Problems relating to Trade and Investment on Myanmar

 
1. Restrictions on entry of foreign capitals
Issue
Issue details
Requests
Reference
(1) Restricted Foreign Capital Entry into Export-Import / Domestic Distribution - Government of Myanmar (GOM) continues even to this date its prohibition of Foreign Capital Entry (FCE) into import/distribution business in an enterprise with even one single percent (1%) of foreign capital. (Myanmar's accession to AEC is due in 2015).
While FCE is liberalised under foreign investment law, competent ministries and agencies continue to refuse issuing its licences/ approvals.
- Foreign trade business is effectively closed to foreign funded enterprises (FFEs), so that FFEs are unable to engage in free commercial activities.
- GOM does not authorise establishment of 100% Foreign Owned International Trade Company.		 - It is requested that GOM expedites liberalisation of FCE entry into import/distribution business by wholly foreign funded enterprises, in the least gives the top priority to JVC.
- It is requested that GOM takes step to deregulate restrictions on FFEs.
- It is requested that GOM discloses the possibility for establishment of 100% foreign owned distribution company, and if yes, its timing.		 - Foreign Investment Rules, Implementing the Foreign Investment Law (13 January 2013)
- New Foreign Investment Law
- More like Common Law, without Written Authority
  (Action)
- Foreign funded enterprises (FFEs) are not authorised to engage in international trading businesses. Since 2002, FFEs have been foreclosed from either filing company registration or issuance of business licence to this date. Likewise, since about August 2013, establishment of fully foreign owned distribution business has become no longer possible. It has become alloable only by formation of a joint venture company.
- In August 2014, Myanmar Investment Commission issued Notification No.49 "Business Sectors Prohibited or Restricted to FFEs", which deleted the statement relative to retailing and wholesale businesses. Nevertheless, the restrictions remain and its practical implementation remains nebulous. It necessitates enquries to Ministries and Agencies of Myanmar about its actual implementation.
  (Improvement)
- On 7 August 2014, Japan-Myanmar Investment Agreement entered into force.
- On 27 May 2015, Thilawa Special Economic Zone (Thilawa SEZ) Management Committee (TSMC) issued "Instruction 02/2015" on the scope of the trading business and the standard for licencing, open for investors into Thilawa SEZ, enabling foreign funded enterprises to engage in trading business, including the wholesale distribution. However, 4-wheels and 2-wheels vehicles, alcoholic drinks, etc., the items restricted outside Thilawa SEZ, and other TSMC designated items are excluded from the scope of the eligible products for import and domestic distribution.
(2) Business Sectors Prohibited to FFEs - GOM retains business sectors closed to FFEs' entry. - It is requested that GOM further expands the scope of business sectors open to FFEs' participation.
  (Action)
- On 12 November 2012, Negotiation on the Bilateral Investment Agreement between Japan and Myanmar is under way.
- New Foreign Investment Regulation defines the Types of Economic Activities (Sectors) for which foreign investment is restricted or prohibited. Myanmar Investment Commission (MIC) Notification of 31 January 2013 has identified the Economic Activities prohibited for foreign investment, as follows:
(1) Business in which FFEs' entry is prohibited (21-Sectors),
(2) FFEs' entry is permitted only for joint venture with Myanmar capital (42-Sectors),
(3) Business in which Investment Permit is subject to Opinion Letters from the competent Ministries and Agencies, and governmental approvals (115-Sectors,
(4) Business in which entry is possible only under certain specific terms and conditions (27-Sectors), and
(5) Business in which environmental impact assessment (EIA) is required (34-Sectors). In addition, Ministry of National Planning and Economic Development (MNPED) Notification of the same date defines
(6) Business Sectors authorised only to Myanmar enterprises (Individuals).
- In August 2014, Myanmar Investment Commission (MIC) issued Notification No.49 "Business Sectors Prohibited or Restricted to FFEs:"
(1) listing the substantially reduced scope of the restricted or prohibited business sectors (i) 11 sectors (prohibited), (ii) 30 sectors (joint venture with indigenous Myanmar nationals, (iii) 43-sectors (joint venture with indigenous Myanmar nationals, subject, however, to Competent Aughority's approval, and (iv) 21-sectors under other terms and conditions.
(2) expressly stipulating that business run by a fully foreign owned enterprise is possible in the business sectors excluded from the Notification. Business sectors in mining production, transport infrastructure, port, medical and tourism businesses are excluded from the business sectors which are only possible by formation of a joint venture.
(3) Disallowed Establishment of Office at Construction Site - GOM disallows on-site office establishment on a project-by-project basis, contrary to the normal routine that begins from acceptance of specific project, tax number registration, and then construction.
It necessitates comprehensive registration as representative office responsible for construction, and could cause confusion with the existing representative office, should one exist.		 - It is requested that GOM allows establishment of on-site office on a project-by-project basis.
(4) Nebulous Application under Foreign Investment Act - The precise details remain unidentified concerning various application procedures, general flow of consultation, judgement basis, etc. It compels a substantial work-time for the applicant to complete the requisite responsive actions. - It is requested that GOM takes step to simplify and clarify the examination institutes' procedures. - More like Common Law, without Written Authority
  (Action)
- In the event of requiring a long term lease on land property for manufacturing business, or making investment under the investment incentive measures, or investing into business sectors that concern Myanmar Investment Commission (MIC) Notification No. 49/2014, the applicant must submit to MIC, application for investment licence for examination by MIC and other ministries and agencies in concern. In addition, applicant must file application to directorate of investment and company administration (DICA) for business licence and company registration. It presumably takes 4-6 months from preparation to the receipt of the licence. On the other hand, moving into the Thilawa SEZ has been facilitated and expedited by filing of application for investment licence, company registration, and business licence to one-stop-service center under the administrative commission of each SEZ.
(5) Disallowed Purchase of Fixed Property, Cars, etc. in Alien's Name - It is disallowed to purchase cars, cellular phones, fixed property, etc. in alien's names. - It is requested that GOM takes step to allow aliens' purchase of cars, cellular phones, fixed property, etc. in their own names.

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