The document summarizes two avenues for foreign investment in Myanmar - under the Myanmar Companies Act of 1914 and the new Foreign Investment Law of 2012. It provides details on ownership structures, capital requirements, tax incentives, land use rights, application processes, importing equipment, labor laws, foreign exchange, and dispute resolution for each law. Key sectors like electricity generation, oil and gas, and upcoming investment summits are also overviewed.

1. Investment in Myanmar
OLIVER MASSMANN - PARTNER
DUANE MORRIS SELVAM MYANMAR

2. Two Avenues for Investment in Myanmar
TheMyanmarCompaniesAct1914(the
“MCA”)
TheNewForeignInvestmentLaw(the“NewFIL”)waspromulgatedon2November2012;
TheMinistryofNationalPlanningand
EconomicDevelopmentPublishedtheForeign
InvestmentRules(the“FILRules”)on31
January2013;
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3. Investing Under the MCA
100% Foreign Ownership allowed for Service Companies;
Minimum of 2 Shareholders;
Minimum Registered Capital- US$50,000 (US$25,000 paid in initially; balance of US$25,000 over
initial license period of 3-5 years);
Corporate Profit Tax of 25%;
No special exemptions on customs duties for importing equipment and materials; and
No Long Term Land Use Rights
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4. Investment Capital Under New FIL
The New FIL does not set out specific capital requirements, however
pursuant to current practice, the capital investment requirements of
US$300,000 for service industries and US$500,000 for manufacturing and
infrastructure industries remain as the minimum amounts
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MIC may require higher capital investments depending on the project.
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5. Three Categories of Investment-New FIL
The New FIL sets out three categories of investment which
are:
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Businesses which
Businesses which
shareholders and
are restricted for foreign investment;
require a Joint Venture between foreign
Myanmar Companies, individuals or
Governmental Entities; and
Businesses which may be 100% Foreign Owned with the
Approval of the Myanmar Investment Commission (the
“MIC”).
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6. Joint Venture Businesses- New FIL
More flexible shareholding ratios for Joint Ventures; and
share transfers between local and foreign shareholders.
Previous requirement that at least 35% of the shares must
be held by foreigners has been removed; however
minimum foreign investor shareholding may be set by the
MIC with respect to various different sectors/projects.
Any subsequent transfer of part or all of the shares of a
foreign investor must have pre-approval of the MIC and if
all of the foreign investor shares are transferred, the
Investment Permit must be returned to the MIC
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7. Tax Incentives- New FIL
Investors may be granted up to 5 years tax holiday
exemption period from the commencement of operations;
A longer tax exemption period may be granted for projects
which are deemed to be in the National Interest;
Exemption on Customs Duties for importation of
equipment and machinery;
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• Depreciation and Reinvestment of Profits from first year;
Foreign employee income tax exemptiion

8. Land Use Rights New FIL
The New FIL allows for Long Term Lease of
Land for MIC Approved Projects of up to 50
years with two 10 year renewal terms;
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• Foreign Ownership of Land
Myanmar.
is Prohibited in

9. The State-Owned Economic Enterprises Law
It is important to note that the New FIL has not repealed
the State-Owned Economic Enterprises Law (the “State
Enterprises Law”) and it therefore remains in effect.
The State Enterprises Law restricts private sector
investment in key sectors of the economy of Myanmar such
as oil and gas exploration and production, certain electricity
generation and transmission projects, telecommunications
services, banking and insurance services.
Foreign Investment in such sectors may still be permitted
under the New FIL, but a specific exemption must be
granted by the Government of Myanmar.
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10. Electricity Generation Sector
Hydropower and Coal Fired Power Generation Projects are open to
foreign investment through a Joint Venture with the Ministry of
Electric Power and on a Build-Operate Transfer BOT status;
The duration of the BOT concession is not set out in the FIL Rules
and thus should be determined by the Joint Venture Agreement
with the approval of the MIC;
Management of the electricity system such as transmission lines,
distribution, trading of electricity and other regulatory aspects are
restricted businesses for foreign investors, although a Joint Venture
is possible with 80% of the shares held by Myanmar shareholders
and 20% of the shares held by foreigners. Such Joint Venture would
require the approval of the MIC and the Union Government.
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11. Oil and Gas Sector
All businesses related to Oil and Gas exploration,
extraction and processing are open to foreign
investors, however only through a joint venture
with the Ministry of Energy or another State
Agency there under;
This sector is still subject to the State Enterprises
Law;
EIAs are necessary as part of the Joint Venture
Application process in addition to waivers under
the State Enterprises Law;
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I

