DUANE MORRIS SELVAMamp-vn.com/document/marketresearch/investmentlegalframeworkfo… · Issued...

www.duanemorris.com 1

Investment Legal Framework for Energy Sector

www.duanemorris.com

Oliver Massmann – Partner

DUANE MORRIS SELVAM

[email protected];


Outlines Today’s Myanmar Economic Policy

Foreign investment legal Framework

Creation of Enabling Business Environment

Foreign Investment Opportunities

Facilitation of Business


Today’s Myanmar

The Republic of the Union of Myanmar The New Government has taken its duty of the state since 31st March 2011

Reforms

Focusing on Politics: National Reconsolidation, Peace and Stability , Freedom of Media

Focusing on Economic Development: Invite more FDI, Change Trade Policy, Monetary & Finance Policy

Focusing on Administrative Measures: Good Governance, Clean Government and Efficient Administration Focusing on Private Sector Development: SMEs Development, To be a modernized

developed industrialize nation


Myanmar’s Reform Efforts

Ap

ril 2

01

2

Managed Floating Rate System Adopted

No

vem

ber

20

12

Foreign Investment Law

•Rules & Regulations passed January 31, 2013

•Clarifies investor rights & incentives for investments

•Clarification on types of investment activities

•Classification of Types of Business Activities (MIC’s Notification No. 49/2014 and 50/2014 issued on 14 August 2014; and 51/2014 issued on 19 August 2014.

July

20

13

Central Bank Law passed

•More Autonomy for Central Bank

Oct

ob

er 2

01

4 Issued Operating

License to 9 Foreign banks

•3 Japanese Banks: Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp., Mizuho Bank Ltd.

Launching of 1st Myanmar Report

Issued OECD Investment Policy Review 2014

Included in WB East of Doing Business Report

Ap

ril 2

01

5

SME Development Law passed by Parliament

•SME Development Central Committee was formed in January 2013

•Aims to address Market Access, Finance Access & Capacity needs of SMEs

Minimum wage has set at Kyat 3600 (around USD 2.80) and will be implemented from September 2015 (Notification No. 2/2015 of National Committee for Minimum Wage)

On

goin

g R

efo

rms Reformation of

Myanmar Company Act

Consolidation of Foreign Investment Law and Citizen Investment Law

4


Economic Policy Objectives

Sustainable development of agriculture towards industrialization and all round development;

Equitable and balanced development among Regions and States;

Inclusive development of entire people;

Accuracy of Statistics and Statistical Systems


Myanmar’s Priorities

Rural Development and Poverty Reduction

Agriculture development and industrialization

Energy sector development

Telecommunication development

Microfinance for rural people and SMEs

Education and health sector development

HRD


Myanmar Data in 2013-14

FDI Inflow 4.1 Billion USD (2015-16 budget year - as of

July 2015 was 2.649 Billion USD)

Population(2014) 51.4 Million

GDP Growth 8.7% (GDP in 2014 USD 64.33 Billion)a

Export 11.2 Billion USD

Import 13.8 Billion USD

Trade Balance USD 2.6 Billion Deficit

Tele Density 14.8% (2014-15- 41.17% )

a) World Bank Database


Foreign investment legal Framework

The Union of Myanmar Foreign Investment Law (State Law and Order Restoration Council, Law No. 10/1988). Its Procedures.

8

Classification of Types of Business Activities (MIC’s Notification No. 49/2014 and 50/2014 issued on 14 August 2014; and 51/2014 issued on 19 August 2014.

Foreign Investment Rules (MNPED’s Notification No. 11/2013), 31st January 2013.

The Foreign Investment Law (Pyidaungsu Hluttaw Law No. 21/2012), 2nd November 2012

The Special Economic Zone Law was enacted in 23rd January2014.

The State Owned Economic Enterprises Law Covered 12 Activities including Exploration, extraction and sale of petroleum and natural gas.)

Classification of Types of Business Activities (MIC’s Notification No. 1/2013), 31st January 2013.

