RANGOON – The government will soon publicly announce details about restricted and prohibited investments by foreign firms and joint venture projects, as well as those businesses approved by the Union ministry and state projects, said U Than Aung Kyaw, deputy director general of Directorate of Investment and Company Administration (DICA).
Despite the Union Ministry of National Planning and Finance officially releasing the Burmese language version of the country’s investment by-law on the DICA website on April 1—with 25 sections and 238 articles—the business community is asking the government to release information about its preferred investments by both local and foreign companies.
“By looking at these [forthcoming] statements, the investors can consider which sector to invest in, or which sector could get them income tax breaks,” U Than Aung Kyaw told The Irrawaddy.
Although Burma’s official investment law was approved by President U Htin Kyaw in late October 2016, Myanmar Rice Federation chairman Dr. Soe Tun remarked that foreign investment could not significantly grow in Burma unless the National League for Democracy (NLD) government clarifies their 12-part economic policy.
“The investors will not come instantly to invest in Myanmar, but there will be a little progress,” said Dr. Soe Tun, saying that the announcement on investments—expected later this week from the NLD—was “better than nothing.”
Dr. Soe Tun pointed to a lack of policy stability as one of the most significant barriers to foreign investment.
“We still don’t know the policies of the government—how they would drive forward to grow the country’s economy. The 12-part policy is too broad,” he added.
Poor infrastructure, an unreliable power supply and an unresolved minimum wage for laborers, are also issues faced by investors. According to World Bank’s annual report, Burma is ranked globally as one of the most challenging places to invest, Dr. Soe Tun added.
DICA official U Than Aung Kyaw argued that the country’s promoted investment sectors had already been announced on April 1—and are to be decided on officially by the Union government.
The document lists nearly 190 types of businesses, highlighting farming and agriculture, forests and plantations, and timber and food production. However, beer, cigarette and liquor production are reportedly not among the projects welcomed.
Other preferential investments are those pertaining to scientific research, hotels and tourism, information technology services and telecommunication, health and education services, renewable energy production, supply and transport services, construction of seaports, river ports and dry ports, the establishment of industrial zones and new urban areas, and the maintenance of airports, aircrafts and airline operation.
“Investors in promoted sectors could get income tax breaks, but other investments will not get a similar opportunity,” U Than Aung Kyaw said, adding that the tax breaks differ by sector—some lasting five years, and others seven.
According to DICA, the NLD government is estimating that foreign investment in Burma will meet US $6 billion per year from 2016-2020 and $8 billion per year from 2021-2030.
U Than Aung Kyaw explained the new investment by-law is more decentralized; it allows for relevant Union ministries or divisional governments to make their own decisions on US$5 million worth of projects, respectively. The by-law also ranks projects by size, based on the amount of funds invested.
The Myanmar Investment Commission securitization body will examine strategic investments to determine whether the projects could have a negative impact on society, residents, cultural heritage zones, or the environment.
The investment by-law states that local companies must hold at least 20 percent of total income of the project, if it is allied with foreign conglomerates. Myanmar Rice Federation chairperson Dr. Soe Tun agreed that this is a reasonable provision for locals, as they are often unable to invest as much capital as foreign companies.
