WUHAN UNIVERSITY

SCHOOL OF LAW

MYANMAR INVESTMENT LAW

STUDENT NAME : LAET YIN WIN

STUDENT ID : 2019271060022
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Contents
Introduction

1. Myanmar Investment Law ...................................................................................................................... 4

1.1 History of Myanmar Investment Law ................................................................................................. 4
1.2 Restrictions on investments and Application for Permit..................................................................... 5
1.3 Distinction from Previous Law ........................................................................................................... 6
2 Investor’s Obligation .......................................................................................................................... 7
2.1 Investment Sectors and Investment Procedure ............................................................................... 7
2.2 Land Lease ...................................................................................................................................... 7
2.3 Responsible for Environmental Conservation ................................................................................ 8
3 Provisions for Foreign Investor....................................................................................................... 9
3.1 Operating in a restricted sector ................................................................................................... 9
3.2 Right to transfer foreign currency ............................................................................................... 9
3.3 Funding an investment .............................................................................................................. 10
4. Exemption and Reliefs…………………………………………………………………………………………………………….10

4.1 Tax Exemption and Reliefs………………………………………………………………………………………………………10

4.2 Import Duty Exemption……………………………………………………………….…………………………………………12

4.3 Raw Material Import Duty Exemption…………………………………………………………………………………….13

Conclusion

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Introduction
Myanmar gained her independence from the United Kingdom in 1948. From 1962 to 2011,
the country was ruled by a series of one-party military governments. Myanmar has been subject to
US and European sanction since the 1990s. In March 2011, the President U Thein Sein began a
process of transition toward democratic rule under the 2008 Constitution of the Republic of the
Union of Myanmar that ensured that the military would retain significant influence over civilian
politics.
The Government of Myanmar is pursuing a variety of reforms in the hope of attracting
new foreign investment. Myanmar is in the midst of a dramatic political and economic transition.
The Southeast Asian nation of 54 million has moved from military rule to democracy, from a
centrally directed economy to a market-oriented economy, and is making strides from decades of
conflict toward peace, though challenges remain. Seeking to tap into the country’s enormous
potential for economic growth, the government in a few months will begin implementation of a
new investment law designed to stimulate and streamline domestic and foreign investment,
increase investor protections, and ultimately create jobs and help diversify an economy heavily
concentrated in agriculture and extractive industries. These and other investment climate reforms
have the potential to contribute to significant economic growth.

1. Myanmar Investment Law

1.1 Background
Myanmar Investment Law (MIL) was enacted by the Pyidaungsu Hluttaw with the Law
No. 40/2016, in October 18, 2016 and it was consolidated and replaced the previous Foreign
Investment Law 2012 and the Citizens Investment Law 2013. Responding to in investment policy
and promotion and worked closely with government officials, private sector stakeholders, and
civil society in a process that emphasized transparency, consultation, and public engagement. A
pro-market reform program initiated by the government in 2012 sought to boost an economy
producing the lowest per capita income among East Asian nations. Procedures for foreign direct
investment (FDI) and domestic investment greatly prolonged the closing of deals. Investment
proposals, even small ones, had to go before the Myanmar Investment Commission (MIC) for
investors to benefit from protections and receive tax incentives. A country undergoing significant
political transition and economic opening after years of isolation, it was important for civil society
and the private sector to be fully engaged in crafting the investment law.
The MIL applies to all investors whether local or foreign, big or small. Investors are
defined to include natural persons, companies incorporated in Myanmar, foreign companies with
4
a registered branch in Myanmar, any other kind of enterprise established under the Myanmar
Companies Act or an entity established in accordance with the laws of any other country. 1
Investments covered by the MIL are much broader than just the construction of big
projects, but includes investments in companies, equipment and other moveable property, shares,
intellectual property rights, contractual rights and assignable rights. Most commercial transactions
would be considered investments under the MIL. 2