D:/DATA Backup/Desktop/Mom's works/a_SOEE_Restricted_Activities.pdf





List of Economic Activities under Prohibition

List of Economic Activities to be allowed only in the form of

Joint Venture with Myanmar Citizens

List of Economic Activities Permitted with the Specific

Condition

1. List of Economic Activities Permitted with the

recommendations of the Relevant Ministry and Required

Joint Venture with the Citizen

2. List of Economic Activities Permitted with Other Conditions

and required Joint Venture

Notification No. 49/2014


Economic activities which required Environmental Impact

Assessment



Investment Activities that are not required to grant

exemption and relief from tax



Legal framework : enactment of new FIL, SEZ & Rules for those laws

Policy framework : more open, more transparent

Institutional framework : new setup of the MIC

Procedural framework : streamlining, simplifying, establishment of OSS

Creation of Enabling Business Environment


Previous Investment Regime Current Investment Regime Limitations - To Lease the Land (No option to lease the land from private) - Import Goods (No option except MIC permit) - VISA - Operating with Foreign Currency MFTB, MICB only

Relaxations - Right to lease the land from Private Notification No. 39/2011 - Issued Import License (MOC) Import goods concern with business - VISA DICA will recommend - Operating with Foreign Currency MFTB, MICB, + Private Banks Notification No. 40/2011 (Foreign Banks are opened)

More Opportunities

Enjoy various incentives , among others include :5 year income tax holiday; 3 year customs duty and internal taxes exemption /relief on importation of raw materials; exemption/relief from customs duty and internal taxes on importation or machinery and equipments during construction period; relief from income tax up to 50% on profits from export; exemption/relief from customs duty and internal taxes on importation or machinery and equipments related to increased investment approved by Commission.


Laws related to incorporate as a company - The Myanmar Companies Act 1914 - Special Companies Act 1950 - Myanmar Companies (Amendment) Act 1955 - Myanmar Companies Regulations 1957

Investment Laws - Foreign Investment Law (2nd Nov 2012) Foreign Investment Rules (31st Jan 2013) - Special Economic Zone Law (Jan 2014) SEZ Rules ( August 2015)

Legal Framework for Setting up of a Business in Myanmar

The State Owned Economic Enterprises Law (31st March 1989


Three Alternative ways to start business in Myanmar

Company Incorporation -Incorporation (or) Registration -Permit -Start -No Incentives

MIC permission -Submit Proposal -Permit -Start -Enjoy Incentives by FIL

SEZ Management Committee -Submit Proposal -Permit -Start -Enjoy Incentives by SEZL (More Advantages)


3 SEZs

Thilawa SEZ

Dawei SEZ

Kyauk Phyu SEZ

SEZs Management Committee which regulate and grant permit.

Existing Special Economic Zones and Economic Zones

Economic zones established under MIC


Creation of Industrial Cluster in Myanmar

Existing Industrial Zones in Myanmar New Industrial Zones to be Established

Source: Myanmar Investment Guide

17

infrastructural facilities land management plan for industrial cluster town and city plan Human resource development and employment plan


- Supporting the main objectives of the economic development plan - Development of employment opportunities - Promotion and expansion of exports - Production of import substitution - Acquisition of high technology and development of manufacturing by high

technology

Investment Opportunities Main Basic Principles of FIL


100 % Foreign owned It is contributed 100% owned by the foreigner expect for the business

prescribed with the notification issued by the MIC A Citizen, a Citizen company or Concerned Government Organization Joint Venture system with the local partner by the agreement between the two parties Any System Included in the Mutually Agreed Contract It will be cooperation system between government and private

including BOT system, BTO system

Forms of Investment


Investor can apply the proposal by 3 ways

Foreign Investment which is connected natural resources based Industry

State owned Economic Enterprises Investment or Industry not included in above 2 categories

How to Submit the Proposal


Process to issue MIC Permit

From 1 by FIL

From 1 + Draft of land lease agreement + EIA or IEE or EMP assessment (depends on project)

Submit

Through concerned ministry or department

+ If, SEE (PSC or MOU or others) + If, Natural Resources Based Industry

PAT meeting

MIC meeting

Permit for Investor

Recommendation

Regional Government Concerned ministry Public Opinion (if project is sensitive on social and culture)

Within 15 Days PAT will reply to investor whether project is acceptable or not.

Within 90 Days MIC will grant permit to investor.


50 years 10 years

10 years Investor could lease the land not only from Government but also form private party for maximum 70 years.

