In an effort to uphold the comprehensive investment agreement reached by ASEAN member states and support the goals of the ASEAN Economic Community (AEC), the Foreign Investment (FIL) and Myanmar Citizens Investment Laws (MCIL) are set to be merged into a single piece of legislation, a senior official said.
Since November of 2012, the idea of adopting a single investment law has been at the front of debate when the FIL was prepared. Instead, two separate laws were drafted with the view that keeping them separate would protect domestic businesses, U Zayar Aung, chair of the Myanmar Investment Commission (MIC), told the parliament.
“With the two laws, foreigners feel that they are restricted, while locals believe international investors are being favoured. Therefore, an improved law in which the weaknesses of both pieces of legislation are addressed will be drafted and submitted to parliament for debate,” he said.
Like other countries in the region, Myanmar needs to adopt a single investment law because it bears the responsibility of promoting equal and fair business opportunities among citizens and foreigners that are in line with ASEAN agreements and standards.
The MIC is drafting the bill and is expected to submit it to parliament to be deliberated in the next round of sessions. “The new law is likely to be enacted in early 2015,” according to Daw Sandar Min, a member of the parliament.
One of the sticking points is the difference in tax benefits. “Tax exemption should be equal and the law should level the field for all players,” Daw Sandar Min said.
Foreign businesses are required by the FIL to employ at least 25 percent local labour in the first two years of operation, at least 50 percent within the next two years and minimum 75 percent in the third two-year span.
In a joint venture with a Myanmar firm or government entity, foreign companies are required to have at least a 35 percent stake in the company.
The law grants MIC the right to ban businesses, which can infringe upon Myanmar traditions and culture, have a negative impact on public health or damage the environment.
MIC is responsible for approving businesses that can support the country’s development, expanding job opportunities, manufacture products to replace imports, provide advance technology and practice energy efficient procedures.
Service or manufacturing businesses which can provide benefits to the country are allowed to enjoy tax exemption for up to five continuous years, according to the law.
Businesses that violate the FIL are first warned, but could face suspension of their operating licence or in the extreme case, become blacklisted and banned from investing the country.
Source: Myanmar BUSINESS TODAY