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PositioningMyanmarasanattractivenewinvestmentdestinationinSoutheastAsia
8th MeetingoftheAsia-PacificForeignDirectInvestment(FDI)NetworkUnitedNationsConferenceCentre,Bangkok,Thailand25-26September2018
Contents• MyanmarInvestmentPosition• ReformoftheMyanmarInvestmentLaw• ChallengesonPositioningMyanmarasaninvestmentdestination
Myanmar Population 53.90million 2015GDP $62.60billion 2015GDPgrowth 7.3% 2015Inflation 10.8% 2015
Measure YearIndex or
Rank YearIndex or
RankTI Corruption Perceptions
index2014 156 of
175 2016 136 of 176
World Bank’s Doing Business Report “Ease of
Doing Business”
2015 177 of 189 2017 170 of
190
4
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]
TotalASEAN[00]
Totalcountries
[99]BruneiDarussalam Cambodia Indonesia LaoPDR Malaysia Myanmar Philippines Singapore Thailand VietNam
2013 -57.98 725.47 298.85 1,274.90 8,721.11 18,443.8 104.61 426.67 2,150.03 12,107.0 1,186.80 2,620.90 -41.71 3,859.79 3,523.00 57,452.4 528.21 15,935.9 2,078.59 8,900.00
2014 141.20 568.18 372.48 1,726.53 13,083.7 21,810.4 137.94 913.24 2,283.98 10,875.3 683.62 946.22 137.10 5,814.57 4,868.50 73,472.4 -940.73 4,975.46 1,547.08 9,200.08
2015 86.65 171.32 425.41 1,700.97 9,228.63 16,642.1 221.83 1,079.15 2,931.35 10,179.9 2,230.65 2,824.48 57.30 5,639.16 3,041.00 62,747.1 433.60 8,927.58 2,153.46 11,800.0
2016 -64.66 -150.44 635.77 2,279.67 9,907.49 3,920.65 196.64 1,075.69 2,098.71 11,290.2 1,682.89 2,989.48 608.26 8,279.55 6,519.40 77,456.2 1,958.84 3,063.24 2,306.61 12,600.0
2017 535.27 460.15 603.49 2,732.15 11,873.4 23,063.6 171.16 1,695.38 2,165.88 9,447.21 2,090.62 4,340.74 718.70 10,049.3 3,957.80 62,016.7 1,913.26 9,100.91 2,531.17 14,099.9
-10,000.00
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
70,000.00
80,000.00
90,000.00
ASEANFDIINFLOW2013-2017
MyanmarFDIin-FLOWANDFDISTOCK(UNCTAD,2016)
15624.516121.4
16705.717651.9
20475.9
1117.7496.9 584.3 946.2
2824.0
-
5000.0
10000.0
15000.0
20000.0
25000.0
2011 2012 2013 2014 2015
InwardStock
Inflow
5
InvestmentFocusSectors
OilandGas Manufacturing Infrastructure Agriculture Tourism
6
ReformoftheMyanmarInvestmentLaw
ReformoftheMyanmarInvestmentLaw•DrivenbyDICA• SupportedbyInternationalFinanceCorporation/WorldBankGroup• SupportedbyDFIDUKandDFATAustraliaandJapanGovernment• TheASEANComprehensiveInvestmentAgreement(ACIA)astheBenchmark
8
PotentialBenefitstoMyanmar
MyanmarInvestmentLaw
BenchmarkedwithACIAstandards
IncreasedLiberalisation,ProtectionandFacilitation
IncreaseinInvestors’Confidence
TransferofKnowledgetoMyanmar
9
ReasonsforReform
DualLaw:ForeignInvestmentLaw2012andCitizenInvestmentLaw2013
Toimproveon:InvestorProtectionMarketAccess
EntryProceduresInvestmentIncentives
Toreducecomplexandlengthyentryprocess,toincrease
transparency
ReformtheIncentiveSchemefromBlanketapprovalto
targetedincentive
TableofComparisonsofPositionBeforeReformCore
InvestorProtectionGuaranteeMyanmarFIL Myanmar-China
InvestmentTreatyMyanmar– IndiaInvestmentTreaty
Myanmar–Philippines
InvestmentTreaty
ACIA
NationalTreatment Noexpressprovision Yes Yes Yes Yes
MostFavoredNation Noexpressprovision Yes Yes Yes Yes
FairandEquitableTreatment(FET)
Noexpressprovision Yes Yes Yes Yes
ProtectionagainstExpropriation
Yes,butinadequate. Yes Yes Yes Yes
Currencyconvertibilityandtransfer
Yes,butinadequate. Yes Yes Yes Yes
DisputeSettlementProvision Yes,butinadequate Yes Yes Yes Yes
MarketAccesspriortoReform• OECDIPR:MyanmarranksverypoorlyintermsofmarketaccessessentiallybecausetheNegativeListisverylong.
