New investment law and opportunities for foreign investors


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New investment law and opportunities for foreign investors

  1. 1. NEW INVESTMENT LAW AND ITS OPPORTUNITIES FOR FOREIGN INVESTORS•1 U Kyaw Zaw Maung Director Directorate of Investment and Company Administration Minister of National Planning and Economic Development
  2. 2. CONTENTMyanmar in briefFDI in MyanmarInvestment Laws of MyanmarSEZs in MyanmarMyanmar Investment EnvironmentConclusion •2
  3. 3. WHERE IS MYANMAR! •China – 1347 •India - 1220 •Bangladesh-158 •T hailand – 70 •Laos – 6 •T otal – 2801 •40% of World Population•3
  4. 4. MYANMAR IN BRIEF • Location: Southeastern Asia, bordering the Andaman Sea and the Bay of Bengal, between Bangladesh and Thailand • Geographic coordinates: 22 00 N, 9 8 00 E • Area: Total: 678,500 sq km Land: 657,740 sq km Water: 20,760 sq km • Land boundaries: total: 5,876 km •Border countries: Bangladesh 193 km, China 2,185 km, India 1,463 km, Laos 235 km, Thailand 1,800 km • The length of the coastline: 1,385 miles • Climate: summer, rainy and cold •4
  5. 5. What Myanmar is!Age Group Male Female Total Percentage15-19 2.90 2.79 5.70 9.520-24 2.77 2.69 5.46 9.125-29 2.57 2.54 5.12 8.530-34 2.34 2.38 4.73 7.835-39 2.10 2.18 4.29 7.240-44 1.84 1.96 3.80 6.345-49 1.58 1.71 3.30 5.550-54 1.31 1.44 2.75 4.655-59 1.06 1.19 2.26 3.8Total 18.47 18.88 37.35 62.25 •5
  6. 6. What Myanmar is ! •Topography can roughly be divided into 3 parts: the Western Hills •6 Region, the Central Valley Region and the Eastern Hills Region
  8. 8. INVESTMENT FLOWS BY SECTOR IN MYANMAR AS OF MAY 2012Sr. Particulars Existing EnterprisesNo. No. Approved Amount % (US$ in Million) 1 Oil and Gas 62 13474.728 43.74 2 Power 4 12843.720 41.88 3 Mining 8 2289.162 7.46 4 Hotel and Tourism 30 814.475 2.66 5 Manufacturing 80 572.964 1.86 6 Real Estate 7 275.000 0.90 7 Industrial Estate 2 179.113 0.58 8 Agriculture 4 144.420 0.47 9 Transport & Communication 7 137.676 0.4510 Livestock & Fisheries 7 64.946 0.2111 Other Services 4 7.061 0.02 •8 Total 215 30803.265 100.00 Source: DICA
  9. 9. INVESTMENT FLOWS BY SECTOR IN MYANMAR AS OF MAY 2012 Real Estate 1% Industrial Estate Agriculture 1% Hotel and Tourism Transport & Livestock & Fisheries 3% Communication Other Services Manufacturing 2% Mining 7% Power 42% Oil and Gas 44% •9Source: DICA
  10. 10. INVESTMENT FLOWS BY COUNTRY IN MYANMAR AS OF MAY 2012 Sr. Particulars Existing Enterprises No No. Approved Amount % 1China 14 13870.525 45.23 2Hong Kong 21 6215.436 20.27 3Republic of Korea 36 2869.870 9.36 4Thailand 25 2460.333 8.02 5U.K * 20 2207.573 7.20 6S ingapore 36 1466.816 4.78 7France 1 499.926 1.63 8Malaysia 14 429.292 1.40 9India 5 257.500 0.84 10Japan 13 113.527 0.37 11Russia Federation 2 94.000 0.31 12Panama 2 55.101 0.18 13Viet Nam 3 41.796 0.14 14Mauritius 2 30.575 0.10 15Indonesia 3 22.200 0.07 16Republic of Liberia** 2 14.600 0.05 17Philippine 1 6.667 0.02 18Australia 1 5.819 0.02 19The Netherlands 2 4.335 0.01 20Germany 1 2.500 0.01 21Austria 1 1.000 0.00 22Canada 1 0.300 0.00 •10 Total 215 30803.265 100.00 Inclusive of enterprises incorporated in British Virgin Islands, Bermuda Islands and Cayman islands **The name and principle organization be changed from Singapore to Republic of Liberia Source: DICA
