Post on 20-Mar-2018
Foreign Investment Law and
Investment Procedures in Myanmar
July 12, 2013
KPMG in Myanmar
Ⅰ New Foreign Investment Law
and Its Guidelines
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member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
1. Revision of Myanmar Foreign Investment Law
2011
• The government announced to make revisions in the foreign investment law (FIL) which
was originally issued in 1988。
August, 2012
• The amended bill (New FIL) was approved by the House of Representatives (the lower
house of the Assembly of the Union)
September,2012
•The new FIL was approved by the Assembly of the Union and sent to the president.
•President Thein Sein returned the proposed law back to the Assembly of the Union with 16
further amendments.
November, 2012
•After a careful deliberation of the Assembly of the Union and after the president signed the
proposal, the new FIL was made effective on the 2nd of November, 2012.
January, 2013
•The Ministry of National Planning and Economic Development (MPED) and Myanmar
Investment Commission (MIC) issued detailed regulations of the new FIL. (Notification of
MPDE No.11/2013 and Notification of MIC No.1/2013 )
3 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with
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member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
2. Comparison of FIL - Old and New
The major changes in the New Foreign Investment Law are summarized below ;
Old FIL New FIL
(1) Timeframe of MIC
approval
Not mentioned • MIC shall notify their acceptance of the
application documents within 15 days from the
submission.
• Within 90 days from their acceptance , MIC shall
conclude their review.
(2) Term for land lease Land lease can be done only from
the government.
Lease term was not mentioned.
• Possible to lease lands both from private
entity/person as well as the government .
• Lease term can be 50 years and apply extension
of the next 10 years twice (70 years in total).
(3) Foreign Capital Ratio Not mentioned
Prohibited business for foreign
capital was described
• Business allowable only for JV with Myanmar
partners
⇒Equity ratio by foreign capital should be less
than 80%(60% for some business)
• Other than the restricted business
⇒Foreign capital can own 100% equity
(4) Tax incentives Corporate tax exemption for 3 years Corporate tax exemption for 5 years
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
2-1. Summary of the Investment Incentive
Old FIL New FIL Special Economic Zone Act (Draft)
Corporate
income Tax
Tax holiday for the first 3 years
from the commencement of
business
Tax holiday for the first 5 years
from the commencement of
business
• Tax holiday for the first 5 years in the
Promotion Zone, and 7 years in the
Export Processing Zone.
• Half tax-rate reduction for the next 5
years after the end of tax holiday
• For another 5 more years、if the profits
are reinvested in the business within a
year, half tax-rate reduction is available
for the earning from the re-invested
business
Import Duty
•Duty exemption for ;
- imported machinery and
equipment during the
construction period
- imported building material
• Duty exemption for
- imported raw materials and
parts for manufacturing for the
first 3 years from the
commencement of business
Same as left
•Duty exemption for all materials/parts,
machinery and equipment imported by
the companies in the Export processing
Zone.
•Duty exemption for imported
machinery/equipment and motor vehicle
for the first 5 years in the other zones.
After the period, half tax-rate reduction
shall be applied for the next 5 years.
Special
Privilege on
Land Lease
•Foreign capital company shall
lease land only from the
government.
•By the Notification No. 39 in
2011, land lease of private-
owned land became available
•Leasing of private owned land
as well as government owned
land
•Possible to sublease it and
pledge it as collateral
•Lease term can be 50 years with
extension of 10 years + 10 years
• Lease term for the land in SEZ can be
50 years with extension of another 25
years.
