Myanmar unveils foreign investment law

Myanmar has passed a new foreign investment law to boost growth. The promulgation came a day after the country’s parliament approved the bill with some amendments made by President U Thein Sein. The new law replaces the 1988 version in a bid to attract more foreign investment in the country. The 20-chapter law mainly states that foreigners can make full investment in undertakings permitted by the Myanmar Investment Commission (MIC), which will designate the minimum amount of the investment capital with the consent of the government. The law allows joint venture operation between foreigner and local citizen or related government department or organisation mutually-agreed ratio of investment.  Dealing with restricted or banned undertakings, the law allows foreigner to do the business in partnership with local citizen and the ratio of foreign capital can be suggested in accordance with the prescription in the provision. Restricted or prohibited foreign investment undertakings include those lying within 15 km to the boundary line with neighbors but do not apply to the economic zone granted by  government. The restricted foreign investment undertakings also cover those which local citizen is able to carry out, such as some production and service sectors, agriculture, livestock breeding and fishing within Myanmar waters. The law grants five-year income tax holidays from the start of business operation and commercial tax relief or exemption will be applied on products for export.  The law grants an initial period of 50 years for lease of land for investment undertakings which is renewable every 10 years and the commission is tasked to fix the lease prices of the land plots owned by government department or organisation with the pre-consent of the government. The law designates that local citizens only shall be employed in undertakings where no skill is demanded, while in those areas which need special skill, at least 25 per cent of the employees be local experts or skilled workers for the initial two years from the day of starting operation, 50 per cent for the second two years and 75 per cent for the third two years. Foreign employers are set to have the responsibility to train local skilled employees to upgrade their skill in work implementation.  The law allows foreign company to transfer all or part of its stake to other foreigner or local citizen with the pre-consent of the commission. The law permits transferring back the net profit of foreign investor through authorised local banks at the designated exchange rate which is now quoted as market rate.  The law guarantees no nationalisation of the foreign-invested business.