  11. 11. YEARLY APPROVED INVESTMENT AMOUNT FROM 1989 TO 2011 US$ in Million •11Source: DICA
  12. 12. INVESTMENT FLOW TO MYANMAR US$ in MillionNo. Country 1989-2001 Country 1989-20121 UK 1380 China 139472 Singapore 1351 Thailand 95683 Thailand 1187 Hong Kong 63084 Malaysia 599 Korea 29385 USA 583 UK 26596 France 470 Singapore 18247 Indonesia 239 Malaysia 9778 Netherland 238 France 4699 Japan 229 USA 24310 Korea 156 Indonesia 24111 Philippines 147 Netherland 23812 Hong Kong 144 Japan 21113 China 67 India 18914 Canada 64 Philippines 14615 Others 243 Others 472 •12 Total 7097 Total 40424Source: DICA
  13. 13. INVESTMENT LAWS IN MYANMARThe Union of Myanmar Foreign Investment Law(FIL) was enacted on 30 November 1988.The Union of Myanmar Special Economic ZoneLaw was enacted in January 2011The Dawei Special Economic Zone Law was alsoenacted in January 2011 subsequently. •13
  14. 14. INVESTMENT LAWS IN MYANMAR (CONT.) 100%ForeignOwned •Any Myanmar Partner •An Individual35% •A Private Company •A Cooperative Society •State Owned Enterprise •14
  15. 15. INVESTMENT LAWS IN MYANMAR (CONT.)• Minimum Foreign Capital (At Least) Manufacturing - US$ 500000 Services - US$ 300000 Both in Kind in Cash •15
  16. 16. •Investment LawsLAWS IN MYANMAR INVESTMENT of Myanmar (CONT.) • Incentives Tax incentives Non-tax incentives •16
  17. 17. •Investment LawsLAWS IN MYANMAR INVESTMENT of Myanmar (CONT.) • Tax Incentives 3 years tax holiday Further tax exemption/relief for an appropriate period in case if it is considered beneficial for the State •17
  18. 18. •Investment Laws of Myanmar IMPACT OF FOREIGN INVESTMENT • Tax Incentives 3 years instead of 5 years tax holiday 3 years instead of income tax exemption for a period of five consecutive years including the year of commencement on commercial scale Further tax exemption/relief for an appropriate period in case if it is considered beneficial for the State •18
  19. 19. LAND LEASE REQUIREMENT•Land Lease•Investors are allowed to lease the land either from the government or from the private- Before the new Law for 30 years as initial- to be extended 2 times, each time allow 15 years- After the new Law for 50 years as initial- to be extended 2 times, each time allow 10 years •19
  20. 20. TAX INCENTIVES UNDER THE FOREIGN INVESTMENT LAWS IMPACT ON JVS/FOREIGN PARTNERSThe Commission may also grant ; -exemption or relief from income tax on profit which is reinvested within one year.Relief from income tax up to 50 percent on the profit from exports.Right to pay income tax on behalf of the foreign employees and to deduct the samefrom the assessable income of the enterprise.Right to pay income tax of the foreign employees at the rate applicable to the citizens ofMyanmar.Right to deduct the research and development expenditure.Right to accelerate depreciationRight to carry forward and set off losses up to 3 consecutive years, from the year theloss is sustained.exemption or relief from custom duty or other internal taxes or both on machineries,equipments , etc if the investment amount is increased and the original investmentbusiness is expanded during the permitted period. •20exemption or relief from commercial tax on the goods produced for export.
