On 27 January 2011, the government enacted The Myanmar Special Economic Zone Law (SEZ Law) to regulate the development and running of special economic zones in Myanmar (SEZs). The law is aimed at helping the country develop economic momentum and to bring about improvements in the goods processing, trading and services sectors. It is also hoped that the development of SEZs will facilitate technology transfer and workforce education and training.

There are currently three SEZs under development in Myanmar: Kyauk Phyu SEZ in Rakhine State, Dawei SEZ in Thanintharyi Region and Thilawa SEZ in Yangon Region. In accordance with the SEZ Law, the Central Body, Central Working Body and Management Committee were formed to carry out the objectives of SEZ Law.

Pursuant to the SEZ Law the Central Body may, by notification, establish a variety of SEZs in Myanmar, including high tech industrial zones, information and telecommunications technology zones, export processing zones, port area zones, logistics and transportation zones, scientific and technological research and development zones, service business zones and sub-trading zones.

Under the SEZ Law, free zones shall be deemed to be situated outside the country which is stipulated by the relevant Management Committee and Customs Development. Free zones include free zone activity, manufacturing area, logistics and transportation areas and international wholesale area.

Promotion zone is the internal taxation area situated within the SEZs based on the domestic market and the markets in the SEZs. In the promotion zone, the investment may be made in manufacturing business based on the domestic market, housing, departmental store, banking business, insurance business, school, hospital and recreational places.

A wholly citizen-owned investment, a wholly foreign-owned investment and joint-venture investment made between the citizen and foreigner may carry out their investments in the free zone as well as the promotion zone.

Myanmar SEZs are similar to special economic zones established in other countries such as the Shenzhen Special Economic Zone in China.

Investment Activities which are permitted in the SEZ

According to the SEZ Rules issued pursuant to the SEZ Law, investors may carry out the following investment activities in the SEZ:

  1. trading;
  2. infrastructure development business, including real estate, hotel and sales centre;
  3. technology and design;
  4. warehousing and logistics services;
  5. research and development services;
  6. computer software programming services;
  7. information services such as venues for business meeting and conferences, information and data processing portal, human resource services, insurance claiming service, data portal for legal facts, medical records, records of financial transactions, remote control service, tax and revenue records, supporting/technical assistance centres, websites service, computer effects and graphic designs;
  8. distribution service including wholesale and retail
  9. financial service;
  10. professional service except legal service and accounting service;
  11. services for short term and long term lease;
  12. other services including consultancy service;
  13. construction and other related services;
  14. education services;
  15. services relating to environmental conservation;
  16. hospital and health services;
  17. tourism and other related services;
  18. recreation and entertainment services;
  19. culture and sports services;
  20. transportation and related services.

Tax Incentives of Myanmar SEZs

The SEZ offers the following tax incentives for labor-intensive industries within the free zone or the promotion zone;

  • Income tax exemption for the first seven years from the date commercial operations commence within the free zone
  • Income tax exemption for the first five years from the date commercial operations commence for businesses located within the promotion zone
  • 50% income tax reduction for the second five year period for businesses within the free zone or the promotion zone
  • 50% income tax reduction for the third five year period on profits derived from the reinvestment of a business that is within the free zone or the promotion zone (subject to conditions)
  • Import duty exemption on the importation of raw materials, machinery, equipment and other specific goods which are used for prescribed activities in the free zone
  • Import duty exemption or 50% reduction for up to five years on raw materials, machinery and equipment that is imported by a business located within the promotion zone
  • Losses carried forward for five years from the date the loss was incurred