Doing Business in MyanmarTIN AYE HAN, DEPUTY DIRECTOR, DICA, REPUBLIC OF THE UNION OF MYANMAR
Contents 1 Formation of MIC 8 2 Policies of MIC 3 Criterion of MIC 10 4 Provisions of FILaw 11 5 Mode of Doing Business 12 6 Incorporation of company 13 7 14
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 Chairman Union Minister for President Office (3) H.E U Aung Min Member Union Minister for President Office (4) H.E U Hla Htun Member Union Minister for President Office (6) Dr Htun Shin Member Union Attorney General Union Attorney General’s Office Dr. Aung Htun Thet Member Economist U Nyunt Tin Member Ambassador (Retired)
Formation of Investment Commission (Cont.) U Win Khaing Member Chairman of the Myanmar Engineering Association Daw Mya Thuza Member Advisor Daw Khine Khine Nwe Member Entrepreneur H. E U Tin Naing Thein Secretary Union Minsiter for the President Office (5) H. E Thura U Thaung Lwin Joint Secretary Deputy Minister for Rail Transportation
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
Form of Investment 1 A Citizen 100% or Foreign 2 Concerned Owned Government Organization Joint Venture 3 Any System contained in the Contract agreed by both parties
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.) Exemption/Relief of Customs Duties and/or Other Internal Taxes Imported machinery & equipment - construction period Imported raw material - first 3 years of commercial production
Exemptions and Reliefs (Cont.) Exemption/Relief of Customs Duties and/or Other Internal Taxes Imported machinery & equipment (volume of investment is increased and original investment business is expanded during the permitted) 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) Depending on the business, type of 10 Years Land business and (First Renewal) Leaseinvestment amount 10 Years (Second Renewal)
Right to Transfer Foreign Currency Foreign currency Net Profit entitled to by the person Foreign currency Legitimate permitted for Balance withdrawal by the MIC Through The Banks that can Operate the Foreign Banking
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 MIC Permit Start enjoy incentivesBusiness Company Incorporation Registration/ Start no incentives Permit
Incorporation of CompaniesLaws 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 CompaniesTypes of Businesses1. Industry and Manufacturing2. Hotel3. Construction4. Services5. Travels & Tours6. Bank Representative7. 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 CompaniesAct, 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 InIndustry and Manufacturing BusinessHotel Business US$ 150000Construction BusinessServicesTravels and Tours US$ 50000Bank RepresentativeInsurance Representative
Settlement of Dispute For more information; www.dica.gov.mm
Thank YouTIN AYE HAN, DEPUTY DIRECTOR, DICA, REPUBLIC OF THE UNION OF MYANMAR