Transcript New Foreign Investment Law & Procedures

Ms. Cho Cho Wynn
Deputy Director General
Directorate of Investment
and Company Administration
- Investment Situation in Myanmar
- New Economic Measures Introduced to Create a
Better Investment Climate
- Foreign Investment Law 2012 and its Rules
- Doing Business in Myanmar
Investment Situation in Myanmar
Foreign Investment of Permitted Enterprises
As of 31 September 2013
Sr.
Particulars
No.
1
2
3
4
5
6
7
8
9
10
11
12
Power
Oil and Gas
Mining
Manufacturing
Hotel and Tourism
Real Estate
Livestock & Fisheries
Transport & Communication
Industrial Estate
Agriculture
Construction
Other Services
Total
( US $ in million )
Permitted Enterprises
No.
Approved
%
Amount
6
19237.921
43.99
115
14372.272
32.86
68
2833.734
6.48
286
3441.165
7.87
49
1595.211
3.65
21
1129.323
2.58
26
347.474
0.79
16
313.906
0.72
3
193.113
0.44
12
191.961
0.44
2
37.767
0.09
12
41.892
0.10
616
43735.739
100.00
Foreign Investment of Permitted Enterprises
As of 30 September 2013
Sr.
Particulars
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
China
Thailand
Hong Kong
U.K *
Republic of Korea *
Singapore
Malaysia
Viet Nam***
France
India
Japan
The Netherlands
U.S.A
Indonesia
Philippine
Russia Federation
( US $ in million )
Permitted Enterprises
No.
Approved
%
Amount
51
14193.395
32.45
69
9984.012
22.83
61
6458.979
14.77
62
3055.518
6.99
84
3044.678
6.96
94
2437.866
5.57
46
1625.861
3.72
6
511.186
1.17
3
474.360
1.08
9
283.100
0.65
39
277.282
0.63
7
249.136
0.57
15
243.565
0.56
12
241.497
0.55
2
146.667
0.34
2
94.000
0.21
Foreign Investment of Permitted Enterprises
As of 30 September 2013
Sr.
Particulars
No.
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Australia
Austria
Panama
United Arab Emirates
Canada
Mauritius
Germany
Republic of Liberia **
Denmark
Cyprus
Macau
Switzerland
Bangladesh
Israel
Brunei Darussalam
Sri Lanka
Luxembourg
Total
( US $ in million )
Permitted Enterprises
No.
Approved
%
Amount
14
99.246
0.23
2
72.500
0.17
2
55.101
0.13
1
41.000
0.09
16
41.883
2
30.575
0.07
2
17.500
0.04
2
14.600
0.03
1
13.370
0.03
1
5.250
0.01
2
4.400
0.01
1
3.382
0.01
2
2.957
0.01
1
2.400
0.01
3
4.273
0.01
1
1.000
0.00
1
5.200
0.01
616
43735.739
99.90
Foreign Investments in Myanmar
Foreign Direct Investment Flow into Myanmar from 1988-89 to 2013 (Sept)
19998.97
20000
18000
16000
14000
12000
10000
8000
7394.78
6065.68
6000
4644.46
4000
2000
19.00
86.95
91.17
158.28
719.70
984.76
205.72
329.58
1419.47
1617.22
0
US$ in Million
Source: DICA
7
FDI inflows in the fiscal year 2010-11
US $ in million
138.75
1396.077
66.321
Energy(12)
10179.3
8281.52
Hydropower(2)
Mining (3)
Agriculture(3)
Manufacturing
(4)
Source: DICA
FDI inflows in the fiscal year 2011-12
US $ in million
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Source: DICA
4343.00
247.697
32.254
19.897
0.634
FDI inflows in the fiscal year 2012-13
US $ in million
300
300
250
200
150
193.778
150.077
118.9
100
50
0
Source: DICA
15.334
9.65
5.6
1.006
FDI inflows in the fiscal year
(April 2013- September 2013)
US$ Million
1400.00
1200.00
1272.75
1000.00
800.00
600.00
400.00
200.00
0.00
Source: DICA
230.40
72.87
24.52
9.21
4.04
3.44
New Economic Measures Introduced to Create a
Better Investment Climate
Legal and Administrative Measures
 notification no. 39/2011 relating to the right to use land
According to notification no. 39/2011, investors can lease the
land not only from the State but also from private
 notification no. 40/2011 relating to the foreign currencies
 organized Technical Team in July, 2011 (transformed into
Project Appraisal Team in early 2013)
 reorganized Myanmar Investment Commission in September,
2012
 enacted new FDI Law on 2nd Nov, 2012
 Enacted FI Rules on 31 January 2013
Formation of Myanmar Investment Commission
H.E U Win Shein
Union Minister for Ministry of Finance
Chairman
H.E U Win Htun
Union Minister for Ministry of Environmental Conservation
& Forestry
Member
H.E U Zayar Aung
Union Minister for Ministry of Energy
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
Source: DICA
14
Formation of Myanmar Investment Commission
U Win Khaing
Chairman of the Myanmar Engineering Association
Member
Daw Mya Thuza
Deputy Director General (Retired), DICA
Member
Daw Khine Khine Nwe
Entrepreneur
Member
H. E Dr .Kan Zaw
Union Minsiter for Ministry of National Planning & Economic
Development
Secretary
H. E Thura U Thaung Lwin
Deputy Minister for Rail Transportation (Retired)
Joint Secretary
Source: DICA
15
Foreign Investment Law 2012 and Its Rules
Restricted Economic Activities
 Economic activities stipulated by MIC with the prior approval of Union Government.
 Totally 11 restricted economic business/activities are designated as follow:-
 Business be harmful to traditional culture and customs, public health and environment and
ecosystem
 Business brought the hazardous or poisonous wastes
 Factories or business produce or use hazardous chemicals under international agreements
 Manufacturing and Services allowed to carry out by only Citizens
 Business which are under experiment or unapproved technologies, medicines, apparatus
equipment
 Agricultural business both short or long term, Livestock breeding & Marine Fishing be
allowed to carry out by only Citizens
 Not allow to business within 10 miles around boundary line with neighboring countries ,
except industry zones approved by MIC
 MIC may grant to allow economic activities with the prior approval of the Union Government
for the interest of the State and the People.
17
Foreign Investment Law
Forms of Investment
1
2
A Citizen
or
Concerned
Government
Organization
100%
Foreign
Owned
Joint
Venture
3
Any System
Included in
the Mutually
Agreed
Contract
18
Foreign Investment Law
Tax Incentives
 MIC may grant any or more than one or all of the remaining exemption or reliefs from
taxes:-
(a)
Income-tax for a period extending to 5 consecutive years,
(b)
Income-tax on profits that are re-invested within one year
(c)
Right to deduct depreciation on machinery, equipment, building or other capital
assets
(d)
Up to 50 percent income tax relief for profits earned from exported products
(e)
Right to pay income-tax on the income of the foreigners at the same rates that
applicable to citizens
(f)
Right to deduct expenses from the assessable income incurred for research and
development
19
Foreign Investment Law
Tax Incentives (Cont.)
(g) Right to carry forward losses incurred within two years following the
expiry of the above mentioned five-year tax holiday, with the carryforward period lasting up to 3 years
(h) Customs duty relief for (i) imported machinery, equipment, and
materials that are actually required for use during the period of
construction; (ii) raw materials imported for the first 3 years
commercial production after the completion of construction (iii)
imported machinery, equipment and materials that are necessary for
use in its expanded work if the amount of investment is increased
and the original enterprise is extended
(i) Exemption or relief from commercial tax on the products to export.
20
Foreign Investment Law 2012
Appointment of Personnel and Employees
 appoint Citizens
employees, technicians and service personnel
businesses as follows :