  21. 21. LATEST LABOUR LAW REFORMS AND UPDATES Employment of Expatriates Allows investors to employed expatriate technicians, expert, staff & skill labor as follows : - (a) First 5 years 75% (b) Second 5 years 50% (c) Third 5 years 25%- ILO lifts most of restrictions on Myanmar Lifting, removing and suspending of restrictions benefits Myanmar in trading with EU for interests of people (13 June 2012) •21
  22. 22. IMPACT OF THE NEW BANKING & CURRENCY LAW RATE FOR JVS Right to Transfer Foreign Currency The investor may transfer the following currencies abroad through the bank prescribed by the Commission in the relevant foreign currency :(a) foreign currency entitled to by the person who has brought in foreign capital;(b) foreign currency permitted for withdrawal by the Commission to the person who has brought in foreign capital;(c) no profit after deducting relevant funds relating to various taxes from the annual profits received by the person who has brought in foreign capital;(d) legitimate balance after causing to pay the taxes due and after deducting living expenses for himself and his family in the manner prescribed, out of the salary and lawful income obtained by the foreign service personnel by performing service in the State;(e) money entitled to the investor after liquidating the invested business; •22(f) from the date of 2-4-2012, Government has opened money changer office , that why according to the market rate can convert Myanmar to US$ and US$ to Myanmar
  23. 23. NON-TAX INCENTIVES UNDER THE FOREIGN INVESTMENT LAWS IN MYANMAR•Guarantee•Enterprises operating under the Foreign Investment Law shall havethe State guarantees- against nationalization- to transfer the entitled Foreign Capital to investor on the expiry of the term of the contract- against termination of investment during the permitted term •23
  24. 24. OPPORTUNITIES IN MYANMARS FINANCIAL SERVICES INDUSTRY•Central Bank allowed to open the representative office offoreign Banks by Joint Venture•Central Bank’s plan: - representative office - branch office - JV bank - 100% foreign own bank •24
  25. 25. THE MYANMAR SPECIAL ECONOMIC ZONE LAW The objectives To base on the framework of the maintenance, protection and safeguarding the sovereignty of the State in allowing to operate foreign investment businesses; To develop the momentum of the economy of the State by establishing and operating the Special Economic Zones; To develop the industry and high technologies in the State; To improve the goods processing, trading and service business; To enable the citizens to train, learn and transfer the high technologies; To create more employment opportunities for the citizens; To develop the infrastructures of the State. •25
  26. 26. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.) Production based businesses goods processing business hi-tech production business industries agriculture livestock breeding and fishery mineral produce business forestry produce business; •26
  27. 27. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.) Services business trading logistics and transportation •27 storage hotel and tourism education and health residential quarters infrastructure supply and support centers green areas which conserves and protects the natural environment recreation and resort centers
  28. 28. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.) Infrastructure construction businesses road bridge airport port electricity communication and water supply environment conservation and protection wastes control Other businesses determined by the Central Body, with the approval of the Government. •28
  29. 29. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.) • Central Body • Central Working Body • Management Committee •29
  30. 30. INCENTIVES FOR INVESTOR UNDER THEMYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.)Tax holiday - 5 yearsSecond 5 years - 50% relief on income tax – overseas sale productsThird 5 years - 50% relief on income tax – reinvestment obtained from export saleMore applicable •30
  31. 31. INCENTIVES FOR INVESTOR UNDER THEMYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.)Exemption from customs dutyImported raw materialMachineries •Export Processing ZoneEquipmentMachineries •5 yearsVehicles50% exemption for the next 5 consecutive years •31
  32. 32. SPECIAL ECONOMIC ZONES IN MYANMARDawei Special Economic Zone - being developedThilawa Special Economic Zone - in the process •32Kyaukphyu Special Economic Zone - to be developed
