New investment law and opportunities for foreign investors

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  • 1.NEW INVESTMENT LAW AND ITS OPPORTUNITIES FOR FOREIGN INVESTORS1U Kyaw Zaw MaungDirectorDirectorate of Investment and Company Administration Minister of National Planning and Economic Development

2. CONTENTMyanmar in briefFDI in MyanmarInvestment Laws of MyanmarSEZs in MyanmarMyanmar Investment EnvironmentConclusion 2 3. WHERE IS MYANMAR! China 1347 India - 1220 Bangladesh-158 T hailand 70 Laos 6 T otal 2801 40% of World Population3 4. MYANMAR IN BRIEF Location: Southeastern Asia, bordering theAndaman 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 cold4 5. What Myanmar is!Age Group MaleFemale TotalPercentage15-192.902.795.70 9.520-242.772.695.46 9.125-292.572.545.12 8.530-342.342.384.73 7.835-392.102.184.29 7.240-441.841.963.80 6.345-491.581.713.30 5.550-541.311.442.75 4.655-591.061.192.26 3.8Total18.47 18.88 37.35 62.25 5 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 7. INVESTMENT FLOWS TOMYANMAR7 8. INVESTMENT FLOWS BY SECTOR IN MYANMARAS OF MAY 2012Sr. ParticularsExisting EnterprisesNo.No.Approved Amount%(US$ in Million) 1Oil and Gas 62 13474.728 43.74 2Power4 12843.720 41.88 3Mining 82289.162 7.46 4Hotel and Tourism 30 814.475 2.66 5Manufacturing 80 572.964 1.86 6Real Estate7 275.000 0.90 7Industrial Estate2 179.113 0.58 8Agriculture4 144.420 0.47 9Transport & Communication7 137.676 0.4510Livestock & Fisheries764.946 0.2111Other Services 4 7.061 0.02 8Total 21530803.265 100.00 Source: DICA 9. INVESTMENT FLOWS BY SECTOR IN MYANMARAS OF MAY 2012 Real Estate1% Industrial Estate Agriculture1%Hotel and TourismTransport & Livestock & Fisheries 3%Communication Other ServicesManufacturing2%Mining 7% Power42%Oil and Gas44% 9Source: DICA 10. INVESTMENT FLOWS BY COUNTRY IN MYANMAR AS OF MAY 2012 Sr.ParticularsExisting Enterprises NoNo.Approved Amount%1China 14 13870.52545.232Hong Kong 216215.43620.273Republic of Korea 362869.870 9.364Thailand252460.333 8.025U.K * 202207.573 7.206S ingapore361466.816 4.787France 1 499.926 1.638Malaysia14 429.292 1.409India5 257.500 0.84 10Japan 13 113.527 0.37 11Russia Federation294.000 0.31 12Panama 255.101 0.18 13Viet Nam 341.796 0.14 14Mauritius230.575 0.10 15Indonesia322.200 0.07 16Republic of Liberia**214.600 0.05 17Philippine 1 6.667 0.02 18Australia1 5.819 0.02 19The Netherlands2 4.335 0.01 20Germany1 2.500 0.01 21Austria1 1.000 0.00 22Canada 1 0.300 0.00 10 Total215 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. YEARLY APPROVED INVESTMENT AMOUNT FROM 1989 TO 2011 US$ in Million 11Source: DICA 12. INVESTMENT FLOW TO MYANMARUS$ in MillionNo.Country 1989-2001Country 1989-20121UK 1380China139472Singapore1351Thailand95683Thailand 1187Hong Kong 63084Malaysia599Korea 29385USA 583UK26596France470Singapore 18247Indonesia 239Malaysia 9778Netherland238France 4699Japan 229USA24310 Korea 156Indonesia24111 Philippines 147Netherland 23812 Hong Kong 144Japan21113 China 67 India18914 Canada64 Philippines14615 Others243Others 472 12 Total7097Total40424Source: DICA 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. INVESTMENT LAWS IN MYANMAR(CONT.) 100%ForeignOwnedAny Myanmar Partner An Individual35%A Private Company A Cooperative Society State Owned Enterprise 14 15. INVESTMENT LAWS IN MYANMAR(CONT.) Minimum Foreign Capital (At Least)Manufacturing - US$ 500000Services- US$ 300000Bothin Kindin Cash 15 16. Investment LawsLAWS IN MYANMAR INVESTMENT of Myanmar (CONT.) IncentivesTax incentivesNon-tax incentives16 17. Investment LawsLAWS IN MYANMAR INVESTMENT of Myanmar (CONT.) Tax Incentives3 years tax holidayFurther tax exemption/relief for an appropriate period incase if