(a)
First 2 years
25%

(b)
Second 2 years
50%

(c)
Third 2 years
for skilled
75%
 Arrange to provide necessary vocational training and practicing training to
Citizen employees in order to upgrade their skills
 Appoint only Citizens at the works in which expertise is not required;
 Carry out labor recruitment through the Work and Labor Recruitment
Office, local labor recruitment agents or by own arrangement;
 Employ, in employing citizen skilled workers, technicians and staff, by signing
the employment agreement mutually between the employer and employee in
accord with the existing Labor Laws and Rules;
Foreign Investment Law 2012
Appointment of Personnel and Employees (Cont.)
 Grant equitable treatment both Local Citizen employee and Foreign
employee in respect to salary and rights at technician rank.
 The foreigners working in permit investment enterprise may apply work
permit certificate , stay permit certificate issued by the State through MIC
 Investor shall: Make a employment agreement in accordance with the stipulations in
appointing personnel and employees;
 Carry out for enjoyable rights contained in the existing Labor Laws and
rules including minimum wages and salary, leave, holiday, overtime fee,
damages, workman’s compensation, social welfare and other insurance
relating to employees in stipulating the rights and duties of employers
 Settle the dispute arisen among employers, among employees, between
employers and technician or service personnel in accord with the relevant
existing laws.
Foreign Investment Law 2012
Right to Use Land
50 Years
(For Initial Period)
Depending on the
business, type of
business and
investment amount
10 Years
(First Renewal)
Land
Lease
10 Years
(Second Renewal)
23
Foreign Investment Law 2012
Right to Transfer Foreign Currency
Foreign
currency
entitled to by
the person
Net Profit
Foreign
currency
permitted for
withdrawal by
the MIC
Legitimate
Balance
Through
The Banks that can Operate the Foreign
Banking
24
Foreign Investment Law 2012
Guarantees
The Union Government guarantees as follow: against nationalization
 against termination of investment during the permitted
term
 to transfer the entitled Foreign Capital to investor on the
expiry of the term of the contract
Establishment of the One-Stop Service Center
 Rules to implement the FIL was enacted on 31 January 2013.
 As prescribed in the Chap VII(14) of FIL and Chapter (XIX) Rule(157), MIC
has formed the Departmental Cooperation Team comprised of officials from
DICA, Ministry of Commerce, Ministry of Finance (Customs Internal Revenue),
Ministry of Immigration & Population, Ministry of Labour, Ministry of Industry,
Department of Industrial Administration and Inspection, Ministry of Electric Power,
Central Bank of Myanmar, Ministry of Mines, Ministry of Agriculture & Irrigation,
Ministry of Livestock & Fisheries, Ministry of Forestry & Environmental
Conservation
 To facilitate the promotion of investment, enhance working processes and to
carryout onsite inspections, the One-Stop Service Center for Investment and
Company Registration was established on 10th April 2013 in Yangon.
 Venue of OSS Office is No. 1, Kanbe street (Thitsar Street), Yankin Township,
Yangon Region
26
Establishment of the One-Stop Service Center : Location
No. 1, Thitsar Street, Yankin Township, Yangon
Responsibilities of the One-Stop Service Center

