Myanmar represents excellent potential for
business investment.
- The Government implemented
market-oriented economic policy in 1988 in order to attract
foreign investment and to increase local private sectors
participation in the economy.
- Investment prospects was boosted after
the promulgation of the Union of Myanmar Foreign Investment Law
(FIL) in November 1988.
- Legislative provisions under the Foreign
Investment Law are very simple and represent one of the most
progressive and favorable Investment Law
- Foreign and Myanmar Companies can be
format in the Union of Myanmar under the Myanmar Companies Act,
which has legal and common language known to all under
entrepreneurs in the competitive commercial world.
Myanmar welcomes foreign investments in all
forms. The Government is intent in maintaining good economic
relationship with all foreign organizations and individuals,
regardless of their political or social systems and its attempting
to build stronger economic relations with all countries.
Foreign Investment
Environment
Foreign Direct Investment Policy
Myanmar’s Foreign Direct Investment policy is
a component of the overall restructuring and development policy of
the Government. The main components of the policy are:
- Adoption of market oriented system for
the allocation of resources.
- Encouragement of private investment and
entrepreneurial activity.
- Opening of the economy for foreign trade
and investment.
The objectives of the Republic of Union
of Myanmar Foreign Investment Law
- Promotion and expansion of exports
- Exploitation of natural resources which
require heavy investment
- Acquisition of high technology
- Supporting and assisting production and
services involving large capital
- Opening up of more employment
opportunities
- Development of works which would save
energy consumption
- Regional Development
In order to oversee and administer the FIL,
the Myanmar Investment Commission (MIC) was formed and it acts as
initial approving authority for investment proposals.
Forms of Investment
Foreign investors can set up their business
either in the form of a wholly foreign-owned or a joint venture with
any partner (an individual, a private company, a cooperative society
or a state- owned enterprise). In all joint ventures, the minimum
share of the foreign party is 35 percent of the total equity
capital.
Minimum Capital Requirement
The minimum amount of foreign capital required
to be eligible under the Foreign Investment law is:
For an industry US $ 500,000
For a service organization US $ 300,000
Eligible Economic Activities
Economic activities allowed under the foreign Investment law cover
almost all sectors of the economy. It has been notified by the
Myanmar Investment Commission (MIC). Any economic activity not
include in the notification can be considered individually.
Liberal Investment
Incentives
Tax Incentives under the Foreign
Investment Law
- A flat tax rate of 30 percent is
applicable to an enterprise operating under the law. Exemption
from income tax for 3 consecutive years beginning with the year
in which the operation commences and further tax exemption or
relief for an appropriate period in case if its considered
beneficial for the State.
- The 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 of the foreign employees and to deduct
the same from the assessable income of the enterprise.
•
Right to pay income tax of the foreign employees at the rate
applicable to the citizens of Myanmar.
•
Right to deduct the research and development expenditure.
•
Right to accelerate depreciation
•
Right to carry forward and set off losses up to 3 consecutive
years, from the year the loss is sustained.
•
exemption or relief from customs duty and other taxes on:-
(a) Imported machinery and equipment for use during the
construction period.
(b) Imported raw materials for the first 3 years commercial
production following the completion of construction.
Right to Transfer Foreign Currency
A person who has brought in foreign capital can transfer the
following:-
- Foreign currency entitlement of him.
- Net profit after deducting all taxes and
provisions.
- Foreign currency permitted for withdrawal
by the Commission which may include the value of assets on the
winding up of business.
- A foreign employee can transfer his
salary and lawful income after deducting taxes and other living
expenses incurred domestically.
Guarantee
Enterprises operating under the Foreign Investment Law shall have
the State guarantee against nationalization and expropriation.
Application
Procedures for Foreign Investment
A promoter for foreign investment must submit
a proposal in prescribed form to the Myanmar Investment Commission.
With the proposal the following must be attached.
(1) Documents supporting financial
credibility. ( audited final accounts of most recent year of the
person or the firm that intends to make investment).
(2) Bank recommendation regarding the business standing.
(3) Detailed calculation relating to the economic justification of
the proposed project indicating inter alia:-
- Estimated annual net profit.
- Estimated annual foreign exchange
earnings or savings and foreign
- Recoupment period
- Prospects of creating employment.
- Prospects of increase in national income.
- Local and foreign market conditions and
the requirement, if any, for local consumption.
(4) If it is a hundred percent foreign
investment, a draft contract to be executed with an organization
determined by the Ministry concerned.
(5) If it is a joint venture, a draft contract to be entered into
between the foreign investor and local counterpart.
(6) If it is a joint venture in the form of a limited company, draft
Memorandum and Articles of Association and also a draft contract
between the foreign and local investors.
(7) The promoter may apply for the exemptions and reliefs from taxes
stated in Chapter 10 Article 21 of the Union of Myanmar Foreign
Investment Law.
