Myanmar previously had two separate investment laws, the Foreign Investment Law and the Myanmar Citizens Investment Law. Yet experts have recommended combining the two, and Myanmar was the only one of the 10 ASEAN countries with two laws.
Public consultations were held earlier this year on what form the new combined law should take, and the International Finance Corporation is providing technical support on the update, which is still a work in progress.
It aims to end different treatment for foreign and Myanmar firms in most areas, though some areas, such as ownership of land, will remain closed to foreigners. The combined law will also provide a streamlined, automatic approvals process for some projects, and aims to make the investment climate more friendly overall.
U Aung Naing Oo said that while the current publicly available draft does not include a discussion of incentives, they are likely to be included in the coming weeks.
“We will use incentives as a tool for development of the country,” he said during a seminar held at Yangon University of Economics by the Centre for Excellence for Business Skills Development, attended by the university’s students and organised jointly with UNESCO.
There will be two broad categories of incentives, said U Aung Naing Oo.
Tax breaks will be lengthened for development in targeted areas. Different regions of the country will receive different classifications – developed areas like Yangon, developing areas such as Mandalay and Magwe, and underdeveloped areas like Chin and Kachin states. New investment in developed areas will be excused some taxes for three years, while developing area investment will have a five-year tax break and underdeveloped areas will be excused for seven years.
Separately, there will also be tax incentives for promoted industries and for certain practices.
“We are promoting investment in labour intensive industries, we are promoting investment in infrastructure development, we are currently promoting investment in agriculture,” he said. There will be a set list of priority sectors, and investment in these sectors will also receive investment. This list can also change from time to time depending on government policy.
Furthermore, the government is also planning to allow certain expenditures in areas like research and development, or training programs for staff, to be written off against taxes.
U Aung Naing Oo added that the draft combined investment law will be updated online shortly to include these initiatives.
Source: Myanmar Times