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
3. Promoted Businesses by FIL
【Investment-promoting Business】(Old FIL)
1) promotion and expansion of exports;
2) development of natural resources that require heavy
machinery
3) manufacturing and production with advanced technology
4) supporting the business of production and services
involving large capital
5) development of employment opportunities
6) bringing out of business which would save energy
consumption
7) regional development
【Investment-promoting Business】(New FIL)
1) Supporting the main objectives of the economic development
plan, business which cannot be affordable and which are financially
and technologically insufficiency by the Union and its citizen;
2) Development of employment opportunities
3) Promotion and expansion of exports;
4) Production of import substituted goods;
5) Production of products which require mass investment;
6) Acquisition of high technology and development of
manufacturing business by high technology;
7) Supporting the business of production and services involving
large capital;
8) Bringing out of business which would save energy consumption;
9) Regional development;
10) Exploration and extraction of new energy and the emergence of
renewable energy sources such as bio‐basic new energy;
11) Development of modern industry;
12) Protection and conservation of environment;
13) Causing to support for enabling to exchange the information and
technology;
14) Not affecting the sovereign power and the public security;
15) Intellectual enhancement of citizens;
16) Development of bank and banking in accordance with the
international standards;
17) Emergence of the modern services required for the Union and
citizens;
18) Causing to be sufficient the local consumption of the energy and
resources of the Union in terms of short term and long term period;
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
4. Prohibited and Restricted Business for Foreign Capital
Foreign Investment Law
(Cap. 2 Article 4)
Prohibited Business areas
MIC Notification
No.1/2013
ListⅠ. Prohibited
Business Areas
MIC Notification
No.1/2013
ListⅡ. Economic activities to
be allowed in the form of
joint venture
MIC Notification
No.1/2013
List Ⅲ. Economic activities
to be approved on special
conditions
Business areas considered to be available for 100% foreign capital
<All Business Areas>
Banking and Financial services, Wholesale and Retail Trading
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
4-1. Economic Activities Prohibited for Foreign Investment
Foreign Investment Law
Chapter 2 Article 4 (a) Business which can affect the traditional cultures
and customs of the national races within the Union
(b) Business which can affect the public health
(c) Business which can cause damages to he natural
environment and ecosystem
(d) Business which can bring hazardous or
poisonous wastes into the Union
(e) The factory which produce or the business which
use hazardous chemicals under international
agreements
(f) Manufacturing business and services which can
be carried out by the citizens by issuing laws
(g) Business which can bring the technologies,
medicines, instruments which is being tested abroad
or not approved
(h) Business of farming agricultures, short-term and
long term agriculture which can be carried out by
citizens by issuing rules
(i) Business of breeding which can be carried by the
citizens by issuing rules
(j) Business of the Myanmar Marine Fisheries which
can be carried out by the citizens by issuing rules
(k) Business of foreign investment to be carried out
within 10 miles from border line connection the
Union territory and other countries except the areas
stipulated as economic zones under the permission
of the Union
(f)Manufacturing services that Myanmar citizens are able to conduct
according to the enforced regulations
(A) Manufacturing
1. Conservation and management of forests 2. Production of traditional
medicine in Myanmar 3. Oil drilling up to 1,000 feet 4.Small and medium-sized
mining 5. Cultivation of medicinal plants to be used in Myanmar traditional
medicine 6. Manufacture and sale of iron scrap and parts 7.Production of
traditional food 8. Manufacturing of religious antiquities 9. Manufacturing of
materials related to traditional culture 10.Production of handicrafts
(B) Services 1. Private traditional clinic 2. Sale of traditional medicine 3. Development of
traditional medicine 4. Ambulance service 5. Aged care facility 6. Cafeteria,
transportation, laundry, management of railway services 7. Agency services 8.
Electricity supply of 10MW or less
9.Publication in Myanmar language or other ethnic minority language,
newspaper and other media
(h) Short-term and long-term agricultural plantations Myanmar citizens
can conduct according to the enforced regulations
1. Small-scale agriculture firm
2. Cultivation in agriculture firms that does not use modern facilities or
technology
(i) Livestock industry that Myanmar citizens can conduct
1. Small-scale livestock industry
2. Traditional livestock industry that does not use advanced technology
(j) Myanmar fishing in inshore fishing waters that Myanmar citizens can
conduct according to the enforced regulations
1. Deep off shore fisheries for saltwater fish, shrimps and other marine
products in Myanmar territory
2. Fishing in coasts and rivers
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
5-1. Manufacturing Industry (1)
Ⅰ.Prohibited Economic Activities
Manufacturing and related services of Arms and ammunition for the national defense.
Agriculture and Manufacturing which are not compliance with Fertilizer Law, Seed Law and Agricultural Laws
promulgated from time to time.
Production of Ozone-depleting substances
Production of organic matter that are prohibited by Stockholm Agreement
Production or use of hazardous substances which are prohibited by environmental and conservation Law, Rules
and Procedures promulgated from time to time.