To facilitate the following processes in one location:
1.
To Accept and Appraise the submitted proposals,
2.
To issue export/import permits,
3.
To facilitate Customs Clearance processes,
4.
To provide knowledge and advice concerning tax-related matters,
5.
To facilitate visa and immigration processes,
6.
To facilitate labor-related matters,
7.
To facilitate industrial registration process,
8.
To assist in facilitation of necessary electric power supply,
9.
To assist in facilitation of remittance abroad.
Responsibilities of the One-Stop Service Center

To provide advice to investors regarding investments in respective
industries.

To facilitate company registration and registration extensions .

To meet with foreign economic delegations and from international
organizations to explain about investment and related issues.

To carry out inspections and follow-up recommendations as per
directrative of the MIC.

To carry out other directratives and instructions from the MIC.
Doing Business in Myanmar
Doing Business in Myanmar
MIC Sec Office
(Nay Pyi Taw)
OSS (Yangon)
Permit
Business
Company Registration
start
Enjoy Incentives
Registration Permit
Ministry of Commerce
Application Procedure for Foreign Investment
Latest audited financial accounts
Preliminary appraisal of proposal
From Investment Information team
Bank reference and recommendation of
investor’s business standing
Economic justification of the proposed
project
Submit proposal
To MIC
Approval from the Cabinet(Only Resource
based investment)
MIC grants and approves issuance of
a Permit to carry out business
Draft Contract to be executed with the State
organization for the wholly foreign owned
Draft contract between the partners for the
joint-venture
Draft land lease agreement
Draft Memorandum and Articles of
Association
An application for exemptions and relief
defined under Section 21 of the FIL
Procedures and Documentary Requirements for Business Permit
Application for Permit ( Affixed K.1000/- court fee stamp)
Apply for Business Permit from
Ministry of National Planning and
Economic Development
Application Form A (2) copies(Duly filled up signed)
List of intended business activities that will be carried out in
the Republic of the Union of Myanmar (To mention only
specific business)
Approval from the EC
Statement of compliance for initial capital brought in.
Original Bank statement for each shareholder or shareholder
Company
Passport copy or NRC copy of each shareholders and directors.
Memorandum and Articles of Association. (Copy)
Board of Director’s Resolution if shareholder is a
company
Procedures and Documentary Requirements for Company Registration
Memorandum and Articles of Association
Declaration of Registration
Apply for Company Registration from
Ministry of National Planning and
Economic Development
Declaration of Registered Office
Declaration of Legal Version
Approval from the EC
List of intended business activities (To
mention only specific business)
Certificate of Translation
List of Directors (Form 26)
Passport copy or NRC copy of each shareholders
and directors.
Example for Application Procedure for Investment Proposal : Project under JV with
Government Agency
PSC Agreement/PPP,
IPP BOT /JV
Contract
(Draft)
Investment
Proposal
Ministry
concwerned
Map of
Contract
Area
Recommendation
Letters
Company ‘s
Profiles/
Bank
Statement
Environment
Management
Plan
MIC
Conclusion
Abide the
local laws
Respect Labor
rights/ human
rights
Upgrade
living
standards/
livelihoods
Investment
Proposal
Protect ion
&
conservation
environment
Social
Impact
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