1.2 Restrictions on investments and Application for Permit

Before making an investment an investor should determine whether their investment is
prohibited or otherwise restricted. Myanmar has adopted a negative list approach to restrictions; 3
if investments are not included on the list they are open for investment. This may be subject
however to restrictions under other applicable laws.
The MIL classifies types of investments which are prohibited by virtue of the
environmental, health and cultural impacts they may have. The MIC has separately published a
List of Restricted Business Activities, 4 which lists specific businesses which are only to be
carried out by the Government. The Government may however enter into agreements allowing
non-government entities to carry out these activities.
The investor shall submit a proposal to the Commission and invest after receiving the
Permit for the following businesses stipulated in the rules;
(a) investment businesses that are essential to the Union strategy;
(b) large capital intensive investment projects;
(c) projects which are likely to cause a large impact on the environment and the local
community;
(d) investment businesses which use state-owned land and building ;
(e) investment businesses which are designated by the government to require the
submission of a proposal to the Commission.5
Only investments which meet these criteria are required to apply for a Permit. When
applying for a Permit the investor may also apply for Tax Incentives and a Land Rights.
The application process requires the submission of a Proposal which includes details on
the location, amount to be invested, forecast financial performance and employment

1
Myanmar Investment Law 2016, S 2 (n),(o), (p)
2
Ibid, S- 40
3
Ibid, S - 42
4
Myanmar Investment Committee, Notification no-15/2017
5
Myanmar Investment Law 2016, S- 36
5
opportunities. 6 Presentations on the investment will need to be made to the Proposal Assessment
Team and the MIC where the investor needs to be prepared to answer questions on the investment.
If the investment does not require a Permit, but the investor still wants to take advantage
of a Tax Incentive and/or a Land Rights Authorization, the investor will need to apply for an
Endorsement. 7 Obtaining an Endorsement is a much simpler procedure akin to registering the
investment with the MIC. The Endorsement shall be issued within 15 working days of submitting
the application. 8

1.3 Distinction from Previous Law

Previous investment laws in Myanmar were only applicable to Myanmar investors if they
decided to obtain an investment approval from the Myanmar Investment Commission (MIC),
encouraged to do so in order to obtain tax incentives and, in the case of foreign investors, the right
to invest in the designated restricted sectors, obtain tax incentives and rights to long term leases of
land. MIC would review the investments to decide whether the investments were beneficial for
the development of Myanmar. Separate regimes regulated foreign and local investments.
An important distinction of the new Myanmar Investment Law- MIL is that it applies to all
investments, no longer giving investors the option to decide whether they want to invest under
Myanmar’s investment laws or whether they want to remain outside of the framework. This
creates a level playing field for investors in Myanmar allowing all investors to take advantage of
the benefits and protections available under the MIL.
Previously, obtaining an investment approval was almost always linked with obtaining
income tax exemptions and other tax incentives. This was one of the reasons why a Permit would
usually only be given to sizeable investments with a considerable economic benefit. The MIL has
decoupled tax incentives from obtaining an investment approval, allowing it to target specific
priority sectors with tax incentives while still allowing other investors to enjoy the non-tax
benefits available under the MIL. An important feature of the MIL is the formation of State and
Regional Investment Committees. With the exception of Permit applications or Tax Incentives
applications, a State and Regional Investment Committee may approve and receive submissions
for investments with a value up to USD 5 million or MMK 600 million. 9 For the purpose of this
overview we only refer to the MIC, however subject to restrictions this role can be carried out by
the relevant State and Regional Investment Committee.

6
Myanmar Investment Rules, Rule- 36
7
Ibid, s-37
8
Myanmar Investment Rules, Rule- 48
9
Myanmar Investment Committee, Notification no- 11/2017
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2 Investor’s Obligation

2.1 Investment Sectors and Procedure

Myanmar has one of the lowest population densities in the region, with fertile lands,
significant potential for increased agricultural production, and a rich endowment of mineral
wealth and natural gas. Overdependence on one resource or sector leaves an economy vulnerable
to external shocks. The top three sectors for foreign investment are currently Transport &
Communication (21.9%), Oil and Gas (20.8%) and Manufacturing (20.0%). 10 Aware of the risk,
the government now wants to diversify investments, and has called on the Bank Group’s expertise
for help in responding to the recent downturns in commodity prices.
The Investment Law is set to introduce a new approval process for both domestic and
foreign investments in Myanmar. 11 There will be two procedures for approving investments:
submission of a proposal to the MIC for an MIC Permit and application for an endorsement from
the MIC. 12 The MIC Permit applies to investors looking to establish operations in an industry that
is deemed strategic to the government, above a certain capital threshold, potentially destructive to
the environment, or uses state-owned land. The MIC will review the proposal, and if deemed
beneficial to the country’s interests, the investment will be approved.
For investments not requiring an MIC Permit but looking to benefit from tax incentives or
the maximum land lease period, an application for endorsement from the MIC must be submitted.
The MIC will review the application and have it approved if the investment complies with
relevant laws and regulation. While the applications for an MIC Permit and MIC endorsement
both contain a review process, it is expected that the latter will involve a simpler and more
streamlined process that simply confirms an investment is in compliance rather than also
benefiting the national interest. The particulars of the approval process will likely emerge in the
near future as the Investment Law nears implementation.

