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Managing Foreign Investment in the Natural Resource Sectors

Lai Lai TheinDirector General,

Planning Department, Myanmar8 August 2012

• Introduction

• Current National Plan

• Foreign Direct Investment in Myanmar

• Environmental Mainstreaming

• Conclusion

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Introduction

China – 1347

India - 1220

Bangladesh-158

Thailand – 70

Laos – 6

Total – 2801

40% of World Population

Where Myanmar is!

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Introduction (continued)

• Rich in natural resources

•More than 100 national races

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Topography can roughly be divided into 3 parts: the

Western Hills Region, the Central Valley Region and the

Eastern Hills Region

Introduction (continued)

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Introduction (continued)

• New Administration launched end of March 2011

• Political and macro-economic reform

• Peace making activities

• Review law and regulation and promulgate the new

laws

• Second stage of reform – People Centered Approach

• Four policies have been adopted

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Introduction (continued)

• Sustaining agriculture development towards

industrialization and all round development;

• Balanced and proportionate development

among states and regions,

• Inclusive growth for entire population, and

• Quality and correctness of statistics

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National Plan

Sectoral Plan Regional Plan

14 States/RegionsUnion Territory

14 Sectors

Current National Plan

Sectors under Sectoral PlanAgricultureLivestock and FisheryForestry and Environmental

Conservation EnergyMiningProcessing and ManufacturingElectric PowerConstructionTransportCommunicationsTradeInvestment and FinanceSocial and Administrative SectorServices

Sectoral Plan

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14 Sectors’ contribution in GDP 2011-12 (Target)

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8.3

0.3

0.1

0.820.4

1.1

4.7

13.2

0.9

0.1 22

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Agriculture Livestock and Fisheries Forestry Energy Mining Processing and Manufacturing

Electric Power Construction Transport Communication Finance Social and Administration

Other Services Trade

Foreign Direct Investment in Myanmar

Myanmar has opened its doors for FDI in 1988 subsequently the

enactment of Foreign Investment Law on 30 November, 1988

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Investment Laws of Myanmar

The Union of Myanmar Foreign Investment Law (FIL) was enacted on 30 November 1988.

The Union of Myanmar Special Economic Zone Law was enacted in January 2011.

The Dawei Special Economic Zone Law was also enacted in January 2011 subsequently.

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FDI Policy in Myanmar

• Adoption of market oriented system for the

allocation of resources

• Encouragement of private investment and

entrepreneurial activity

• Opening of the economy for foreign trade and

investment

Investment Laws of Myanmar

100% Foreign Owned

35%

Any Myanmar Partner An Individual A Private Company

A Cooperative Society State Owned Enterprise

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Constraints for Foreign Investors

• Land can lease only state-owned land and buildings

for investment activities

• No one shall lease immoveable property to a foreigner

or a company owned by a foreigner for more than one

year

• There is no right for investors to make an account

transfer for payment transition

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Notifications

• Two notifications were issued for better

opportunities in doing business

• With the aim of facilitating investment procedures and getting better opportunities in doing business, Government issues two notifications relating to Land used and Foreign Currency.

The Transfer of Immoveable Property Restriction Law (Pyithu Hluttaw Law No. 1, 1987)

Republic of the Union of the Myanmar Notification of Concession Rights for Land Used relating to FIL (Notification No. 39/2011)

- No person shall lease to a foreigner or a company owned by a foreigner immoveable property for more than a year at a time

- Investor has a right of the grantee of land lease or land used from government owned land, governmental department, organization owned lands and citizen owned private lands

Notifications

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Existing FIL

Republic of the Union of the Myanmar Notification of Relating to foreign currency relevant with Foreign Investment Law (Notification No. 40/2011)

Foreign Capital brought in has to be evaluated at official exchange rate

Foreign Capital brought in can be exchange with prevailing market price

No rights to make account transfer for payment transition

Investor has the rights to make account transfer for payment transition

Notifications (Conted.)

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• According to notification, private can release

his or her own land and grant longer time for

utilization, and favorable condition for

foreign currency.

• FDI law and Special Economic Zone Law are

currently revising.