• TheconsolidationoftheFILandCILintoonesinglelawoninvestmentofferstheopportunitytoreviewtheNegativeListandremovesomeoftherestrictions.
• Bestinternationalpracticeistohaveashort,clear,transparentNegativeList thatstateswithoutambiguitywhatarethevariousrestrictions.Usually3typesofrestrictions:
1. Prohibitionstoinvest:sectorswheredomesticand/orforeigninvestorscannotinvest.Idealistohavethesameforbothdomesticandforeign.
2. ForeignInvestmentCeilings:sectorswhereforeignparticipationislimitedtoacertainpercentageofownership.Idealistohavenoorveryfewsectorswithforeigninvestmentceilings(ineffectamandatoryjointventure)
3. Performancerequirements orspecialapprovalprocesses forforeigninvestors.Idealistohaveasfewsuchrestrictionsaspossible.
Bestpracticeistoestablishaperiodicreview oftheNegativeList.
PriortoReform:MyanmarSetsOutMoreStepsforInvestmentApprovalThanNeighboringCountries.
Investmentapproval Post Investmentapproval
DICA Relevantministries/regionalgovernments
MIC Municipality Otherrelevantministries
PermittoTrade
CompanyRegistration
InvestmentApproval
InvestmentEndorseme
nts
ConstructionPermit
OperationalLicenses
CommercialOperationsApproval
InvestmentIncentivesApproval
LeasingApproval
ExportLicensesif
BusinessisanExport
Company
TheMyanmarInvestmentLaw2016,October2016
OBJECTIVES(CHAPTER2)
• AppliestobothDomesticandForeignInvestors
15
ProtectInvestorsandtheirInvestments
DevelopResponsibleBusiness
DevelopBusinessesandInvestmentsthatmeetInternationalStandards
KEYDEFINITIONSANDSCOPE
Ø "Enterprise":Ø (1)anylegalentityconstitutedorestablishedinaccordancewiththe
applicablelawsincludingcompany,trust,partnership,soleproprietorship,jointventure,businessassociationorsimilarorganisations
Ø (2)abranchofficeofsuchlegalentityestablishedinaccordancewiththeapplicablelaws.
Ø “DirectInvestment”:Ø Aninvestmentwheretheinvestorshavetherighttocontrolorinfluenceor
manageofsuchassetswhichareinvestedbytheinvestorswithintheUnioninaccordancewiththelaw.
16
Keydefinitionsandscope(cont’d)
Ø “Investment”(S.4)Investmentincludes:a) anEnterprise;b) movableandimmovablepropertyandrelatedpropertyrights
etc;c) shares,stocks,bondsanddebentures;d) Intellectualpropertyrightsetc;e) claimstomoneyandtoanyperformanceundercontract
havingafinancialvalue;f) rightsundercontractsetc;andg) Assignablerightsgrantedbytherelevantlawsorcontract
includingtherightsofexploration,prospectingandextractionofnaturalresources.
3
SCOPEOFTHELAW(CH.3)
AnyExistingornewDirectInvestment
Notapplicabletoanypendingdisputeoranysituationthatended
beforethedateoftheLaw
AnymeasureadoptedormaintainedbytheUnion
GovernmentandGovernmentorganisationsexceptmeasuresunder
Ch.21(Generalexceptions)andCh.22(SecurityExceptions).
5
RoleoftheMyanmarInvestmentCommission
MyanmarInvestmentCommission
(MIC)
Directorateof
Investmentand
CompanyAdministration(DICA)
6
ØMICMandateandFunctionsØ investmentpromotionagency;Ø investmentfacilitation;Ø Investmentapprovals;Øadviseoninvestmentpoliciesincludingpromotedsectorsandrestrictedsectors(negativelist);
Ø investmentgrievancemechanism.
