On Friday 4 December 2015, Myanmar-Norway Business Council and the Swedish Chamber of Commerce in Yangon in cooperation with the Nordic embassies in Yangon hosted an informal presentation of the post-election perspective on investment with U Aung Naing Oo, Director General of Directorate of Investment and Company Administration (DICA).
The Director General gave details of the revised Investment Law which will most probably be finalised during the first part of 2016. The foreign and domestic investment laws will be merged in line with recommendations from OECD. The new combined law will be more investor friendly, and it will also guarantee foreign investment protection. New performance based tax incentives will be introduced and zoning will be implemented giving more incentives to projects in rural areas.
The new policies strive to diversify investments giving a better industrial spread away from policies that previously favoured extraction of natural resources. The government further seeks to attract investments from many countries, not only those that traditionally have invested in the country.
The new draft Investment Law has been sent to Myanmar’s Attorney General, and it is expected that it will be approved during the first months of 2016. The news law will also have a set of rules; these are currently under evaluation and it is the intention to publish these at the same time as the law.
A number of institutional reforms is to be implemented thus simplifying and streamlining procedures. More facilitation will be added in order to create a level playing field for all investors. Small and medium sized investment projects, which do not imply environmental or other social impacts, will not need MIC approval and will in principle be automatically approved.
The draft of the new Investment Law has been posted on the agency’s website and a number of stakeholders incl. civil society, law firms and UMFCCI have been consulted. Others have offered advice which have been taken into account; a truly transparent process according to the Director General.
The Director General sees the Myanmar Investment Commission (MIC) becoming an autonomous “superbody” above the ministries and reporting directly to the President. The MIC today consists of six ministers and six private sector specialists. It is further the intention of DICA to establish regional offices all over the country which will give easier access and facilitate the Special Economic Zones (SEZs).
U Aung Naing Oo believes that more Foreign Direct Investments will come to Myanmar in the years ahead. He expects that a number of liberalisation measures will be implemented including easier company registration and easier compliance. Investment protection will be improved and bilateral agreements to that effect will be signed, to start with with EU, Hong Kong and Canada. Finally, he believes that sanctions imposed by the US will be lifted and that Myanmar will be offered Generalised System of Preferences (GSP) facilities.
The Director General sees AEC as advantageous to Myanmar as the country is geographically well placed in the India-China corridor with 70% of the population being of working age, a factor, which will make the country favourable for manufacturing. The underdeveloped domestic consumer market of more than 50 million people also offer huge opportunities for foreign investors.
Finally, U Aung Naing Oo touched on challenges for Myanmar. The lack of modern infrastructure is a challenge, particularly the lack of electricity. In addition, labour skills need to be upgraded. In the past, the parliament and the government have often been at odds when considering new laws, but the Director General believes that new government will find it easier to work in harmony with the new parliament.
The presentation was followed by a Q+A session. The first question concerned MIC Notification No. 49/2014 and a possible revised list of prohibited and restricted activities for foreigners. The Director General answered that no decision had been made to a revised list, but that this was an issue which was under evaluation.
Another question concerned the change in the trading regulations (Notification No. 96/2015 from Ministry of Commerce) which allow joint venture companies to trade in fertilisers, insemination seeds, pesticides and hospital equipment. The question was if an already registered joint venture service company could be allowed to trade. The Director General confirmed that this was possible by amending the articles of association and simply registering the change with DICA. Also, there is no limit on the foreign shareholding in such joint ventures. U Aung Naing Oo explained that the reason for the notification is that the ministry believes the liberalisation will benefit the country through import of better materials and equipment. He stated that pharmaceuticals, farming machinery and construction materials were currently under consideration for similar liberalisation.
Another question concerned industrial parks. The Director General explained that a new industrial zone was under development in Bago, another close to Nay Pyi Taw and finally one close to Mandalay Airport. U Aung Naing Oo stated that the previous government had realised that they should have developed the infrastructure in the existing industrial parks, since this was a big burden for the developers to carry. One follow-up question concerned foreign land ownership and the Director General confirmed that this would not be possible as it is restricted in the constitution.
The final question concerned existing businesses being caught in between the two laws. U Aung Naing Oo confirmed that existing businesses would not be negatively affected by the revised laws.