it is considered beneficial for the State 17 18. Investment Laws of Myanmar IMPACT OF FOREIGN INVESTMENT Tax Incentives3 years instead of 5 years tax holiday3 years instead of income tax exemption for a period offive consecutive years including the year ofcommencement on commercial scaleFurther tax exemption/relief for an appropriate period incase if it is considered beneficial for the State 18 19. LAND LEASE REQUIREMENTLand LeaseInvestors 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 years19 20. TAX INCENTIVES UNDER THE FOREIGN INVESTMENTLAWS 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. 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 years50% (c)Third 5 years 25%- ILO lifts most of restrictions on Myanmar Lifting, removing and suspending ofrestrictions benefits Myanmar in trading with EU for interests of people(13 June 2012) 21 22. IMPACT OF THE NEW BANKING & CURRENCY LAW RATEFOR JVSRight to Transfer Foreign CurrencyThe investor may transfer the following currencies abroad through the bank prescribed bythe 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 hasbrought in foreign capital;(c) no profit after deducting relevant funds relating to various taxes from the annualprofits received by the person who has brought in foreign capital;(d) legitimate balance after causing to pay the taxes due and after deducting livingexpenses for himself and his family in the manner prescribed, out of the salary andlawful income obtained by the foreign service personnel by performing service in theState;(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 whyaccording to the market rate can convert Myanmar to US$ and US$ to Myanmar 23. NON-TAX INCENTIVES UNDER THE FOREIGNINVESTMENT LAWS IN MYANMARGuaranteeEnterprises operating under the Foreign Investment Law shall havethe State guarantees- against nationalization- to transfer the entitled Foreign Capital to investor on the expiryof the term of the contract- against termination of investment during the permitted term23 24. OPPORTUNITIES IN MYANMARS FINANCIAL SERVICES INDUSTRYCentral Bank allowed to open the representative office offoreign Banks by Joint VentureCentral Banks plan:- representative office- branch office- JV bank- 100% foreign own bank24 25. THE MYANMAR SPECIAL ECONOMIC ZONE LAW The objectivesTo base on the framework of the maintenance, protection and safeguarding thesovereignty of the State in allowing to operate foreign investment businesses;To develop the momentum of the economy of the State by establishing andoperating 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. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.)Production based businesses goods processing business hi-tech production business industriesagriculture livestock breeding and fishery mineral produce business forestry produce business;26 27. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.)Services business trading logistics and transportation27 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. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.) Infrastructure construction businessesroadbridgeairportportelectricitycommunication and water supplyenvironment conservation and protectionwastes control Other businessesdetermined by the Central Body, with the approval of the Government. 28 29. THE MYANMAR SPECIAL ECONOMIC ZONE LAW (CONT.) Central Body Central Working Body Management Committee 29 30. INCENTIVES FOR INVESTOR UNDER THEMYANMAR SPECIAL ECONOMIC ZONE LAW(CONT.)Tax holiday - 5 yearsSecond 5 years- 50% relief on income tax overseas saleproductsThird 5 years - 50% relief on income tax reinvestmentobtained from export saleMore applicable 30 31. INCENTIVES FOR I