AdmissionofInvestment
4
InvestmentinAnyAllowedSector
EnterpriseRegistration
Endorsement MICPermit
ApprovalNotificationforEndorsement
NotificationforInvestorsnotinbothcategories
INVESTMENTSREQUIRINGMICPERMITs(s.36)
• (a)Businesses/investmentactivitiesthatarestrategicfortheUnion;• (b)Largecapitalintensiveinvestmentprojects;• (c)Projectswhichhavelargepotentialimpactontheenvironmentandthelocalcommunity;• (d)Businesses/investmentactivitieswhichusedstate-ownedlandandbuilding;and• (e)Businesses/investmentactivitieswhicharedesignatedbytheGovernmenttorequirethesubmissionofaproposaltotheCommission.
21
Restrictedsectors(Negativelist)
22
ProhibitedSectors(S.41)
• Hazardous/poisonous
• UntestedtechnologiesunlessR&Dbusiness
• Damagetoenvironment
• AffectPublicHealth• Prohibitedunderotherlaws
Restricted(S.42)
• LimitedtoGovernment(e.g.powertransmission)
• RestrictedtoForeignInvestors
• JVbetweenforeignandcitizeninvestors
• NotificationbyMIC(e.g.Notification26),subjecttoreviewifneedtoliberalise,amendorremove
Special(s.46)
• Significantimpactonsecurity,economiccondition,theenvironmentandnationalinterest
• ApprovalfromParliament
InvestorRightsandProtections
Fair&EquitableTreatment(s.48)
NationalTreatment(s.47(a)andMostFavoredNation
Treatment(s.47(b))
RighttoUseLand(s.50)
RighttoEmploy
Expatriates(s.51)
InvestmentGuarantee
(s.52)
TransferofFunds(s.56)
23
INVESTMENTGUARANTEE(CH.14)• Conditions for an expropriation (S.52):• for public purposes;• in a non-discriminatory manner;• The investors are to be provided with prompt, adequate and effectivecompensation; and
• In accordance with due process of law.
24
Direct Expropriation Indirect Expropriation
• Formal transfer of legal title• Outright seizure of the investment of
the foreign investors
• A measure or series of measuresthat has similar effect to directexpropriation even without formaltransfer or outright seizure of thelegal title over the investment.
• This is decided on a case-by-casebasis.
EXEMPTIONSANDRELIEF
RemovalofBlanketIncentives
NotificationsonZones/InvestmentActivities
AllowsforspecialtreatmentofdomesticSMEs
10
SETTLEMENTOFDISPUTES(CH.19)
26
DisputeBetweenInvestorandState(ClaimsforBreachoftheInvestmentLaw)
AmicableSettlement
Unabletoreachasettlement
DomesticCourt/Tribunalinaccordancewiththelaw
Otherformsifstipulatedinanagreement(international
arbitration)
GRIEVANCEMECHANISM(S.82)MICtoestablishandmanageagrievancemechanismtoinquireandresolveissuesbeforetheybecomelegaldisputesandtopreventtheoccurrenceofdisputes.
ChallengestoPositionMyanmarasanAttractiveInvestmentDestination
AdvantagesofMyanmarIntheMiddleofIndiaandChina,Bangladesh.ASEANand40%ofworldpopulation
Neighbours economiesworthUSD15trillionor20%ofworld’sGDP
BigDomesticMarket RichinNaturalResources,fertileland
DynamicandenthusiasticPopulation
InclusiveReformProcess– Increased
transparencyandpublicparticipation
KeyChallengestoMyanmar
LegacyIssues:Investmentsapprovedbeforethe2016Law
Regionaldevelopmentinviewofnewapproach
forFederalism
HumanCapacity,ExpertisetoimplementtheLawandtoprovidesupporttoInvestors
CreatingFocusSectors:Physicalinfrastructure,
exportoriented,responsiblebusiness,
jobs
Bringinginformalactivitiesintoformal
sector(e.g.agriculture,bordertrade)
AccesstoLand
Overdependenceonresourcesector(80%);
telecomandmanufacturingonly7%