Foreign Investment in Myanmar – The Myanmar Investment Rules
On 18 October 2016, the Pyidaungsu Hluttaw enacted new Myanmar Investment Law. On 30 March 2017, Ministry of Planning and Finance (now Ministry of Investment and Foreign Economic Relations) has prescribed the new Myanmar Investment Rules (Notification 35/2017). Notification 35/2017 provides details on the business activities in which foreigners are permitted to engage in and the restrictions that apply. Notification 35/2017 divides Types of Investment. These are:
Notification 35/2017 provides details on the business activities foreigners are permitted to engage in and the restrictions that apply. Notification 35/2017 divides Types of Investment. These are:
- Investments where a Permit is required;
- Prohibited Investment Activities;
- Restricted Investment Activities; and
- Restricted Investment Notice.
Myanmar Investment Rules and Restricted Activities
Pursuant to the Myanmar Investment Rules, the list of economic activities in which foreigners can engage in under certain restrictions is wide-ranging, and is sub-divided according to the Ministry responsible for the relevant restricted activity. Most activities require adherence to the terms and conditions imposed by the relevant Ministry or which normally apply in a particular sector. For example, various construction and manufacturing activities must be carried out in accordance with ASEAN standards, applicable national codes, regulations, and various activities involving livestock must be conducted in accordance with national and/or WHO or ASEAN standards. Interestingly, Myanmar citizens are prohibited from gambling at casinos formed under the FIL and to which the Myanmar Investment Rules apply. Other restrictions include:-
- investment activities allowed to be carried out only by the Union;
- investment activities that are not allowed to be carried out by Foreign investors;
- investment activities allowed only in the form of a joint venture with any citizen owned entity or any Myanmar citizen; and
- investment activities to be carried out with the approval of the relevant ministries.
Regulation on Prohibited and Restricted Investment Activities
The Myanmar Investment Commission ("MIC") published 15/2017 dated 10 April 2017 ("Notification 15/2017") on prohibited and restricted activities for foreign investment. Notification 15/2017 repeals Notification 26/2016 dated 21 March 2016 ("Notification 26/2016").
- The investments included in prohibited activities are the activities bringing or causing hazardous or poisonous wastes into the country; the activities bringing technologies, medicines, flora and fauna and instruments which is in the status of testing in overseas and which have not obtained the approvals for plantation or cultivation; the activities affecting the traditional culture and customs of ethnic people; the activities affecting the public; the activities causing the harmful impact to the environmental conservation and the activities prohibiting the goods to manufacture or services subject to the applicable laws.
- MIC Notification 15/2017 lists some restricted activities for foreigners. These include prospecting, exploration, feasibility study, production, and refinement of minerals for small and medium scale businesses; tour guide services; and activities that must be carried on in JV with a Myanmar partner such as manufacturing and domestic marketing of plastic products, development, sales and lease of residential apartments and condominiums, dry port services relevant to rail transport, postal services, and all electrical businesses to be connected to the electric power system.
- All other investment activities which are not on the restricted investment list may be carried out by 100% foreign invested companies, provided that the necessary licences and ministerial approvals have been obtained.
- Coming into force the Myanmar Companies Law 2017, foreign investors are able to participate in the shareholding of locally owned Myanmar companies (up to 35%) and thus able to invest in sectors that are currently restricted to foreign investors.
- This notification also restricts in some investment activities participated by Myanmar citizens and entities or JVs between foreigners and Myanmar entities or citizens (where the Myanmar partner must hold a minimum 20% shareholding in the JV).
- Notification 15/2017 includes a general proviso that, if the restrictions for investment are described in the laws administered by the concerned ministries and organizations, it shall follow in accord with such law. So the new Notification effectively grants the MIC broad discretion conducting economic activities which the MIC considers should require ministry approval. For banking, insurance and financial services, it can be allowed according to the plan of the relevant Ministries and organizations. If the investments which make export/import shall perform in accord with the policy of Ministry of Commerce.
Applications under the Myanmar Investment Rules
The Myanmar Investment Rules also contain information relevant to the
- Submission for Investment;
- Proposal Submission and Assessment;
- Proposal Assessment Procedure;
- Proposal Assessment Criteria;
- Endorsement Application;
- Endorsement Application Assessment Procedure;
- Endorsement Application assessment criteria;
- Submitting Tax Incentive Applications and Screening;
- Tax Incentive Application assessment procedure;
- Tax Incentive assessment criteria;
- Other matters relevant to Tax Incentive Applications and Approvals;
- Land Rights Authorisation Application;
- Criteria for Applicants who Apply for Tax Incentives;
- Use of third party service providers; and
- Providing One Stop Service.
The Myanmar Investment Rules also contain information relevant to the form and processes on certain aspects of foreign investment, including but not limited to the following -
- the timing of company registration and/or incorporation;
- the information required to be included with applications for investment permits;
- the particulars the Directorate of Investment and Company Administration (DICA) will consider when considering applications for investment permits;
- the issuance of permits and post issuance formalities and obligations which generally include continued compliance with various laws of Myanmar including environmental law and health and safety law.
- the construction period,e. the prescribed period for the investor to complete construction activities, where applicable. If an investor needs to extend the construction period, an application must be presented at least 30 days in advance before the end of the original construction period. The construction period can be extended by up to 50% of the original construction period. Except in special circumstances, only one extension is permitted. The investment permit can be revoked, if construction is not completed within the original construction period. Investors are not entitled to any compensation, if a permit is revoked.
An investor who obtains permit or tax exemption or relief needs to insure the relevant insurance among the following types of insurance, based on the business nature.
- Property and Business Interruption Insurance;
- Engineering Insurance;
- Professional Liability Insurance;
- Bodily Injury Insurance;
- Marine Insurance; or
- Workmen Compensation Insurance;
- Life Insurance; and
- Fire Insurance.
Right to transfer foreign currency
A foreign investor is permitted to remit and transfer foreign currency abroad, including:-
- capital designated under the provisions relating to capital account rules stipulated by CBM;
- proceeds, profits from the asset, dividends, royalties, patent fees, license fees, technical assistance and management fees, shares and other current income resulting from any investment;
- proceeds from the total or partial sale or liquidation of an investment;
- payments made under a contract, including a loan agreement;
- payments resulting from any settlement of investment disputes;
- other compensation or money as compensation under the investment or expropriation;
- remuneration, salary and earnings of foreign experts legally employed in the Union.
Appointment of staff and workers
An investor may appoint any skillful citizens or foreign workers, technicians, and staff by signing an employment contract in accordance with Myanmar labour laws and rules, by ensuring equal rights and avoid salary bias, rights and benefits including but not limited to, leave, holidays, overtime pay, compensation and social security, and settlement of disputes between workers, employers, consulting experts or any other personnel.