About the Myanmar Investment Law
The new Myanmar Investment Law is designed to promote and facilitate both foreign and domestic investment in the economy and open more economic sectors to private investment.
The role of the Myanmar Investment Commission
The Myanmar Investment Rules ("MIR") came into effect on 30 March 2017. The unofficial translation has been posted on the website of the Directorate of Investment and Company Administration ("DICA"), Notification No. 35 / 2017.
The MIR, together with the Myanmar Investment Law that was enacted in October 2016, provide greater clarity on the role of the Myanmar Investment Commission ("MIC") and also streamline and categorise the various processes and requisite approvals applicable to foreign investments in a more efficient manner. Key aspects of the MIR include the following:
- The introduction of an investor assistance mechanism, under which the MIC is required to help investors experiencing difficulties. This includes more responsibility in liaising with government ministries.
- It clarifies when a submission of a MIC Permit is required by providing specific criteria to help Investors determine the relevant application and what criteria will be applied in the approval process.
- In awarding MIC Permits, the MIC must consider, amongst other criteria, business experience and financial commitment of the investor. The MIR is designed to give the MIC the tools to determine the suitability and reputation of the investor.
- Investors who are uncertain on whether they can engage in a certain business, what type of application needs to be made or if they are eligible for incentives may submit Screening Application. The MIC should provide non-binding advice within 10 working days.
- The MIR also sets out certain timelines within which the MIC is supposed to reject, accept and/or complete its review of applications for MIC Permits and Endorsements, as well as Screening Applications.
BLP supported DICA and the International Finance Corporation in drafting the MIR.
List of restricted investment activities and promoted sectors released
The MIC released the lists of promoted sectors (Promoted Sectors List) on 1 April 2017 (Notification 13/2017) and restricted investment activities (Negative List) on 10 April 2017 (Notification 15/2017).
The new Negative List is more detailed and specifically defined than the previous list of restricted investments issued in March 2016. While some investors may be disappointed that it appears to be longer than the previous list, this needs to be seen in the context of the new regulatory regime. Previously whether on the Negative List or not all investment needed to be approved, meaning that in practice certain investments were not permitted, even though not on the list. With many investments no longer needing to be reviewed, the MIC has attempted to come up with a definitive list, providing investors greater certainty that they can confidently forge ahead if their investment is not restricted.
Retail and distribution was one of the major areas of interest. Investors wanting to engage in retail require Ministry of Commerce approval and are subject to certain conditions.
Under the MIR, in order for an investor to enjoy income tax exemptions, its investment must be in a Promoted Sector, in addition to obtaining an MIC Permit or Endorsement. The Promoted Sectors prescribed by the MIC include:
- a range of agricultural and farming activities, such as cultivation of crops, variety of beans and oil-bearing crops except paddy
- a range of manufacturing services
- establishment of industrial zones and new urban areas
- infrastructure-related activities, such as construction of roads, bridges, railway lines and ports
- supply and transport businesses
- production of renewable energy
- telecommunications businesses
- education services
- hotel and tourism services
Myanmar Companies Law to be enacted before end 2017
The director general of the DICA, U Aung Naing Oo, has stated that the new Myanmar Companies Law is envisaged to be enacted into law before the end of this year. According to U Aung Naing Oo, Parliament is expected to handle the draft Companies Law this June, as mentioned in our March 2017 postcard.
The enactment of the new Myanmar Companies Law is expected to supplement the new Myanmar Investment Law and MIR by creating a more sophisticated regime that foreign investors can navigate. Notably, the new Myanmar Companies Law is expected to allow foreign investors to hold up to 35% of a local company’s equity before it is classified as foreign-owned.
Members of the BLP team were engaged to undertake the drafting of the Myanmar Companies Law and to lead the consultation process. See our review of the Myanmar Companies Law (in English and Burmese) explaining its effects on companies operating in Myanmar.