Manufacturing and marketing of construction materials whose composition includes asbestos
Ⅱ. Economic Activities to be Allowed only in the Form of Joint Venture with Myanmar Citizens
Manufacture and sale of the following products:
Hybrid seeds
High-yield seeds and local seeds
Grain products (biscuits, various noodles, etc)
Confectionary
Preserving, manufacturing, canning and marketing of
other food products except milk and dairy products
Malt, malt liquors and non-aerated products
All kinds of spirits beverages and non-beverages
All kinds of ice
Purified drinking water
Cordage, rope, twine of textile fibers
Enamelware, cutlery, crockery of all kinds
Plastic wares
Rubber and plastic
Hides, skins and leathers of all kinds (foot wears,
handbags, etc) except synthetic leather
Various paper products
Paper, paperboard including carbon paper, waxed
paper, toilet paper, etc.
Chemical products using domestic natural resources
Flammable materials, liquid, gas, aerosol
Oxidants (Oxygen, Hydrogen, Peroxide) and
compressed gas (Acetone, Argon, Hydrogen, Nitrogen,
Acetylene)
Corrosive chemicals (Sulfuric acid, Nitric acid)
Industrial chemical gases, including compressed,
liquefied and solid forms
Pharmaceutical raw materials
High-tech vaccine
Structural metal framework for buildings, girders,
prefect and precast concrete
Locomotive wagon, coaches and locomotive engine
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
5-1. Manufacturing Indsutry (2)
Ⅲ.Economic Activities Allowed on Certain Conditions
Type of Economic Activities Condition
Production of oil and fats from vegetables, animals
and other substances
Local raw materials must be used at least 80%
Production of soft beverages, aerated and non-aerated
products
Local raw materials must be used at least 20%
Local cropping raw materials must be used at least
60% after 3 years factory completion
Production of seasoning powder Local raw materials must be used 100% within first 3
years
Production of cigarette Local raw materials must be used at least 50% which
is bought by the income earned after exporting local
Virginia
Export 90% of products
The list of local raw materials to be used and exporting
program must be attached in the investment proposal
Production of perfume and cosmetics Local raw materials must be used at least 50% within 5
years after the completion of factory
Manufacturing and marketing of chemical products
such as paint, varnish, polish, dye, thinner and lacquer
ware paint
Up to 70% of foreign capital is allowed
※Business areas which are required to comply the various regulations and to obtain
approvals of specific government ministries are omitted from the above list.
。
10 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with
KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
5-2. Real Estate Development and Infrastructure Project (1)
Ⅰ.Prohibited Economic Activities
Management of electricity distribution network
Trading of electric power
Inspection services of electrical equipment
Air navigation services
Sea navigation services
Ⅱ. Economic Activities Allowed only in the Form of Joint Venture
Construction of road network and railway such pier, highway, subway, etc.
Development of international standard resort facilities and golf course
Development or sale or lease of residential apartment condominium
Development or sale of commercial building and office building
Development , sale and lease of residential apartments in the residential areas connected to the industrial zone
Development of general public housing
Development of New Town
Building new ships and repairing services at docks
11 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with
KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
5-2. Real Estate Development and Infrastructure Project (2)
Ⅲ.Economic Activities Approved under Certain Conditions
Economic Activities Condition
Hydropower and coal-fired thermal power plants Only in the form of joint venture with Myanmar
government and on BOT contract
Construction and lease of office buildings and
commercial buildings
100% foreign investment can be accepted only on
BOT contract
In the case of joint venture with Myanmar、Myanmar
partner shall contribute the land lease title as capital in
kind
※ Business areas which are required to comply the various regulations and to obtain approvals of specific
government ministries are omitted from the above list.
