- By Ye Khaung Nyunt, Zaw Gyi
A roundtable business discussion was held recently, during which matters relating to duties and responsibilities of the Myanmar Investment Commission (MIC), opportunities and challenges faced by investors and current economic and financial situation at home and abroad were discussed by U Than Aung Kyaw, Deputy Director General from the Directorate of Investment and Company Administration (DICA), U Aye Lwin, MIC member and National League for Democracy Central Economic Committee member, Daw Mya Thuzar, MIC Joint Secretary, and U Htay Chun, MIC member.
Q: Regarding safeguards granted to investors by the new Myanmar Investment Law 2016, what measures have been taken to protect them?
U Than Aung Kyaw: When it comes to the basic nature of foreign investments, there are already some general agreements between both parties, and also agreements worked out regionally. The host country is duty bound to render assistance to foreign investors, and the law has been prescribed to that effect.
Guarantees and safeguards
The government gives a guarantee that businesses that are permitted will not be nationalized, directly or indirectly forced to cease their operations during the period approved or extended in the contract, as long as the investments are running legally. Even if businesses are nationalized because of a compulsory requirement for the interest of the people or country, compensation has to be paid, based on current value in the market.
According to Section 26(d) of the Constitution, the government guarantees that investments will not be nationalized during the granted 20, 30, 50 years or so, if they are not going against the law. If there arises a state of emergency, the Union can close down business enterprises after giving adequate compensation for damages or losses. These are our guarantees and safeguards granted to investors.
U Aye Lwin: What I want to add is that in the same way efforts are made by the government or relevant ministries to facilitate and relax some rules, on their part, any local or foreign investment, and local or foreign investor need to run their operations in accordance with the law. They should act ethically. The word “protected” means “protection for the investment”, and “not for the investors”. Of course, the law would support and protect investors whose businesses play a vital role for the benefit of the country. If investors break the rules, we cannot be able to protect them and will have to take legal action against them.
Abiding by the law
Section 55 of the new investment law says it is necessary to safeguard investments. But there are also four exceptions to this rule, where the government can terminate an investment and not protect it: (a) when it is an absolute necessity in the interest of the Union or its citizen; (b) when a member of an investment company goes against the law; (c) when agreements between the investor and relevant ministries or entrepreneurs are being violated; (d) when one of the agreed parties goes against ethics, the environment and the public.
If violators are given protection, this would go against the law. Those who should receive compensation should be granted thus, but those who shouldn’t would not be granted compensation. We will conduct the procedures according to rules, and I want to add that everyone is responsible to abide by the law and regulations.
Q: Could you discuss regarding the terms for land utilization by or land lease for the investors?
Daw Mya Thuzar: When it comes to the issue of land lease, investors can lease and utilize land according to the kinds of businesses they are running and the location of their businesses. Formerly, foreign investors could not lease land from private citizens, but only from the government. The Myanmar Investment Commission has issued announcement 39/2011 regarding land utilization.
According to the new Myanmar Investment Law, foreign investor may lease land or buildings either from the government, government organizations or from owners of private land or buildings up to an initial period of 50 years. After the expiry of the terms for the right to use land or buildings, a consecutive period of 10-year extension, and a further consecutive 10 years extension may be obtained with the approval of the MIC.
Q: According to rules and regulations, which investments could be categorized as being restricted?
U Than Aung Kyaw: The following types of businesses shall be stipulated as restricted investments: businesses that are permitted to be carried out only by the Union; investments that are not allowed to be carried out by foreign investors; investment businesses that have to be carried out only in the form of joint ventures with any citizen-owned entity or with any Myanmar citizen; and investments that could be carried out only with the approval of relevant ministries. There are also investments that will require government approval—those that are deemed “strategic” for the country, capital intensive or those that may have a large impact on the local community or the environment.
Q: Are there any increase of investments that are having an impact and what is being done about them?
U Htay Chun: The Myanmar Investment Commission is a government-appointed body, responsible for verifying and approving investment proposals and regularly issuing notifications about sector-specific developments. Income tax exemptions shall be granted only for the sectors specified by the Commission in the notification, and investments promoting these sectors will have their tax exempted. In addition to the provisions under Chapter XI of Treatment of Investors, the government may undertake subsidies, funding, capacity building and training to Myanmar citizen investors and citizen-owned small- and medium-sized enterprises. The government may also allow exemptions and relaxations for designated locations where Myanmar citizen-owned businesses or other economic activities are operated.
Win Ko Ko Aung