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(Nov 28, 2012) On November 1, 2012, the Pyithu Hluttaw, Burma's Parliament, passed amendments to the Foreign Investment Law that it adopted just two months ago. President U Thein Sein, who had recommended that the Law be revised, signed the revisions into law on November 2, and the amended legislation was published the following day. The Parliament adopted 10 of the President's 11 suggested changes. Concerns had been raised that the Law as adopted in September was too protectionist. (Win Ko Ko Latt & Stuart Deed, President Amends Foreign Investment Law After Vote, "Investor-Friendly," THE MYANMAR TIMES (Nov. 5, 2012); Wendy Zeldin, Burma: New Foreign Direct Investment Law Adopted, GLOBAL LEGAL MONITOR (Sept. 12, 2012).)
New Foreign Investment Rules (FI Rules) are expected to be adopted that will clarify and add details to certain provisions of the Law. (Rachel Saw, Myanmar - Foreign Investment Law Passed, NEWS IBFD (Nov. 21, 2012).) The new Law supersedes the old Law of 1988. (Aung Hla Tun, Myanmar State Media Details New Foreign Investment Law, REUTERS (Nov. 3, 2012); Foreign Investment Law of Myanmar, No. 10/88 (Nov. 30, 1988), Provincial Commerce Operation Center, Thailand Ministry of Commerce website.)
Highlights of the new Law are:
- removal of a 50% maximum and 35% minimum level of foreign investment in 13 restricted sectors, allowing the investment ratio to be negotiable between the investor and the local partner. A new capital requirement minimum will be specified in the FI Rules; until then, the current minimum of US$500,000 for industrial projects and US$300,000 for services-related projects will still apply;
- a ban on 100% foreign ownership of ventures in certain sectors, with the permitted foreign ownership percentage likely to be published in the FI Rules. The restricted sectors include public health; natural resources and the environment; manufacturing and services operations that Myanmar citizens are capable of handling (to be specified in the FI Rules); and agriculture, livestock raising, and fisheries (details to be specified in the FI Rules);
- new labor requirements for increased use of local staff in skilled positions, including: in the first two years of the venture, Myanmar nationals must constitute at least 25% of the workforce; in the second two years, at least 50%; and in the third two years, at least 75%. Only Myanmar citizens may fill unskilled positions;
- land-use rights of up to 50 years, extendable thereafter for two additional ten-year terms (vs. the previous initial term of 30 years and two 15-year extensions);
- extension of the period of exemption from corporate income tax to five years from the previous three, retention of the previous Law's discretionary tax benefits, and addition of some customs duty and commercial tax exemptions for exports;
- the additional requirement to obtain certain state and regional approvals for foreign projects that must be approved by the national Myanmar Investment Commission (MIC), which administers foreign investment in the country;
- the inclusion of new activities, such as import substitution, for which an investment permit must be obtained from the MIC;
- stipulation of investors' rights and duties, based on similar provisions in the Myanmar Citizens Investment Law;
- a guarantee that, after the investment period has expired, the investor can remit its investment gains overseas in the same foreign currency that it brought in at the outset; and
- a guarantee against nationalization, as in the old law, to the effect that without "sufficient cause," approved investment activities will not be terminated during the contract period or its extension (a clause in a previous version of the new Law, stating that compensation would be offered if a company were nationalized in the public interest, was dropped). (Saw, supra; Iain G.O. Melville, Myanmar: Details of Myanmar's New Foreign Investment Law, MAYER BROWN JSM (Nov. 26, 2012) http://www.mayerbrown.com/Details-of-Myanmars-New-Foreign-Investment-Law-11-19-2012/; Aung Hla Tun, supra.)
|Author:||Wendy Zeldin More by this author|
|Topic:||Foreign investment More on this topic|
|Jurisdiction:||Burma More about this jurisdiction|
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Last updated: 11/28/2012