12 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with
KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
5-3. Trading and Service Business (1)
Ⅰ.Prohibited Economic Activities
Integrated management of media and publishing business
Printing and publishing in Burmese and in other minority ethnic languages
【Financial services and Wholesale and Retail trading is not covered by the Foreign Investment Law. In principal these
business are prohibited for foreign capital investments】
Ⅱ. Economic Activities Approved only in the Form of Joint Venture
Ship transport services of passengers and freight
Warehousing and port services by container depot
Traditional medicine clinics and private hospitals
Tourism and travel industry
13 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with
KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Ⅲ.Economic Activities Approved under Certain Conditions (1)
Economic Activities Conditions
Marine and water way transport and related services Only in the form of joint venture with Myanmar
government
The hospitals and clinics by foreign capital Only in the form of joint venture with Myanmar
government
Health Spa services Operate only in 3-Star and above hotels, or in 5-Star
Boutique hotels
Casino business for foreigners only Approval by Myanmar government
Operate only in hotels in restricted areas
Myanmar citizens are not allowed to play
Hotel Business 100% foreign capital shall be allowed only for 3-Star
and above hotels
5-3. Trading and Service Business (2)
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member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Ⅲ.Economic Activities Approved under Certain Conditions (2)
Economic Activities Condition
Large-scale retail trading Only large-scale retail businesses such as
supermarkets, department stores, shopping center, etc
Floor Area
・Department hypermarket⇒50,000 square feet or more
・Supermarket ⇒12,000~20,000 square feet or more
Should not be located near to the existing local stores
Priority in trading of domestic products
In the case of joint venture, Myanmar capital shall hold
at least 40% interests
Small and medium-sized retail trading Government may approve after 2015
Minimum investment of USD 3 million or more
Trading of motorcycle and automobile will be
excluded
Franchise Business Foreign capital may become only franchisor
(Franchisees shall be local capital only)
5-3. Trading and Service Business(3)
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Ⅲ.Economic Activities Approved under Certain Conditions (3)
Economic Activity Condition
Wholesale trading Require the recommendation from Ministry of
Commerce (It may require large amount of investment,
high technology involvement )
Warehouse Business Only large-scale warehouses
In the case of joint venture, Myanmar capital shall hold
at least 40% interests
Restaurant, beverage shop in large-scale retail facility Require area of 2,000-4,000 square feet in supermarket,
5,000 and above square feet in department store
Publishing in foreign languages In the case of joint venture, Myanmar capital shall hold
at least 51% interests
At least 2/3 of officers and other key staff must be
Myanmar citizen
5-3. Trading and Service Business (4)
※ Business areas which are required to comply the various regulations and to obtain
approvals of specific government ministries are omitted from the above list.
Ⅱ Procedures for Foreign
Investment in Myanmar
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
1. Types of Foreign Investment
Corporation of 100% Foreign Capital
Corporation in the Form of Joint Venture with Local Capital
Branch of Foreign Corporation
Business activities can be carried out in the same manner as
corporation of 100% foreign capital
Representative offices can also be registered as “ Branch of a
Foreign Company” under Companies Act
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KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
2. Registration and Approval Procedure
Branch of a foreign
corporation
Service Company
(excluding prohibited or
restricted business)
DICA
DICA
MIC
DICA
MIC
Registration of company
and the business permit
Approval of MIC
Approval of MIC
Restricted Business by
FIL
Businesses eligible for
incentives by FIL
Business required
approval of the relevant
ministries
Relevant ministries
Inquiry Approval and Conditions
Registration of company
and the business permit
Registration of company
and the business permit
19 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with
KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
3. Company Registration and Business Permit
Temporary Permit
Completion of the
Procedures
Submission of the
application form
(Form A)
Review by DICA
Payment of
Registration Fee
Acceptance of the
conditions by the
investor
Payment of 50%
of the minimum
capital
Business
Minimum Capital
Service USD 50,000
Manufacturing USD 150,000
Company
Registration /
Proposed
Conditions for
Business Permit 2 months
5 years
Payment of the
full capital
20 © 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with
KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other
member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
4. Myanmar Investment Commission (MIC) Approval
Draft land lease agreement
Review by Union Attorney
General office
Prior explanation to
relevant Ministries and
Agencies
Preparation of
Application Form
(Form1)
and the Business
Plan and other
attachments
Submission to MIC
Referral to relevant
Ministries and Agencies Review of the
application
documents
Issuance of
MIC Certificate
※ 【Minimum Capital】 In previous FIL, the minimum capital for Manufacturing - USD500,000 、 Service Business - USD 300,000 In the new FIL, the minimum capital is not explicitly Mentioned. It is assumed to differ on case-by-case basis。
90 days
© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated
with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any
other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Yasuhide Fujii, CPA Japan
Managing Director
KPMG Advisory (Myanmar) Ltd.
yfujii@kpmg.com
+95-1-527-103 / +95-1-514-862