2.2 Land Lease

To further encourage investment, the government is now also offering more generous land
leasing rights to foreigners. Under Myanmar law, foreigners are not allowed to buy land or enter
into leases which exceed one year. Under the previous investment laws the MIC has been able to
grant an exemption to this restriction being able to grant a foreign investor the right to enter into a
lease up to 50 years with the possibility of two 10 year extensions in undeveloped regions. 13
Allowing foreign investors to lease land in less developed regions for a longer term provides

10
Myanmar Business Guide, p-21
11
Myanmar Investment Law 2016, s 40
12
Ibid, s 25
13
Ibid, Chapter 12
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added certainty for foreign investors and incentives for operating in the country’s less developed
regions that struggle with inadequate infrastructure, among other limitations. While the
Investment Law introduces a range of incentives, they only apply to new investments and not
preexisting ones.
Being able to enter into long term leases was only generally possible for companies which
were making investments large enough to obtain a Permit, under the MIL the possibility to apply
for an approval to enter into a long term lease is available to all foreign investors. The application
process is intended to be quick and simple. 14
It should be noted that this privilege only extends to leases being entered into for the
purpose of an investment and would not, for example, permit a foreigner from entering into a long
term residential lease. If the investor is subleasing land or a building from another investor who
has already obtained a Land Rights Authorization, the sublease is already deemed approved and
does not require a further Land Rights Authorization, although MIC must be notified of the
sublease. 15
A common problem faced by investors is that after identifying a suitable site for the
investment they need to go through a long drawn out change of use procedure to convert the land
type to a type which is suitable. The MIL requires the relevant authorities to instigate the change
of use procedure for land issued with a Land Rights Authorization, this additional provision in the
MIL should help expedite the change of use procedure.
Leases for more than 1 year need to be registered with the relevant authorities, which can
be a very difficult process and is frequently seen as an obstacle to investment. The MIL requires
all relevant authorities to give effect to the rights granted under the Land Rights Authorization,
this would include the registration of leases.

2.3 Responsible for Environmental Procedure

Myanmar Investment Law enacted to abide the provision of environmental conservation.
To develop responsible investment businesses which do not cause harm to the natural
environment and the social environment for the interest of the Union and its citizens. 16 The
investor shall submit a proposal to the Commission and invest after receiving the Permit for the
projects which are likely to cause a large impact on the environment and the local community; 17
businesses stipulated in the rules. There has been some uncertainty relating to the timing of any
application to the MIC in relation to an investment obtaining its Environmental Compliance

14
Ibid, S-50
15
Myanmar Investment Rules, Rule-7(b)
16
Myanmar Investment Law 2016, S - 3
17
Ibid, S- 36
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Certificate (ECC). 18 The Environmental Impact Assessment Procedure published under the
Environmental Conservation Law states that an ECC must be obtained prior to obtaining project
approvals. The MIL has clarified that the MIC can approve investments prior to obtaining an ECC,
however it will need to inform the MIC about the environmental assessment procedure. Receiving
a Permit or Endorsement does not absolve the investor from obtaining the necessary
environmental approvals prior to implementing the investment. This will instead become a
condition of the investment approval.

3 Provisions for Foreign Investor

3.1 Operating in a restricted sector

Restricted investment under MIL may affect foreign investors operating businesses which
can only be carried out in a joint venture. 19 Investors operating in a restricted sector with a Permit
are able to continue their investments in accordance with the terms of the Permit and the
requirements under the MIL will not apply to extent that they conflict with the Permit. For
example where a foreign investor was approved to carry out an investment with 100% foreign
ownership, that investor will not have to change the ownership structure if it is now listed as an
investment activity which needs to be carried out as a joint venture. Foreign investors operating in
a restricted sector and not holding a Permit, must give notice to the MIC that they are operating in
a restricted sector, even if they are in compliance with the imposed restrictions.

