7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 1/12
iAdvisory Seminar Series - Doing Business in Myanmar
The New Foreign Investment Lawand its Implications9 July 2012
Presentation by Andrew Ong
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 2/12
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 3/12
Myanmar's foreign investment legal framework
(1) Foreign Investment Law (“FIL”) of the Republic of the Union of Myanmar, 1988
(2) Myanmar Citizens Investment Law of the Republic of the Union of Myanmar
(3) Dawei Special Economic Zone (“SEZ”) Law
(4) Thilawa and Kyaukphyu Special Economic Zone Law of the Republic of the Union
of M anmar to be develo ed
Background to Myanmar’s Investment Laws
• FIL governs foreign investments in general
• SEZ laws operate exclusively in the SEZ, to the exclusion of other laws
• SEZs are more investment friendly due to SEZ laws
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 4/12
• Myanmar officials recently revealed new version of FIL, initially expected in
January, could be delayed further
• Latest indications are that new FIL will be ready in the coming months
• New FIL arguably more investor friendly than current SEZ laws
Myanmar’s FIL – a Laborious Process
• Revised SEZ laws previously expected in early July – will not emerge for another
4 – 5 months
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 5/12
• Reasons for delay in release of new FIL:
FIL still subject to further discussions in current legislative session – approval of
President Thein Sein required
Various external entities/ ministries involved: e.g. tax aspects of the new FIL will
require involvement of the Tax Bureau, employment laws in the FIL need to be
settled in conjunction with the Ministry of Manpower
Myanmar’s FIL – a Laborious Process (cont’d)
• Reasons for delay in release of SEZ laws:
SEZ law is problematic and is being revised with the help of Japanese consultants
Basic concept has changed – three large SEZs and at least 18 smaller industrial
zones are to be created
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 6/12
What to expect from the new FIL
•
5 year tax exemption period for foreign companies, up from 3 years under the 1988FIL
• Exemption or relief from income-tax on profits of the business (provided re-
Myanmar’s FIL – a Laborious Process (Cont’d)
• Exemption from duties on imported raw materials for the first 3 years of
commercial production and operation
• Foreigners will be entitled to lease land for an initial period of up to 50 years, upfrom 30 years under the 1988 FIL. Lease can be renewed for 2 rounds of 10 years
each
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 7/12
What to expect from the new FIL (cont’d)
• All unskilled workers in foreign firms must be Burmese
• After the first 5 years from the commencement of business, 25% of the skilled
Myanmar’s FIL – a Laborious Process (Cont’d)
.
the second 5 year term, and 75% after the third 5 year term
• No nationalisation of foreign business during contract period - if this occurs,
compensation provided based on prevailing market price
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 8/12
Minimum Capital Requirements
• US$500,000 (Industry)
• US$300,000 (Service)
Shareholding
Myanmar’s FIL – Other Key Aspects
case of joint venture with local party
Process
• Approval from MIC before application for Permit
to Trade and incorporation of company
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 9/12
• For high profile projects:
New FIL will be advantageous to foreign investors
Investors should arrange for meetings with the relevant Ministry and Myanmar
Investment Commission to discuss the project
• For setting up representative offices: Not directly impacted by FIL
Implications if New FIL not Passed
• Existing protection from nationalisation: Myanmar is a party to the ASEAN Investment Protection Agreement 1987 and
its successor, the ASEAN Comprehensive Investment Agreement 2009 (not yet
in force), which prevent member states from expropriating/nationalising
covered investments
• Mandalay Brewery case
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 10/12
Key policies of the Myanmar government when administering foreign
investment laws:
•Desire for foreigners to bring technology/ technological improvements to Myanmar
•Job creation through foreign investment
Key Policies for the Myanmar Government
•Investments in rural areas
•Foreign investment not at expense of environmental sustainability, e.g.
– Myitsone dam project was suspended in September 2011 partly due to its
environmental impact – 400MW coal-fired power plant in Dawei suspended in January 2012
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 11/12
• Lack of transparent regulations
• Disconnect between written law and practice in certain instances
• Bureaucratic processes (e.g. 3 to 6 months needed to set up a company)
Regulatory Challenges of Doing Business in Myanmar
•
Necessity to approach sectoral authorities/ ministries at an early stage
• Foreign law compliance, eg. anti-bribery laws
•
Enforceability issues (Myanmar is not a signatory to the NY Convention)
• Understaffed governmental bodies (e.g. in the Central Bank)
7/29/2019 The New Foreign Investment Law and Its Implications
http://slidepdf.com/reader/full/the-new-foreign-investment-law-and-its-implications 12/12