Investment Law update

Myanmar Investment Law Updates

The new Myanmar Investment Law 2016 (“MIL”) has been enacted on 18 October 2016. The new MIL is a consolidation of the Myanmar Citizen Investment Law (2013) and the Myanmar Foreign Investment Law (2012).

The Myanmar Citizen Investment Law and Myanmar Foreign Investment Law have been repealed with effect from 18 October 2016. However, by-laws implementing the new MIL have not been issued yet and as such the rules issued under the old Myanmar Foreign Investment Law continue to be in effect to the extent that they are not contrary to the new MIL. Investment permits issued under the old investment laws continue to be valid. It is likely that the MIC will process MIC applications as if the new law did not exist for a transitional period (until the new by-laws are implemented).

Summary of key changes in the new MIL

1.Two ways to invest –MIC Permit vs Endorsement

Under the previous investment laws, investors were required to submit an application and obtain approval for an MIC Permit. The new MIL has introduced a new route for investment, i.e. endorsement application.

A MIC Permit is required for businesses that are (a) strategic for the Union; (b) large capital intensive projects; (c) projects which have a large potential impact on the environment and the local community; (d) use state-owned land or buildings; and (e) designated by the government to require the submission of a proposal to the Commission. The requirement to obtain a MIC permit applies to both foreign and citizen investors.

Businesses/investments that do not fall under the categories above do not require a MIC Permit. However, these businesses would still need to submit an endorsement application to the MIC to be eligible to enjoy the right to use land and obtain tax exemptions. Furthermore, they will benefit from other advantages under the new MIL (e.g. guarantee against confiscation, explicit right to repatriate profits) that have so far only been available to MIC companies.

Under the new MIL, the MIC Permit appears to be mainly for the purpose of regulating investments that are restricted. Investors seeking to secure rights to use land and tax incentives would only submit an Endorsement application.


2.Scope of permitted and restricted investments

The new MIL also provides certain investments which are restricted and prohibited and are generally along the same vein as that in the old investment laws.

The new MIL classifies businesses that are detrimental and harmful to Myanmar as prohibited investments. The new MIL has also stipulated the restricted businesses/ investments as follows:

(a) sectors which are allowed to be carried out by the government only;

(b) sectors that are restricted to foreign investors;

(c) sectors that are allowed only in joint venture with a citizen owned entity or a citizen of Myanmar; and

(d) sectors that are permitted only with the recommendation of the relevant ministries.

The specific businesses/investments that are prohibited/restricted will be determined by the MIC with the approval of the Government.


3.Tax incentives

The list of tax benefits under the new MIL are as follows:

(a) For investments in sectors listed in a notification to be issued by the Commission in order to promote investment: exemption from corporate income tax for seven, five of three years depending on whether the investment takes place in an underdeveloped, moderately, developed, or adequately developed region or state. The designation of these zones are subject to change from time to time depending on the development in the respective regions.

(b) Income tax exemptions shall only be granted to sectors which the Commission has specified as sectors which are promoted for investments.

(c) The Commission may allow more favorable exemptions and reliefs for locations where Myanmar citizen-owned businesses are operated. The Government may also provide subsidies, funding, capacity building and training to Myanmar citizen investors and citizen owned small and medium sized enterprises.

(d) Exemption from custom duties or other internal taxes or both on machineries, equipment, instruments machinery components, spare parts, construction materials not available locally and materials used in thebusiness which are imported as they are actually required, during the construction period, or during the preparatory period of the investment business.

(e) Exemption or relief from customs duties and/or other domestic taxes on raw materials and semi-finished goods which are imported for the production of export goods by wholly export investment business.

(f) 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 which are used to manufacture the products in the country and re-export it.

(g) If the volume of investment is increased and the original investment 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 which is being expanded.

(h) 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.

(i) 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).

(j) 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 is carried out in the country.

(k) Foreign investors will pay income taxat the rates applicable to citizens residing within the country.


4.Right to use land

The previous investment laws granted investors right to lease land long-term for a period of 50 years with the option for two 10-year extensions. The new MIL retains this long-term land lease provision. It has also added that the government may grant a longer period for the right to lease land or building to investors who invest in less developed and remote regions.


5.Staff recruitment

Unlike the previous Myanmar Foreign Investment Law, the MIL has removed the requirement for appointment of a specified percentage of skilled employees. However, employers should arrange for capacity building programs in order to be able to appoint citizens to positions of management, technical and operational experts, and advisors. For non-skilled work, only citizens shall be appointed.


6.Investor relations

The new MIL states that the government will accord foreign investors and investments made by foreign investors that is no less favourable than that accorded to Myanmar citizen investors except as stipulated in laws, rules and notifications.

Foreign investors of a country shall not be treated less favourably than a foreign investor of another country except for favourable treatment that is accorded under an international agreement.

The government also guarantees fair and equitable treatment in respect of (a) the right to obtain relevant information on any measures or decisions which have a significant effect on an investor and its direct investment; and (b) the right to due process and the right to appeal on matters concerning an investor.

These provisions were previously not included.


PwC Myanmar

Directorate of Investment and Company Administration (DICA)


Myanmar Investment Guide 2018

Myanmar Investment Law 2016 (Official Translation)