3.2 Right to transfer foreign currency

Foreign investors may transfer the following funds abroad relating to the investments
made under this Law:
• capital designated under the provisions relating to capital account rules stipulated by
the Central Bank of Myanmar;
• proceeds, profits from the asset, dividends, royalties, patent fees, license fees, technical
assistance and management fees, shares and other current income resulting from any
investment under this Law;
• proceeds from the total or partial sale or liquidation of an investment;
• payments made under a contract, including a loan agreement;
• payments resulting from any settlement of investment disputes;
• other compensation or money as compensation under the investment or expropriation;

18
Myanmar Investment Law 2016, S-65
19
Ibid, S- 42 (c)
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 • remuneration, salary and earnings of foreign experts legally employed in the Union. 20

3.3 Investment Funding

The MIL does not place any restrictions on how an investment may be funded, however
when applying for a Permit or a Tax Incentive details of the type of funding needs to be provided.
If the investment is funded with an offshore loan (including a shareholder loan) prior approval
from the Central Bank of Myanmar (CBM) is required in accordance with the Foreign Exchange
Management Law. 21 An application for the offshore loan is required to be submitted through the
MIC. Onshore loans which are available through local banks or in the case of foreign investors,
foreign banks with registered branches in Myanmar do not require CBM approval.
Investors have the right to remit funds overseas under the MIL, subject to any
requirements of the CBM. The purpose of the remittance includes the transfer of profits, proceeds
from a sale of the business, payments under loan agreements and payments under other
agreements. 22 It should be remembered that payments under an offshore loan agreements require
prior CBM approval of the loan.

4. Exemption and Reliefs

4.1 Tax Exemption and Reliefs

The MIL provides international investors with numerous tax exemptions and reliefs. These
include:-
- Exemption from corporate tax for 3 – 7 years, depending on whether the investment takes
place in an ‘underdeveloped’, ‘moderately developed’, or ‘adequately developed region’.
The designation of these zones is subject to change from time to time, depending on the
development in the respective regions;
- Exemption from customs duties or other internal taxes, or both on machineries, equipment,
instruments, machinery components, spare parts, construction materials not available
locally, and materials used in the business that are imported as they are actually required,
during the construction period, or during the preparatory period of the investment business;
- Exemption or relief from customs duties and/or other domestic taxes on raw materials and
semi-finished goods that are imported for the production of export goods by wholly export
investment businesses;

20
Myanmar Investment Law 2016, S-56
21
Foreign Exchange Management Law 2012, S-7
22
Myanmar Investment Law 2016, S- 56
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 - Right to obtain a refund, based on the amount of exported goods, of customs duties and/or
other domestic taxes paid at the time of importation of raw materials and semi-finished
goods that are used to manufacture the products in the country and re-export them;
- If the volume of investment is increased, and the original investment or business is
expanded during the period of investment, exemption or relief from customs duties or
other internal taxes or both, on machineries, equipment, instruments, machinery
components, spare parts, materials used in the business, and construction materials not
available locally, which are imported as they are actually required for use in the business
that is being expanded;
- Exemption or relief from income tax, if the profits obtained from the investment business
is reinvested in the same business, or in a similar type of investment business within one
year;
- Right to deduct depreciation for the purpose of income tax assessment, after computing
such depreciation from the year of commencement of commercial operation, based on an
accelerated depreciation rate (which is less than the stipulated lifetime of the asset);
- Right to deduct expenses from assessable income incurred for research and development
related to the investment activities/business required for the development of the country
and carried out in the country;
- Foreign investors will pay income tax at the rates applicable to citizens residing within the
country.
- Tax incentives are not granted automatically. The Investment Rules make it clear that an
investment must be in a Promoted Sector, in addition to the investor being granted an MIC
Permit or MIC Endorsement, in order for the investor to benefit from the income tax
incentive of either 3, 5 or 7 years. Companies engaged in ‘non-promoted’ activities will
not receive a tax holiday.
If the activity is on the ‘Promoted list’, the tax holiday period will be determined based on
whether the investment will be located in Zone 1, 2 and / or 3. Companies whose minimum
capital is less than US$300,000 will not qualify for a tax holiday. 23
There are a number of Tax Incentives available to an Investor under the MIL. Whether the
investor is eligible for Tax Incentives will depend on the location and nature of the investment.
The MIC may prescribe additional limits and criteria when making assessments on whether to
grant Tax Incentives.

