In­vest­ment law sent to par­lia­ment

The Myanmar Times - - Front Page - – Trans­la­tion by Thiri Min Htun HTIN LYNN AUNG htin­lyn­naung@mm­times.com

A long-awaited law that seeks to lure for­eign in­vest­ment into spe­cific re­gions and sec­tors with a se­ries of tax in­cen­tives is ex­pected to be passed soon.

A DRAFT of the long-awaited Myan­mar In­vest­ment Law has been sub­mit­ted to par­lia­ment and will be passed soon, bring­ing a more strate­gic and nu­anced ap­proach to tax ex­emp­tion in ad­di­tion to sim­pli­fy­ing in­vest­ment, ac­cord­ing to U Aung Naing Oo of the Direc­torate for In­vest­ment and Com­pany Ad­min­is­tra­tion (DICA).

“We have al­ready put the bill to par­lia­ment af­ter fi­nal­is­ing the draft, and it will be en­acted dur­ing the next par­lia­ment,” the DICA di­rec­tor said at a press con­fer­ence in Yankin town­ship last week. The next meet­ing of par­lia­ment will be held in the first week of Novem­ber.

The new law com­bines into one doc­u­ment the Myan­mar Cit­i­zens In­vest­ment Law, which gov­erns in­vest­ment by lo­cals, and the For­eign In­vest­ment Law, which gov­erns for­eign en­ti­ties. Drafted with help from the In­ter­na­tional Fi­nance Cor­po­ra­tion, U Aung Naing Oo said the new frame­work would sim­plify in­vest­ing in Myan­mar.

One sig­nif­i­cant point in the draft law is a re­duc­tion in the num­ber of in­vest­ment pro­jects that re­quire per­mis­sion from the Myan­mar In­vest­ment Com­mis­sion (MIC), he said.

“In­vestors don’t need to ap­ply to the MIC to in­vest in all busi­nesses,” he said. Ap­pli­ca­tion will only be re­quired for pro­jects that are highly cap­i­tal-in­ten­sive, that have po­ten­tial im­pact on the en­vi­ron­ment or that the govern­ment deems “strate­gic”, ac­cord­ing to U Aung Naing Oo. This lat­ter cat­e­gory would in­clude key in­fra­struc­ture pro­jects.

“But all in­vestors [will still] need to in­form the MIC about what busi­nesses they are in­vest­ing in so that there is a record,” he said.

U Aung Naing Oo added that un­der the ex­ist­ing For­eign In­vest­ment Law, for­eign in­vestors do­ing busi­ness with an MIC per­mit qual­ify for tax ben­e­fits, in­clud­ing an in­come tax ex­emp­tion. Un­der the new law, tax ben­e­fits will be tai­lored and strate­gic rather than au­to­matic, he said.

“Tax ex­emp­tions will be granted only to busi­nesses in sec­tors that the state needs to boost the econ­omy,” he said.

Lo­cal firms have ar­gued that they are at a dis­ad­van­tage be­cause they do not qual­ify for the same tax ex­emp­tions as in­ter­na­tional com­peti­tors. An MIC per­mit typ­i­cally re­quires a high level of in­vest­ment. Al­though this dif­fer­en­tial treat­ment is con­cerned with the size of the in­vest­ment, some ob­servers say it is im­por­tant to lure in­ter­na­tional en­trants into Myan­mar, bring­ing a higher level of in­vest­ment than lo­cal busi­ness in the same sec­tor can­not match.

“Gen­er­ally lo­cal com­pa­nies rein­vest­ing prof­its would strug­gle to sat­isfy the con­di­tions for an MIC per­mit re­quired for the tax breaks,” Robin Scott, gen­eral coun­sel of City Mart, told The Myan­mar Times. “Their [lo­cal firm’s] large set up costs will have been in­curred some time ago.”

The du­ra­tion of the tax ex­emp­tion will also be tai­lored un­der the new law, ac­cord­ing to U Aung Naing Oo.

“For ex­am­ple, three years [for in­vest­ment] in de­vel­oped re­gions and seven years in less de­vel­oped re­gions,” he added.

The draft also takes se­ri­ously the is­sue of en­vi­ron­men­tal and so­cial im­pact, and up­dates long-out­dated of­fences and pun­ish­ments in the old Myan­mar Ci­ti­zen In­vest­ment Law, he said.

‘Tax ex­emp­tions will be granted only to busi­nesses in sec­tors that the state needs to boost the econ­omy.’

U Aung Naing Oo DICA

Photo: EPA

Peo­ple use ATM ma­chines at a road­side in Yan­gon.

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