  33. 33. •Dawei SEZ Project Location •Kunming •India•Middle East /•Europe • Dawei•Africa •33 •Asia Regional Hub
  34. 34. •34
  35. 35. Thilawa SEZ Project Location •Yang on •Yangon down town from Thilawa = 18 Kilometer •35
  38. 38. THILAWA SPECIAL ECONOMIC ZONEProject Descriptions-Basic Infrastructure Package •38Electricity (Power Generation)PortWater Resource DevelopmentHuman Resource Development
  39. 39. •Special Economic Zones in Myanmar •Kyauk Phyu •Yangon •Thilawa •Dawe i •39
  40. 40. Investment Promotion & Protection Agreement Concluded Under negotiation Philippines Russia •40 Vietnam Bangladesh Lao PDR Mongolia China Japan India Korea Thailand Iran Kuwait
  41. 41. Formation of MICAccording to the Notification No(82/2011),in order to monitor the provisions of theexisting Investment Laws ,the government of the Republic of the Union of Myanmarreorganizes the MIC as follows: Union Minister Chairman Ministry of Industry •41 Union Minister Member Ministry of Rail Transportation Union Minister Member Ministry of Finance and Revenue Union Minister Member Ministry of Electric Power No(1) Attorney General of the Union Member Union Attorney General’s Office Union Minister Secretary Ministry of National Planning and Economic Development Deputy Minister Joint Secretary Ministry of Rail Transportation
  42. 42. BUSINESS ORGANIZATION Companies Limited by Share Branches/Representative Office For foreign companies and branches, the minimum capital (at least) to be brought in are as follows:- - Industrial company- US $ 170,000 - Services company - US $ 50,000 •42
  43. 43. Documentary Requirements for Permit Application •Apply for Permit to Trade from •Application Form A (2) Copies (Duly filled up signed and affixed K. 6/- court fee stamp)•Ministry of National Planning and Economic Development •Questionnaire Form (2) copies (Duly filled up and signed) •Approval from the EC •List of intended business activities that will be carried out in the Union of M yanmar (To mention only specific business) •Approval from the Cabinet •A Copy of Permit & decision of the M yanmar Investment Commission for the manufacturing, Hotel & Construction businesses. •Undertaking (Statement that a shareholder/director is a member/director at other company or not) •List of estimated expenditure for the first year operation •Board of Director’s Resolution if shareholder is a company •Statement of compliance for initial capital brought in •Original Bank statement for each shareholder or •Undertaking not to do Trading Activities shareholder Company •43 •Passport copy or NRC copy of each shareholders and directors. •M emorandum and Articles of Association. (Copy)
  44. 44. Documentary Requirements for Registration Application •Apply for Registration from •Memorandum and Articles of Association•Ministry of National Planning and Economic Development •Declaration of Registration •Approval from the EC •Declaration of Registered Office •Declaration of Legal Version •Approval from the Cabinet •Certificate of Translation •Undertaking (Statement that a •List of intended business activities (To mention shareholder/director is a member/director at only specific business) other company or not) •A Copy of Permit & decision of the Myanmar Investment Commission for the manufacturing, •Passport copy or NRC copy of each Hotel & Construction business. shareholders and directors. • •44 •List of Directors (Form 26) •Undertaking not to do Trading Activities
  45. 45. WHY MYANMAR!Myanmar on a new path has become democratic nation no longer a pariah •45 active integration into international and regional communities striving to meet MDG
  46. 46. • Desire of the Government• We will open doors, make reforms and invite investments as necessary for development of the nation and the people.• President U Thein Sein •46
  48. 48. MYANMAR EXPECTATIONConsidering that promotion of foreign direct •48investment to Myanmar is highly and mutuallybeneficial as it will contribute to qualify FDI,technology transfer and win-win situation!
  49. 49. •Contact us• Mr. Kyaw Zaw Maung• Director •49• Directorate of Investment and Company Administration• Office Building No. (32), Yarza Thingaha Road, Nay Pyi Taw, Myanmar• Tel : 95-67-406140• Fax : 95-67-406333• e-mail :•• Website :•
  50. 50. Thank you very much •50for lending your ears!