23
Ibid, Chapter 13
11
 For an investment to be eligible for an income tax exemption it must be in a promoted
sector, a list of promoted sectors is issued by notification by the MIC. If the investment is in a
promoted sector it will be eligible for an income tax exemption for either 3, 5 or 7 years
depending on the zone in which the investment is located. 24
Zones are based on the level of development in each township with the least developed
townships being classified as zone 1 where promoted sector investments can obtain a 7 year
income tax exemption, while the most developed townships being classified as zone 3 where
promoted sector investments can obtain a 3 year income tax exemption.
If investments are made across multiple zones MIC will consider where 65% of the value
of the investment is made and will apply the shortest income tax exemption available to the
investment in those zones. As an example the following investments will be considered to be
made in the respective zones:
- zone 2 – if 65% of the investment is made in zone 1 and zone 2
- zone 3 – if 65% of the investment is made in zone 2 and zone 3
- zone 3 – if 65% of the investment is made in zone 1 and zone 3 25
The income tax exemption will only be applicable to the income earned from operating an
investment in a promoted sector. If the investor also earns income from other non-promoted sector
investments it will not be able to apply the income tax exemption from such activities. If the
investor earns income from various sources it should consider structuring its business in a manner
that separate entities would be engaged in the investors various businesses. 26

4.2 Import Duty Exemption

Regardless of the type of business the investor is engaged in it may apply for import duty
exemptions. These apply to the equipment and materials which are required for construction and
implementation of the investment or for the raw materials required as part of it its operations. 27
There are a number of criteria which a business must satisfy in order to be eligible for an
import duty exemption, these include that the investor must have or be in the process of applying
for a Permit or an Endorsement and the investment must be at least USD 300,000. 28
Subject to satisfying the minimum criteria any investor may apply for an import duty
exemption when importing equipment and material for the construction and implementation of the

24
Myanmar Investment Law 2016, S-76 (a)
25
Myanmar Investment Rules 2017, Rule 96
26
Myanmar Investment Committee, Notification no- 13/ 2017
27
Myanmar Investment Law 2016, S-77(a)
28
Myanmar Investment Rules, Rue- 91
12
investment. 29 This does not include raw materials and other imports to be used as part of the
production process. The investor will normally be given a prescribed time period during which it
may import the equipment and material, if it wishes to import additional equipment and material
later on, for example if it is upgrading its manufacturing facility it will need to apply for a new
import duty exemption. 30 Note that there are some restrictions on importing used equipment into
Myanmar, including the country of origin, the age of the equipment and the performance capacity.

4.3 Raw Materials Import Duty Exemptions

Certain investors may also be able to benefit from import duty exemptions for raw
materials. Raw materials include partly-manufactured goods and materials required in the
manufacture of goods. 31 If an investor is an export orientated business and expects to earn at least
80% of its earnings from exports it may be eligible for an import duty exemption for the import of
raw materials granted on a pro-rata basis based on the percentage of income earned from exports.
If an investor expects to earn less than 80% of its earnings from exports it can be granted an
import duty exemption based on the portion of earnings from exports. 32 The investor in this case
is not eligible for an upfront import duty exemption, but may apply for a reimbursement at the end
of the fiscal year, which may be in the form of a credit to offset future import duties. If an investor
reinvests profits back into its investment, it may be eligible for relief or exemption from income
tax. The incentive is only available for making capital investments, not for operating expenses. 33
The MIC may grant an investor the right to depreciate its assets at a rate equal to 1.5 times the
normally permitted depreciation rate. 34 An investor may apply to the MIC to obtain the right to
deduct research and development expenses from its assessable income up to an amount equal to
10% of the investment’s income. 35

Conclusion
The Investment Law combines the previous Myanmar Citizen’s Investment Law with the
Foreign Investment Law. Changes to Myanmar’s previous investment regulations include a new
approval process with the MIC, updates to the distribution and length of various tax incentives,
and further easing of foreign access to land leases. The Investment Law is set to introduce a new
approval process for both domestic and foreign investments in Myanmar. The MIC Permit applies

29
Myanmar Investment Law 2016, S -77
30
Ibid, S -78
31
Ibid, S-77
32
Myanmar Investment Rules, Rule -97
33
Myanmar Investment Law 2016, S- 78
34
Myanmar Investment Rules, Rule- 100
35
Ibid, Rule- 101
13
to investors looking to establish operations in an industry that is deemed strategic to the
government, above a certain capital threshold, potentially destructive to the environment, or uses
state-owned land. The MIC will review the proposal, and if deemed beneficial to the country’s
interests, the investment will be approved. For investments not requiring an MIC Permit but
looking to benefit from tax incentives or the maximum land lease period, an application for
endorsement from the MIC must be submitted. The MIC will review the application and have it
approved if the investment complies with relevant laws and regulation.

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