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Investments in Myanmar

Power46%

Oil and Gas35%

Mining7%Manu-

factur-ing4%

Hotel and

Tourism3%

Real Estate3%

Livestock & Fisheries1%

Transport & Communication1% Industrial Estate Agriculture Construction Other Services

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Investments in Myanmar

Foreign Investment of Permitted Enterprises as of (30/6/2012)(By Sector)

(US$ in Million)Sr.

Particulars No. Approved %

No. Amount

1 Power 5 19067.498 46.47

2 Oil and Gas 113 14181.972 34.57

3 Mining 66 2814.36 6.86

4 Manufacturing 170 1778.375 4.33

5 Hotel and Tourism 45 1064.811 2.60

6 Real Estate 19 1056.453 2.57

7 Livestock & Fisheries 25 324.358 0.79

8 Transport & Communication 16 313.906 0.77

9 Industrial Estate 3 193.113 0.47

10 Agriculture 7 173.101 0.42

11 Construction 2 37.767 0.09

12 Other Services 6 23.686 0.06

Total 477 41029.400 100.00

Permitted Enterprises

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Investments in Myanmar (Cont.)Foreign Investment of Permitted Enterprises as of (30/6/2012)

(By Country) (US$ in Million)Sr.

Particulars No. Approved %

No. Amount

1 China 34 14142.674 34.47

2 Thailand 61 9568.093 23.32

3 Hong Kong 40 6371.495 15.53

4 Republic of Korea 51 2954.105 7.20

5 U.K * 54 2799.185 6.82

6 Singapore 75 1824.651 4.45

7 Malaysia 41 1026.961 2.50

8 France 2 469.000 1.14

9 U.S.A 15 243.565 0.59

10 Indonesia 12 241.497 0.59

11 The Netherlands 5 238.835 0.58

12 Japan 25 216.940 0.53

13 India 6 262.000 0.64

14 Philippine 2 146.667 0.36

15 Russia Federation 2 94.000 0.23

16 Australia 14 82.080 0.20

17 Austria 2 72.500 0.18

18 Panama 2 55.101 0.13

19 Viet Nam 3 41.796 0.10

20 United Arab Emirates 1 41.000 0.10

21 Canada 14 39.781 0.10

22 Mauritius 2 30.575 0.07

23 Germany 2 17.500 0.04

24 Republic of Liberia** 2 14.600 0.04

25 Denmark 1 13.370 0.03

26 Cyprus 1 5.250 0.01

27 Macau 2 4.400 0.01

28 Switzerland 1 3.382 0.01

29 Bangladesh 2 2.957 0.01

30 Israel 1 2.400 0.01

31 Brunei Darussalam 1 2.040 0.00

32 Sri Lanka 1 1.000

477 41029.400 100.00* Inclusive of enterprises incorporated in British Virgin Islands, Bermuda Islands and

Cayman Islands.

** The name and promoter and principal organization be changed from Singapore to

Republic of Liberia.

Permitted Enterprises

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• Resource seeking investment is higher in

Myanmar

• Induced investment in agriculture, livestock and

fisheries, hotel and tourism, industrial estate,

electricity and other services• Potential land resources for the expansion of crop

areas• Less exploited in fishing and large mineral

potential

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• Downstream project in oil and gas sector

• High potential in hydropower

• Shortage of power supply and development of

power projects are needed

• EIF and SIF take into account

• Mining law is revising to preserve environment

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Environmental Mainstreaming

• Constitution prescribes to protect environment

• Article 45 states as “The Union shall protect and conserve

natural environment”.

• Article 390 (b) Every citizen has the duty to assist the Union in

carrying out environmental conservation

• Energy, Electricity, Mining and Forestry Sector is included in

SCHEDULE ONE, Union Legislative List “Environmental

protection and conservation including wildlife, natural plants

and natural areas” is prescribed under it.

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Environmental Mainstreaming

• Environmental Conversation has been taken place in poverty reduction and rural development objectives.

• Extraction of forestry products is limited to preserve the environment.

• FDI is not allowed for the extraction of teak and hard wood.

• Environmental law was promulgated in April 2012 to implement environmental policy.

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Conclusion• Managing for the effective utilization of natural

resources

• Economic and environmental impacts are also

considered

• Managing natural resources in Myanmar needs to

consider both the requirements for long-term

investment in a context of less abundant capital, as

well as the acute immediate needs for poverty

reduction and expansion of education, health and

other human development outcomes.

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Thank You