Investment in Myanmar

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INVESTMENT IN MYANMARUNDER THE FOREIGN INVESTMENT LAW 2012

AND COMPANY REGISTRATIONUNDER THE MYANMAR COMPANIES ACT 1914

Presented byKOWIT SOMWAIYA

MANAGING PARTNER

TOTHE FEDERATION OF THAI INDUSTRIES

3rd MARCH 2014QUEEN SIRIKIT NATIONAL CONVENTION CENTER

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Presentation Topics

1. Overview of FIL

2. Investment Activities under FIL

3. Capital Requirements for MIC Permit

4. Major Incentives

5. Protection Measures

6. Application for MIC Permit

7. Company Registration Procedures

8. Application for Company Registration

9. DICA Permit Procedures

10. Application for DICA Permit (Permit to Trade)

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Overview of FIL

• The Foreign Investment Law (FIL) was enacted on 2nd November 2012 to promote foreign investment in Myanmar.

• The FIL imposes no foreign ownership limit on investment/economic activities, subject to some limits under regulations issued under the FIL.

• Section 56 of the FIL empowers the Ministry of National Planning and Economic Development (MNPED) and the Myanmar Investment Commission

(MIC) to issue regulations to implement the provisions of the FIL.

• The MIC Notification No. 1/2013 categorizes investment activities into 3 lists.

• The MNPED Notification No. 11/2013 sets out detailed requirements and procedures for applications for MIC Permits and approvals, etc.

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Investment Activities under MIC Notification No. 1/2013

List 1: Activities Prohibited to Foreigners: 21 activities. Eligible to Myanmar citizens only.

List 2: Activities Permitted to Foreign-Myanmar JVCs Only: 42 restricted activities. Eligible to foreigner-Myanmar JVCs only.

List 3: Activities Permitted to Foreigners 115 activities subject to conditions imposed by 13 ministries. 27 activities subject to other conditions. 32 activities subject to an environmental impact assessment (EIA).

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Capital Requirements for MIC Permit

Minimum capital: Case-by-case basis to be determined by the MIC.

Foreign ownership limits:

(1) 80% of the total capital for the permitted activities under List 2. (2) No limit for the permitted activities under List 3, except for limits for some activities, e.g.

- 25% for basic timber conversion- 49% for high technology project requiring large investment- 70% for manufacturing and marketing of chemical products.

Capital can be paid in cash or in kind (machinery, intellectual property, technical know-how, etc).

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Major Incentives 1

Exemption of corporate income tax for 5 consecutive years and for profit reinvested in Myanmar within 1 year.

Acceleration of depreciation of assets.

Reduction up to 50% of income tax on profit from exports.

Deduction of R&D expenditure from taxable income.

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Major Incentives 2

Set-off of losses carried forward up to 2 consecutive years after the end of the tax exemption or tax reduction period.

Exemption or reduction of customs duties and other taxes on imported machinery and equipment.

Exemption or reduction of customs duties and other taxes on imported raw materials for the first 3 years.

Foreign employees pay tax at the same rates as Myanmar nationals.

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Major Incentives 3

Land lease up to 50 years plus 2 renewals of 10 years each.

Land lease for a term longer than 50 years in less developed regions is possible upon MIC approval.

Can sub-lease or mortgage the leased land and buildings upon MIC approval.

Can export or sell products of the MIC approved project in Myanmar.

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Protection Measures

No nationalization during the term of the MIC Permit.

No termination of the MIC Permit without sufficient cause.

Repatriation of the foreign capital upon expiration of the MIC Permit or dissolution of the company, subject to MIC approval.

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Application for MIC Permit

• Major Requirements Application Form 1

Draft of AOA of the applicant

Draft of MOA of the applicant

Draft of JVA (if the applicant is a JVC)

Financial documents of the applicant

Bank confirmation letter on financial creditability of the applicant

Detailed calculation of benefits to be generated by the project for the economy

• Timeframe 4-5 months

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MIC Permit

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Company Registration Procedures

Filing Application for Company Registration

with CRO under DICA

Temporary Certificate of Incorporation

Payment of 50% of Registered Capital

Certificate of Incorporation

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Application for Company Registration

• Major Requirements Company Registration Form

AOA

MOA

Declaration of Registration

Declaration of Registered Office

List of Directors (at least 2 directors)

List of Shareholders (at least 2 shareholders)

Copies of passports of shareholders (if individuals) and directors

Copies of company registration documents of corporate shareholders (legalized)

Copy of temporary DICA Permit


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Temporary Certificate of Incorporation

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Certificate of Incorporation

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DICA Permit Procedures

Filing Application for DICA Permit

with DICAunder MNPED

Temporary DICA Permit

(Valid for 6 Months)

DICA Permit(Valid for 5 Years,

Renewable)

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Application for DICA Permit (Permit to Trade)

• Major Requirements Application Form A

AOA of the applicant

MOA of the applicant

BOD Resolution of the applicant

Bank confirmation letter on financial creditability of the applicant (legalized)

Proposed business activities of the company

Estimate of first-year expenses of the company


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Temporary DICA Permit

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DICA Permit

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