Construction period is defined depends on business Exemption or relief from custom duty or other internal taxes on machineries, equipments, instruments, spare parts used in business

Starting commercial operation of business

Exemption or relief from custom duty or other internal taxes on raw materials imported for production for the first three years.

Income tax exemption for a period of five consecutive years including the year of commencement of commercial operation.

3 years

5 years

? Years/ months depends on business

Land Lease Period under MIC and enjoyment of Duty & Taxes relief / exemption


Appoint Citizens employees, technicians and service personnel for skilled businesses as follows :

First 2 years 25%

Second 2 years 50%

Third 2 years 75%

Unskilled labor must be Myanmar Citizen only

Obligation relating to employment


Protection for Foreign Investment Dispute settlement mechanism State guarantee No nationalization No termination during the permitted period Right to transfer & repatriation

http://www.dica.gov.mm/


Particulars Free Zone( 75 % must be exported)

Promotion Zone(Tax rebates

on export)

Income Tax Relief

1st seven years 1st five years

2nd five years- 50 % 2nd five years-50%

Income Tax Relief if profits reinvestment 3rd five years-50 % 3rd five years-50%

Exemption from custom duties and other tax Raw materials, Equipment (Full)

Equipment 1st five years and 2nd

five years -50%

One Stop Service Centre Serves for company incorporation, immigration, import/import license, taxes and duty exemption/relief, labour certificate, environmental conservation and prevention plan, building permit, factory operation certificate and others …

Incentives under Special Economic Zone


Relaxation of performance requirements

Liberalizations of operational conditions

One stop service

Coordinate with related government agencies

Review and update regulations

Consultation with Int’l Organization, stakeholders

Streamline & simplify procedures for investment applications and approval

Facilitation of Business


FDI flow in New Investment Regime

0

1000

2000

3000

4000

5000

6000

7000

8000

2011-2012 2012-2013 2013-2014 2014-2015

300.48

Chebwe Hydropower

USD Million

4343.98

1419.47

8010.53

4107.054

FDI i

nflow

s fro

m th

e per

iod 1

st Apr

il to 3

1st J

uly 2

015

– USD

264

9.143

mi (

64 pr

ojects

) To

tal Pe

rmitt

ed In

vestm

ent u

p to

July

2015

- U

SD 5

6886

.442

mi (

959

proje

cts)


FDI Projection and Inflows

0

1

2

3

4

5

6

7

8

2012-2013 2013-2014 2014-2015

1

3

4

1.419

4.107

8.01

Projection

Approved

USD Billion


29

1

3

No Sector 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

2015-2016

(as of July 2015)

No Amount No Amount No Amount No Amount No Amount No. Amount

1 Manufacturing 4 66.32 5 32.25 78 400.72 94 1827.28 141 1502.01 48 383.126*

2 Power 2 8218.52 1 4343.98 1 364.20 1 46.51 1 40.11 -

3 Oil & Gas 9 10179.30 5 247.70 6 309.20 - 26 3220.31 10 2049.200

4 Hotel &

Tourism

- 1 300.00 6 435.21 5 357.95 - 50.750*

5 Mining 3 1396.08 2 19.90 1 15.33 2 32.73 1 6.26

6 Agriculture 3 138.57 - 2 9.65 4 20.27 4 39.67

7 Livestock &

Fisheries

- 1 5.60 3 96.02 5 26.86

8 Transport &

Communicatio

n

- - 4 1190.23 8 1679.30 1 120.000

9 Real Estate - - 4 440.57 6 780.75

10 Other Services 0.63 4 14.77 5 18.23 14 357.32 5 46.067*

Total 21 19998.79 13 4644.46 94 1419.47 123 4107.06 211 8010.54 64 2649.143

U.S $ in million

Existing Direction of Foreign Investment


Thank you!

[email protected];

Oliver Massmann – Partner

DUANE MORRIS SELVAM

http://www.dica.gov.mm/

DUANE MORRIS SELVAMamp-vn.com/document/marketresearch/investmentlegalframeworkfo… · Issued...

Documents

Transcript of DUANE MORRIS SELVAMamp-vn.com/document/marketresearch/investmentlegalframeworkfo… · Issued...