 39/2011 relating to the right to use land

Declared the notification no. 40/2011 relating to the foreign currencies

Myanmar Investment Commission was reorganized with 11 members who are

not only from Government Sector but also from private sector, academic field

and researcher field.

The Union of Myanmar Foreign Investment Law (FIL) was enacted on

30 November 1988 and the parliament has approved a new foreign

investment law on 2nd November 2012.

The Special Economic Zone Law was also enacted in January 2011 and

is now proceeding for amendment.

Foreign Investment Priority Areas

labour intensive export-oriented projects

resource-based export-oriented value-added projects

Hi-tech and heavy investment

Form of Investment

100%

Foreign

Owned

Joint

Venture

A Citizen

or

Concerned

Government

Organization

Any System

Included in

the Mutually

Agreed

Contract

1

2

3

US Dollars 500,000/- for Manufacturing

US Dollars 300,000/- for Service

US Dollars 10 million for industrial mineral

US Dollars 15 million for metallic mineral

(Until the declaration of the required rules, regulations, procedures,

orders, notifications and directives by the Ministry of National Planning

and Economic Development)

Minimum Foreign Capital Requirements

Application for Permit

In order to obtain a investment permit, an investor or promoter may apply investment proposal to MIC in accordance with the stipulations.

The MIC;-

(a) May accept or refuse the proposal within 15 days after making necessary scrutiny if the proposal submitted under section 19 is obtained;

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

If the investor or the promoter obtains the permit issued by MIC, an investment shall be established after concluding necessary contract with relevant Government department and organization or person and organization.

MIC may, if it is applied by those relevant Government department, allow the extending, reducing, amending of the term of agreement contained in the Contract as appropriate in accord with this Law.

Document Requirement for Investment Proposal

An application form 1 in which proposed activity/ area, form of

investment, equity ratio, duration, estimated output, economic

justification etc.,.

A draft contract (100% or JV with a State organization or private

company )

A draft land lease agreement(if required);

For resource-based industries, to be submitted through concerned

Ministry

For other industries, to submit directly to MIC

Draft Memorandum and Articles of Association if it is a limited

company;

Bank reference and recommendation regarding the potential foreign

investor’s business standing;

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%

Arrange to provide necessary vocational training and practicing training to Citizen staff for improvement of the working skills

Appoint only Citizens for the works which do not require skill;

Carry out labor recruitment through the Labour Exchange Office or local labour exchange agencies or by the arrangement of the investors;

Appoint citizen skilled workers, technicians and staff by signing an employment agreement between the employer and worker in accord with the existing Labor Laws and Rules;

Administer the rights of causing not to differ the level of wages in appointing the Myanmar citizen staff like the foreigner staff as the allocation of expert level.

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 in accord with the stipulations

in appointing staff and workers;

(b) Carry out to enjoy the rights contained in the existing labour laws

and rules including minimum wages and salary, leave, holiday,

overtime fee, damages, workman’s compensation, social welfare and

other insurance relating to workers in stipulating the rights and

duties of employers and workers or the occupational terms and

conditions contained in the employment agreement;

(c) Settle the disputes arisen among employers, among workers,

between employers and workers and technicians or staff in accord

with the relevant existing laws.

Applicable /restricted or prohibited Business

Business stipulated by MIC, by notification, with the prior approval of Union Government

Totally 11 restricted or prohibited businesses are designated as follow:

Business which can affect the traditional culture and customs of the national races within the Union

Business which can affect the public health

Business which can cause damage to the natural environment and ecosystem

Business which can bring the hazardous or poisonous wastes into the Union

Factories which produce or the business which use hazardous chemicals under international agreements

Manufacturing business and services which can be carried out by the citizens by issuing rules

Business which can bring technologies, medicines, utensils paraphernalia which is testing in abroad or

not obtaining the approval to use

Business of farming agriculture, and short term or long term agricuture which can be carried out by

citizens by issuing rules

Business of breeding which can be carried out by citizens by issuing rules

Business of the Myanmar Marine Fisheries which can be carried out by citizens by issuing rules

Business of foreign investment to be carried out within 10 miles from borderline connecting the Union

territory and other countries except the areas stipulated as economic zone with the permission of the

Union Government

MIC may allow the restricted or prohibited investments for the interest of the Union and Citizen especially

the native people with the approval of the Union Government for the interest of the State and the People.

MIC shall, the foreign investment business which can cause great effect on the conditions of security,

economic, environment and social interest of the Union and citizens, submit to the Pyidaungsu Hluttaw

through the Union Government.

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

(Increasing business investment during the specified

period by the permission of the Commission)

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

The Myanmar Special Economic ZoneZone

Law

Production based businesses

Services business

Infrastructure construction businesses

Other businesses

- determined by the Central Body, with the approval of

the Government.

Incentives under the SEZ Law

Tax holiday - 5 years

Second 5 years - 50% relief on income tax –

overseas sale products

Third 5 years - 50% relief on income tax –

reinvestment obtained from

export sale

More applicable

Incentives under the SEZ Law

Imported raw material

Machineries

Equipment

Machineries

Vehicles

50% exemption for the next 5 consecutive years

Export Processing Zone

5 years

Industrial Zones

Monywa,

Kalay,

(2)

Magwe,

Pakhokku,

Yenanchaung

(3)

Pyay (1)

Pathein,

Myaungmya,

Hinthada

(3) Yangon

(4) Myeik

(1)

Phaan

(1)

Taungyi

(1)

Mandalay,

Myingyan,

Meikhtila

(3)

19 Industrial Zones are already developed

Mawlamyine

(1)

Industrial Zones

Tatkone

(1)

Ponnakyun (1) Myawaddy

(1)

Phaan

(1)

Mandalay

(Yadana Pone)

(1)

Muse

(1) 6 Industrial Zones to be established

Phaya Thone Zu

(1)

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.

The Directorate of Investment and Company

Administration is responsible for permission and

registration of the incorporation of companies.

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

Criterions of Investment

Protection of investors

Safeguard of environment conservation

Deeply emphasize on social impact

Transparency and accountability in financial matters

Create job opportunities

Abide existing labour law

Support corporate social responsibilities consistent

with regional and international standard and

agreements

Transfer of Technology

Market Economy

• All the entrances for sound business are opened

• Made reform for requirements and Extend

• Reduce the Centralization

• Reduce the barriers and bottleneck

• Cooperate the Public Private Partnership

• Invite the Foreign Direct Investment

• Active stakeholder support

• Facilitate Business and Facilitating Linkage

International Business Matchmaking Program

Investment Seminars

Overseas Missions

Interpretation

Consulting on Contract

Negotiation

Identifying Partners /

Match-Making

Consulting on Laws &

Regulations

Thank

You