Select Page
Our friend Edwin wrote to me…Dear Sonny,

We
have obtained an advance copy of the Myanmar Investment Commission’s
Notification 1/2013 which sets out a long list of additional rules and some
restrictions on foreign investment in Myanmar. This Notification, which follows
and adds to Regulation 11/2013 of the Ministry of National Planning and
Economic Development (MNPED) which we commented on per email yesterday, has
apparently been finalized but has not yet been officially released. We
understand that this comprehensive document will be released in the course of
next week.

The
Notification comprises an extensive list of rules and restrictions for foreign
investment projects in various sectors including:

  • List of business
    activity and use of specific materials which are not permitted;
  • List of business
    activities that require a joint venture with a local partner;
  • Conditions which foreign
    investors need to meet in order to receive an approval for an extensive list of
    specific activities; and
  • Guidelines which foreign
    investors need to follow for specific activities.

A
wide range of sectors is affected by the Notification, but few sectors or
activities are really closed off to foreign investors. Nevertheless, certain
activities have a new requirement for a joint venture, or have certain specific
and important conditions for approval (e.g. requirements for operation,
requirement for export or necessary use of raw materials), and most often have
guidance on standards or approvals.

We
thought it might be helpful to give you an idea of these different rules and
restrictions per sector:

Sectors


(Not a
Limitative List)

Rules and
Restrictions

(JV Requirement, Approvals, Conditions, Guidelines)

Agriculture, fisheries,
livestock

Certain small projects require a JV; approval is required from the relevant Ministry; certain fertilizers and insecticides are prohibited.

Forestry

No JV required; cutting and selling timber requires approval from the relevant Ministry but if a sawmill is operated, a JV is required with a maximum percentage for foreign investors.

Real estate

Depending on the structure of the project, a JV is required for most types construction, but not for hospitality (3 star hotels and above). The Notification sets out a number of specific rules for BOTs and on land use rights in a JV.

Mining

According to the Regulation, small scale and medium scale mining is subject to a JV requirement. According to the Notification, so is large scale mining. The Notification also sets out rules on prospection, surveying, exploration and production, which are largely in line with the current practice, except that the contract term is put at 15 years with 4 extensions of 5 years per extension. Certain “strategic minerals” can be mined only through a JV with the Government.

Foodstuffs

Nearly all foodstuffs require a JV for manufacturing, canning and distribution. The same applies to mineral water, and production or distribution of ice.

Production of beverages
(we presume non-alcoholic, and not mineral water)

No JV is required,
but there are several requirements on the use of raw materials.

Alcoholic beverages and
spirits

A JV is required for
distilling, bottling, mixing and distributing. There are also certain
environmental requirements and special conditions on the use of malt.

Textile manufacturing

A JV is required for production of threads. Other garment manufacturing seems open to 100% foreign ownership.

Packaging industry

A JV is required.

Manufacturing industry

Certain industries require
JVs including rubber, plastics, plastic goods, ceramics, utensils, various
chemicals and gasses, drugs and a number of others.

Transport

There is a JV requirement
for a number of transportation services including for cargo, air transport,
sea transport, containers, The Notification also sets out which approvals are
needed from the Ministry. Special requirements exist for ground services,
servicing to airlines, luggage handling services and aircraft charter.

Health

Private and specialized
hospitals require a JV.

Tourism business

A JV is required; for
eco-tourism certain approvals are needed.

Power

A JV is required for coal and hydropower power projects, and is executed through a BOT. No JV required for other types of projects. Special requirements exist for environmental and social impact.

Oil and gas

Government approval is needed with consultation of the relevant Ministry, specific rules for processing and marketing fuels and petroleum products. Certain oil and gas services are subject to approval from the authorities.

Media

Periodicals and most other
media activities are possible for foreign investment with approval from
the Ministry subject to its guidelines.

Retail

Large scale retail (with
some exceptions), is open to foreign investors, but it is not entirely clear
whether there is a general moratorium until the end of 2015. There are
apparently minimum capital requirements and certain requirements on square
footage.

Wholesale

Open to foreign investment
with approval from the relevant Ministry.

Please note that we are still translating and analyzing the comprehensive Regulation we reported about Friday, plus the lengthy Notification referred to above. The overview offered in this email is by no means complete.

If you have any questions on this Notification for the Myanmar Investment Commission, the Regulations of the Foreign
Investment Law, or on other Myanmar legal or tax matters, feel free to contact
me. By the way, our team in Yangon has expanded with a number of lawyers and
tax advisors. Download an updated profile here.

***

VDB
Loi is a specialized law and tax advisory firm with more than 60 transactional
lawyers and tax advisors across our offices in Cambodia, Indonesia, Laos,
Myanmar, Vietnam and our liaison office in Singapore. We provide the highest
quality solutions for transactions and taxation.

With
approximately 20 foreign and local lawyers and tax advisors in our offices in
Yangon and Nay Pyi Taw, we are one of the leading professional services firms
in Myanmar. You can find more information on our Myanmar offices here.

With best regards,

Edwin Vanderbruggen I Partner