Appropriate compensation equal to the market value in force at the time of expropriation of the investment must be paid. Section 53 clarifies that compensation for indirect expropriation is normally equal to the fair market value of an investment, but that other factors must also be taken into account. At a historic economic policy event in Naypyitaw on 22 October 2016, State Counsellor Daw Aung San Suu Kyi and Minister of Planning and Finance U Kyaw Win reaffirmed Myanmar`s openness for business. They had invited more than 150 of Myanmar`s largest taxpayers to attend the event, and they presented high-level plans to boost economic growth. They stressed that the government wants to work with the private sector in areas such as infrastructure development and reiterated the need to attract more responsible foreign investment. Currently, DICA encourages investment in the following sectors: – The Myanmar Investment Commission (“TRIM”) issued 15/2017 of 10 April 2017 (“Notification 15/2017”) on prohibited and restricted activities for foreign investment. Communication 15/2017 repeals Communication 26/2016 of 21 March 2016 (the “Communication 26/2016”). The IME contains dispute resolution mechanisms. Disputes that cannot be settled amicably must be settled in accordance with the dispute settlement provisions of the Investment Agreement. Where such provisions are not provided, Myanmar`s dispute settlement laws shall apply.
Even if it is an investment activity that does not require an investment permit, investors must obtain confirmation from TRIMs in order to (i) enter into long-term leases of land and buildings for the conduct of their activities; or (ii) tax exemptions and reliefs offered by the Government of Myanmar. The 2016 law aims to simplify procedures and allow for greater transparency in the investment approval process. In addition to allowing MIC to rely on the expertise of external experts, the 2016 law also allows MIC to engage with investors at its meetings. In addition, the 2016 law appears to decentralize the foreign investment approval process by allowing state governments to review and approve certain types of foreign investment. Myanmar`s investment laws and policies have evolved in recent years. While the 2012 law set the rules for foreign investment, the 2013 law regulated investments by Myanmar citizens. However, those separate legal regimes created an uneven playing field for foreign investors on the one hand and domestic investors on the other. The 2016 law is an attempt by the Myanmar government to harmonize these investment laws and facilitate investment in Myanmar. Although the Government of Myanmar has sought to streamline and simplify investment procedures through the 2016 law, the success of these efforts will also depend on the quality of subsidiary legislation, which is still ongoing. The MIC was reconstituted in June 2016 after the NLD-led government came to power and now consists of 11 members, including the chairman. The main tasks of the MIC include promoting investment in Myanmar and setting investment conditions for various sectors.
The MIC is also primarily responsible for reviewing investment proposals and applications for investment incentives. The 2016 law requires the MIC to meet at least once a month to consider, among other things, investment proposals and other applications. (b) current transactions related to foreign investment, including the payment of royalties, royalties, technical fees or administrative fees by Myanmar nationals and entities. (i) capital goods and construction materials imported during the start-up phase of an investment activity that are not available locally; and In 2016, the Government of Myanmar passed a new Myanmar Investment Law (MIL). The MIL entered into force on 18 October 2016 and consolidated and replaced the former 2012 Foreign Investment Law and the 2013 Citizen Investment Law. MIT, which constitutes the general legal framework, was followed by the more detailed Myanmar Investment Rules 2017 (Investment Rules), which entered into force on 30 March 2017, as well as two notifications: Notification 13/2017 of 1 April 2017 (Supported Sector Classification) (Communication 13) and Communication 15/2017 of 10 April 2017 (List of Restricted Investment Activities) (Notification 15). Together, they represent all of Myanmar`s current foreign investment laws. Cross-border money transfers are subject to compliance with the Foreign Exchange Administration Act of 2012 and Myanmar`s tax laws.
The free flow of capital for investment activities in Myanmar will also depend on the effectiveness of CBM operations and the availability of Myanmar kyat and “freely usable currencies” such as the US dollar in Myanmar. Under Section 42 of the 2016 Law, investment activity is considered restricted if: (i) it is reserved for the Government of Myanmar; (ii) are not open to foreign investment; (iii) Authorized only if conducted jointly with a national or entity of Myanmar; or (iv) subject to approval by a ministry of the Government of Myanmar. TRIM is required to issue notices from time to time detailing the promoted and restricted investment activities. The rules issued under the 2012 Act, to the extent that they are not contrary to the 2016 Act, will continue to apply until the Government of Myanmar formulates subsidiary legislation for the 2016 Act. Based on recent statements by senior Myanmar government officials, subsidiary legislation on the 2016 law is expected to be published by March 2017. The 2016 law provides more clarity regarding guarantees for foreign investments than the 2012 law. In addition to a guarantee against direct expropriation of investments by foreign investors, the 2016 law also addresses the issue of indirect expropriation. The 2016 Act provides that no action shall be taken that results in indirect expropriation or cessation of activity, unless such action is (i) necessary in the public interest; (ii) non-discriminatory; (iii) in accordance with applicable laws; and (iv) prompt payment of market-based compensation. The 2016 law also provides investors with the opportunity to challenge actions they consider to be an indirect expropriation of the investor`s company in Myanmar.
Section 41 of the 2016 Act lists the types of investment activities that are prohibited. This includes businesses or activities that may have an impact on Myanmar`s environment, biodiversity, culture and traditional customs, and public health. In addition, the MIC must obtain the approval of the Pyidaungsu Hluttaw (Assembly of the Union of Myanmar) if an investment activity may significantly affect Myanmar`s security, economic situation and/or national interests. (a) Repatriation of funds by foreign investors and transfer of capital gains and dividends from investments in Myanmar through normal banking channels; and Unlike the 2012 law, the 2016 law regulates both foreign and domestic investment. It divides investment into three categories: (i) encouraged; (ii) restricted; and (iii) prohibited. If the activity is on the “Promoted List”, the tax exemption is determined according to whether the investment is in Zone 1, 2 and/or 3. Businesses with a minimum capital of less than $300,000 are not eligible for a tax exemption. Article 55 of the MIL provides for the “extraordinary expropriation” of property.
According to Article 55 of the Mil, the government may “take non-discriminatory measures for the regulation of economic or social activities, including appropriate measures to protect the `morality of citizens` or to safeguard the public interest or national security.” Extraordinary expropriation clauses, such as Article 55, are often used in international investment treaties. The Myanmar Investment Commission (“TRIM”) remains the central authority responsible for regulating foreign investment in Myanmar and reports to the Ministry of Planning and Finance. The administrative activities of MIC are carried out by DICA. Myanmar`s Investment Rules also contain relevant information on the form and processes surrounding certain aspects of foreign investment, including, but not limited to, the following: This client review summarizes the main features of the 2016 law, based on an unofficial translation provided by DICA.