Problems relating to Trade and Investment on Myanmar
9. Restrictive export/import trade, duty, and customs clearance |
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Issue |
Issue details |
Requests |
Reference |
| (1) Nebulous Export/Import Licence System | - GOM requires import licence registration, model by model, upon export/import of finished goods, raw materials and parts. - Import licences are required on export (import into Myanmar) of electric wires, cables and accessories, individually, for parts and finished products. |
- It is requested that GOM repeals the import licence requirement. - It is requested that GOM either repeals import licence requirement or reviews items subject to import licence. |
- Ministry of Commerce Notification No. 72 - Some improvements by removal of 1,928 items from export/ import licences requirements in February-September 2013 |
| (Action) - Before applying for export/import customs clearance, an exporter/importer must first obtain export/import licence with 3-months validity by payment of the licence fees commensurate with the CIF value of the goods. Normally, Directorate of Trade under Ministry of Commerce is empowered to issue export/import licence, while, in case of the Border Trade, Department of Border Trade has the authority to issue export/import licence. Export/import licence, previously handed out only in Naypyidaw where Ministry of Commerce locates. However, since 7 October 2011, it has become obtainable at Yangon branch of Ministry of Commerce, limited only to the export/import relative to consignment processing, cutting, making and packaging (CMP) of materials and finished products, as well as export only of certain agricultural produce such as beans and rice. To file application for import licence, first, it is necessary to open foreign currency account at Myanmar Foreign Trade Bank (MFTB), the State Commercial Bank, or Myanmar Investment and Commercial Bank (MICB). In line with "Export first and import later system", GOM used to allow import only within the limit of foreign currency gained by export. Since April 2012, it has now become possible to import goods, if the applicant maintains foreign currency bank account, even without the underlining foreign currency deposit from export. |
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| (Improvement) - GOM alleviated the problems by release in February 2013 of Notification that abolishes export/import licence on 1,928 items, beginning September. - As of July 2014, the number of items not requiring export/import licences went up to 2,079 items in import and 983 items in export. - Documents required for acquisition of export/import licences have been substantially reduced. |
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| (2) Overvaluation of Tax Base for Import Duty | - GOM establishes standard taxable value for each item on imported goods purportedly at the "real value", however, in effect, at a higher value than the real market price. More often than not, taxpayer must pay superfluous tax. This causes cost increase. | - It is requested that GOM takes steps to get the Amended Customs Act approved by the Assembly of the Union as soon as possible to enable its early implementation. (Being aware of the problems, GOM has already completed drafting the Bill for the Amended Customs Act, under the WTO Customs Valuation Agreement, which is based on the real price paid (based on Invoice Price)). | - Customs Act |
| (Action) - Myanmar Customs Department and Japan International Cooperation Agency (JICA) have implemented project of capacity development for Customs management reform, modernization and technical cooperation in Myanmar. |
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| (3) Departure of LFTV from Market Price | - Ministry of Commerce releases the List of Fair Tariff Value (LFTV) per item of imported goods to avoid importers' tax evasion. For acquisition of import licence, importers must prepare import licence application using LFTV, which frequently differs from the actual contract price. Moreover, bank's refusal to open the letters of credit above LFTV causes problems in settlement of account with the exporter. | - It is requested that GOM issues import licence based on import declaration (at actual contract price). | |
| (4) Delayed Duty Free Import Procedures for ODA related Materials and Equipment | - On import of materials and equipment under ODA projects on application for tax exemption, it takes the applicant's own coordination among the ministries and agencies in concern to assure the duty free treatment. Moreover, numerous procedural delays occur at the end of the customs service hierarchy. | - It is requested that GOM ensures closer communication among ministries and agencies to assure duty free entries without fail. | |
| (5) Import Licence restrictions on FFEs | - Import licence being unavailable, foreign funded enterprises (FFEs) have no alternative but to organise the flow of commerce via the local Myanmar enterprises, without the ability to set the sales prices. | - It is requested that MOC deregulates import licence restrictions. | - Ministry of Commerce Notification No.16 |
| (Action) - Excepting the case where an FFE holds the Myanmar Investment Commission (MIC) licence, GOM does not issue import licence to foreign funded enterprises. However, since the promulgation of Instruction No.02/2015 of 27May 2015 on "the scope of trading activities" permitted for investors in the Thilawa special economic zone, it has become possible for FFEs to engage in trading business, including the wholesale distribution in the Thilawa SEZ. FFEs entering Thilawa SEZ with the trading licence may import products (or semi-finished products) into Myanmar. It is hoped that one day, import licence acquisition becomes no longer necessary. |
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| (6) Tariff Rate on CBU and CKD | - There can be no merit in local production of two-wheeled vehicles, as the same 5% tariff rate applies to both CKD and CBU. | - It is requested that GOM devises an incentive that clearly identifies the merit of local production in Myanmar. | |
| (7) Import Duty based on Standard Valuation Price | - GOM determines the customs duty not based on invoice price but on the standard valuation price, requiring adjustments with the prevailing market prices. | - It is requested that GOM takes step to: -- change to the tax levy scheme to invoice price, -- introduces flexible system for settlement of accounts, and -- secures duty free procedures of materials and equipment under ODA, and their expedited customs clearance. |
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