Myanmar Investment Law

1. Scope of law and treatment of investors

The Myanmar Investment Law 2016 (“MIL”) came into effect on 18 October 2016 and consolidates and replaces the previous Foreign Investment Law 2012 and the Citizens Investment Law 2013. The MIL provides the overall legal framework followed by the more detailed Myanmar Investment Rules 2017 (“Rules”) which came into effect on 30 March 2017 as well as two notifications. Notification 13/2017 dated 1st April 2017 (Classification of Promoted Sector) and Notification 15/2017 dated 10th April 2017 (List of Restricted Investment Activities). Together, these all represent the body of the current Myanmar foreign investment laws. Here are some of the key highlights introduced under the MIL, Rules and notifications: Under the Rules, any permit issued to an investor under the previous investment law shall remain effective until the permit expires. If the investor wishes to take advantage of any additional or discretionary incentives available under the new law, the investor may apply to enjoy the new benefits.

2. New or streamlined procedures for investment approval 

There are two types of processes to obtain approval from the Myanmar Investment Commission (“MIC”), that is, the permit application process and the endorsement application process. Investors can apply to either the MIC or the relevant state or regional committee.
Investors who obtain permits or endorsements are entitled to obtain long-term lease rights (on land or building) for up to an initial 50 year period and two consecutive 10-year extensions.
Proposal submission for Permit application process
A proposed investor must submit a proposal to MIC for a permit which relates to the following types of businesses:
Investments requiring a permit under section 36 of the MIL Types of investment under the Rules
(a) investment businesses aligned to Myanmar’s strategy An investment is strategic to Myanmar if:
· it is made in the technology (information, communication, medical, bio or similar technologies), transport infrastructure, energy infrastructure, urban development infrastructure and new cities, natural resources or media sectors and has expected investment value exceeding USD20 million
· it is made pursuant to the grant of a concession, agreement or similar authorisation by an authority and has expected investment value exceeding USD20 million
· it is made in a border region or conflict affected area by foreign investors or in case of Myanmar citizen investors and has expected investment value exceeding USD1 million
· it is made across the national border by Foreign Investors or in case of Myanmar Citizen Investors and has expected investment value exceeding USD1 million
· it is made across the States or Regions;
· it is made for primarily agricultural related purposes and includes rights to occupy or use more than 1000 acres of land
· it is made for primarily non-agricultural related purposes and includes rights to occupy or use more than 100 acres of land
(b) large capital intensive investment projects Investment is a large capital intensive investment if the expected investment value <b>exceeds USD 100 million</b>
(c) projects which are likely to have a large impact on the environment and the local community Investment is taken to have a large potential impact on the environment and the local community if:
· it has been or is likely to be classified as an EIA Type Project (that is, the type of project prescribed under the Environmental Conservation Law, Rules and Environmental Impact Assessment Procedures)
· the investment is located under a designated protected or reserved area or major biodiversity area
· it includes rights to occupy or use land that causes or may cause social impact (such as the relocation of residents, involuntary restrictions on land use and access to natural resources by persons who have such rights)
(d) investment businesses which use state-owned land and buildings An investment is taken to use state-owned land and buildings if an authority has the land, building or relevant land rights and is authorised to transfer or deal in such land, building or rights in the capacity of an owner or occupier
(e) investment businesses which are designated by the government to require the submission of a proposal to the MIC MIC may prescribe other forms of investment which require the investor to submit a proposal and acquire a permit
Proposal submission for Endorsement applications process
The endorsement process speeds up the approval process for investments in non-restricted business activities (that is, activities that do not require a permit). Endorsements entitle investors to enjoy land use rights and other exemptions and reliefs such as customs free duty and income tax exemptions. According to Notification 13, if the business is in one of the “Promoted Sectors”, it may be possible to be a 100% foreign-owned business qualifying for endorsement by MIC or the relevant state or regional committee. Investors can better understand what activities qualify for 100% foreign-owned treatment by reading Notification 13 together with Notification 15. Endorsement applications can be submitted to either the MIC or the relevant state or regional committee.

3. Prohibited investment activities

Prohibited investment activities may include ;
  1. bring or cause hazardous or poisonous wastes into Myanmar,
  2. bring technologies, medicines, flora and fauna and instruments which are still being tested abroad, except for investments made for research and development,
  3. affect Myanmar’s ethnic groups’ traditional culture and customs,
  4. adversely affect the public,
  5. cause an enormous impact on the natural environment and ecosystem,
  6. manufacture goods or provide services that are prohibited by law.

4. Restricted investment activities

According to the Myanmar Investment Law and Rules Notification 15, the list of restricted investment activities are divided into the following categories:
  • investment businesses allowed to be carried out only by the Republic of the Union of Myanmar
  • investment businesses not allowed to be carried out by foreign investors
  • investment businesses only allowed in the form of a joint venture with a Myanmar citizen or citizen owned entity (a Myanmar local minimum direct shareholding interest of at least 20% however is required with approval from the relevant Ministries).
  • investment businesses requiring approval of the relevant ministries.

5. Investment screening application and guidance from MIC

For investors who are uncertain as to what type of investment they can engage in, MIC can pre-screen their investment applications for a nominal fee.
The project’s nature and all material information will need to be fully disclosed to allow MIC to assess what type of application needs to be made.
MIC can offer non-binding guidance within 10 working days from the date of application.

6. Tax incentives

Tax exemptions or incentives may apply depending on the zone in which the investment takes place;
  • Zone (1) (less developed regions) for 7 years
  • Zone (2) (moderate developed regions) for 5 years;
  • Zone (3) (adequate developed regions) for 3 years
Applications for tax incentives can be bsubmitted together with or subsequent to proposal for a permit or application for endorsement, and must specify the precise tax incentives applied for.

7. Transfers of funds

Foreign investors may transfer abroad funds relating to investments made under the MIL. Any transfers of funds shall be allowed only after paying all tax obligations imposed on such amount in accordance with the relevant tax laws. Foreign experts with legal work permits may make remittances abroad without any further deduction from the amount paid under income tax law. Transfers of loan proceeds or taking a loan is subject to the approval of the Central Bank of Myanmar. The approval of MIC is also required in relation to the transfer of proceeds from a total or partial sale or liquidation, payments resulting from any settlement of investment disputes, compensation under investment or expropriation, or where the investor has any outstanding tax obligations, or any contingent or disputed obligations within Myanmar.

8. Insurance

Investors holding a permit or endorsement are required to take out relevant insurance based on the following types of insurance:
  • Property and business interruption insurance;
  • Engineering insurance;
  • Professional liability insurance;
  • Professional accident insurance;
  • Marine insurance; and workmen compensation insurance.

Notification 13 sets out a list of promoted sectors

Other factors such as the value of investment (must exceed USD300,000); whether the investment creates new employment opportunities in Myanmar and develops a skilled labour force, brings new or enhanced technology or business skills, leads to market competition, greater efficiency or productivity, or provision of enhanced infrastructure or services in Myanmar.

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