12. • Exploration
• Drilling
• Production
• On Land Oil and Gas
Pipeline Network
• CNG
• Marketing
• Distribution
• TechnicalArm
• Coordination
• Management
• Policy Formulation
• Refineries & Process
• Fertilizer Plants
•Methanol Plant
• CO2 and LPG Plants
• Waxing & Tar
(MPPE)
(Ministry of Energy)
Organizations and Respective Responsibilities
Energy
Planning
Department
(EPD)
Myanma Oil
and Gas
Enterprise
(MOGE)
Myanma
Petrochemical
Enterprise
(MPE)
Myanma
Petroleum
Products
Enterprise

13. MIC Application Process
Investments under the New FIL must be approved by the MIC.
Required documentation includes, but is not limited to:
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Project Investment Proposal, Detailed Business Proposal;
Development Schedule and Projected Costs and Profits
Draft Lease Agreement where project involves land;
Draft Joint Venture Agreement where project is a Joint Venture;
Environmental Impact Assessment Report for certain types of projects;
Contractors need to show that they have a contract for a project within
the country to obtain their initial MIC Investment License and
amendments offering additional benefits for later projects is possible;
Detailed equipment list for import customs duty exemption necessary.•

14. MIC Application Process (Con’t)
The MIC shall, within 15 days, accept or refuse the proposal and
if it is accepted, shall Issue Approval or Rejection of the
Proposed Business within ninety (90) days of the application
being submitted to the MIC;
The MIC will coordinate required governmental approvals based
on the project concerned;
Investors must complete the development of their projects
within the timeframe approved by the MIC; although an
extension of up to 50% of the original timeframe is possible with
approval of the MIC;
Relevant Insurance Policies Must be Acquired and Maintained.
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15. MIC Application Process (Con’t)
If the contractor will be importing its own
equipment and machinery it must become a
member of the Union of Myanmar Federation of
Chambers of Commerce & Industry (“UMFCCI”);
prior to submitting MIC application;
Large construction/contracting companies need
to become members of the Myanmar
Engineering Association prior to submitting MIC
application.
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16. Importing Equipment and Machinery
If the contractor is going to be an MIC company,
all equipment and machinery which is brought in
without paying customs duty on the importation
can be exported without customs duty at the end
of the project life;
However, if equipment which is imported duty
free is sold in Myanmar, the duty which would
have been paid on the importation needs to be
paid;
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17. Importing Equipment and Machinery (con’t)
Contractors could theoretically have the equipment and machinery
they would need to use on the project imported by the MIC
approved developer of the project. However, the developer’s
original request for duty exemptions would have to include this
equipment and machinery or an addendum would be required;
The Customs Department has, within the last year, created a list of
250 items (mostly equipment and machinery for infrastructure
development purposes) which can be imported duty free even by
non-MIC approved companies. Importation of these exempted
items does not require an import/export license and therefore
doesn’t require membership in the UMFCCI;
Customs duties for importing most equipment and machinery for
infrastructure projects currently ranges between 0%-5%.
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18. Labor
Jobs requiring unskilled
for Myanmar citizens.
Issues
labor must be reserved
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• If a particular enterprise requires skilled labor,
investors must employ at least 25% Myanmar
citizens during the first 2 years of operation; 50%
Myanmar citizens during the following 2 years;
and 75% Myanmar citizens in the following 2
years.
All existing labor laws and regulations otherwise
remain unchanged and are in full force and effect.
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19. Foreign Exchange and Repatriation of Profits
• Investors must open foreign currency bank
accounts in Myanmar and report funds
brought into the country;
Funds brought into the country, dividend
payments to foreign shareholders, profit after
tax and foreign salary may be repatriated at
the official exchange rate then in effect.
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20. Arbitration and Non-Nationalization
The New FIL states that the Government of Myanmar assures investors
that it shall not nationalize projects approved under the New FIL during
the term or extended term of the investment project.
However, there is an additional provision which states that projects which
have MIC permission shall not be terminated without “sufficient cause”
although no guidelines as to what would constitute sufficient cause have
been issued to date.
The New FIL also allows for resolution of disputes as per the agreement of
the parties, thereby allowing for the possibility of arbitration and other
alternative dispute resolution practices.
However, enforcement of arbitral awards in Myanmar is still questionable
as Myanmar just acceded to the New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards in July 2013 and this is still
awaiting ratification which is expected soon.
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21. Myanmar Energy Investment Summit- 3-4 September 2013
Oliver Massmann@duanemorris.com;
DUANEMORRISSELVAM MYANMAR