New investment law unlikely to be enacted this year

Parties involved in the drafting of the new investment law are willing to thoroughly review legal content, even though the process may delay the enactment to next year.

Until March 26, the opinions of civil society organisations, local and foreign investors are being sought for the consolidation of two investment laws – Myanmar Citizens Investment Law and the Foreign Investment Law – aimed at modernising the investment environment of the company. Last week, there was a consultation about the second draft of the law.

Win Aung, president of the Union of Myanmar Federation of Chambers of Commerce and Industry, said that both foreign and local investments are equally important to the nation’s economic growth. Consolidation is compulsory as Myanmar is the only country in Asean which has two such laws, he said.

He added that it might take time to enact the new law as there are many steps to go through.

“It [the meeting] is not the end of the process. We will review all the views from this meeting and recheck the text within one week. We will also try to update it. At the same time, we welcome public inputs from all the stakeholders as different people may have different views,” he said.

Cho Cho Wynn, deputy director-general of the Directorate of Investment and Company Administration, echoed his view. She said that the process of negotiation is still on for the text to be written in the law and there will be more discussions ahead.

“In the process of drafting the texts, we have already conducted several discussions with the government, civil society and the private sector. We also organised a meeting at the UMFCCI in October last year to get important feedback for the draft of the law. We are conducting various seminars in different regions and states with the cooperation of the local governments for the business community’s efficiency and participation of the global economic community,” she said.

DICA commenced its efforts to merge the two investment laws when it conducted the Myanmar Investment Policy review, with the assistance of the Organisation for Economic Cooperation and Development and financial support from Asean, Australia, New Zealand.

The main purpose is to promote investment, cashing in on the launch of the Asean Economic Community later this year. This requires better investment policies and a more level playing field, while at the same time strengthening local industries so that they can be engaged with regional and global trade systems.

DICA currently serves as the lead agency for the drafting of the new investment law and modification of the century-old Burma Companies Act, in cooperation with World Bank and its arm the International Finance Corporation.

“It is fortunate that key issues of the two laws can be considered at the same time. Working on the two together is more efficient and complementary. This is also a golden opportunity for all the stakeholders to participate in this turning point in history when we are rewriting various economic laws,” said Cho Cho Wynn, admitting that DICA has limited resources.

Though the Foreign Investment Law (FIL) was enacted only in 2012, she asserted that the rewriting is necessary.

“The currrent Company’s Act could not address new issues and initiatives. We believe that by creating a fair and transparent legal framework, Myanmar will attract more responsible investments from home and abroad. The new law will make it easier for investments and provide effective access to settle disputes. This will also address reforms of MIC and help achieve our national objectives of job creation and inclusive growth,” she said.

Proposed changes

Charles Schneider, the World Bank Group’s senior operations officer, said the new law would further strengthen the role of the MIC in reviewing investment applications and annual review of restricted sectors. There will be insertions of new chapters such as the Myanmar Investment Commission (MIC) and investment incentives among its seven main parts.

Like in the existing law, there may be some sectors where both domestic and foreign investments are prohibited (state monopolies), sectors where foreign investment is prohibited, and only allowed in the form of joint venture with a citizen. However, the government can reduce or remove the above restrictions over time, as part of its commitment to economic openness.

“Under the new law, the government may revise the list of restricted sectors on a non-discriminatory basis. The government’s commitments under international trade and investment agreements and consultation with stakeholders may be taken into account. Once a sector is liberalised, such liberalisation may not be derogated,” said Schneider.

In terms of the access to land, the new law may pose the same description as the 2012 FIL. According to the second draft, all investors have the right to lease land either from private land holders or from the government for a period to be agreed between the investor and the leaser. For foreign investors, the right to lease land up to a maximum initial period of 50 years is guaranteed with an extension of 10 years and for a further 10 years thereafter.

Schneider explained that investors have the right to employ or engage qualified persons of any nationality to fill senior management, technical, professional and advisory positions in accordance with the existing laws. The government may allow the transfer of funds from abroad, including foreign loans to the investors.

He did not indicate the specific timeline to complete the process.

Civic opinion

Vicky Bowman, a former British diplomat and director of the Myanmar Centre for Responsible Business, said that it is better to take time than approve the new law in haste.

The centre will this week submit its comments, while urging the DICA to clearly explain the objective of the changes. DICA should also seek parliamentary approval for the draft Companies Act during this government’s term, and then submit the draft investment law to the new Parliament.

“It will be better to wait for a new parliament with a fresh democratic mandate,” she said. “I am worried that the current parliamentary timetable is very tight. They already have many laws half-written and there are more laws, which the government is awaiting. That is not good for quality. If you do not have good-quality laws, you will not be able to attract more investment,” she said.

She added that the 2012 investment law contains some weaknesses, and in particular the MIC’s role should be simplified and more strategic. Myanmar’s ability to attract more investment depends on the MIC, not the law itself.

“The investment law itself is just a way to regulate it. The draft law strengthens the role of the MIC in promoting investment strategically. Greater transparency, greater legal stability and electricity are also required to attract more foreign direct investment,” she said.

Source: The Nation

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