Investment Commission Could Have Wings Clipped
By Simon Roughneen 23 October 2013
RANGOON — The Myanmar Investment Commission (MIC), the body that vets would-be foreign investors into Burma, could have its discretionary powers curbed as part of a review of investment policy being undertaken by the Burma government and the Organization for Economic Co-operation and Development (OECD).
Dr Khin San Yee, Burma’s Deputy Minister of National Planning and Economic Development, met with the OECD Investment Committee and Advisory Group on Investment and Development last week, and, according to the OECD, the “Myanmar delegation noted that it was already working to ease the administrative burden on investors and simplify the screening process to reduce the amount of discretion of the Myanmar Investment Commission.”
Such a move, if it comes about, is necessary, according to Burma’s main opposition party, the National League for Democracy (NLD). Han Tha, a member of the NLD’s central executive as well the party’s economic committee, says that the MIC has too much sway over investment into Burma. “The MIC has too much power and any reduction of that is to be welcomed,” he told The Irrawaddy.
NLD leader Aung San Suu Kyi is currently in Europe, seeking backing for her drive to have Burma’s 2008 constitution amended to allow her become President should the NLD win Burma’s 2015 national elections.
However, Tin Aye Han, director of the Directorate of Company Administration (DICA), told The Irrawaddy that there is no indication that the MIC will be tinkered with. “There are no changes at all in MIC’s role,” she said.
Burma’s foreign investment law was passed in November 2012 after a lengthy saga involving disagreements between President Thein Sein and the Parliament, and between MPs. The new code, which updated a 1988 investment law, was broadly welcomed, though it limits foreign investment in sectors such as energy and farming. The law and subsequently-issued foreign investment rules give the MIC discretionary powers to seek government approval to allow investments in otherwise off-limits areas.
But even here, the rules are marred by hazy wording, with one sample clause relating to the MIC reading as follows: “The Commission shall submit and obtain approval from the Union Government for the designation of investment businesses which are categorized by prohibited business for investment within the Union, investment business only to form joint – venture with citizens and investment business only permitted with the specific condition.”
Along with reining in the MIC, some existing curbs on foreign investment are being looked at, it seems, with the OECD saying that Burma “is also reviewing the many sectoral restrictions on foreign investors, and a new notification on these restrictions will be issued in the coming months.”
Tin Aye Han said that “the MIC is currently reviewing on Notification No (1/2013) in order to distinguish economic activities to be done under Foreign Investment Law or [under the] Myanmar Companies Act.”
The MIC is headed by Burma’s Finance Minister, Win Shein, who replaced Soe Thane, a minister in President Thein Sein’s office, earlier in 2013. Other Commision members include Dr Kan Zaw, Minister for National Planning and Economic Development, and Attorney-General Tun Shin.
Edwin Vanderbruggen, a partner with Burma legal advisory firm VDB Loi, told The Irrawaddy that “the Myanmar Investment Commission is poised to issue an updated list of business activities for which foreign investors can receive benefits under the Foreign Investment Law.
“It is expected that certain types of activities, notably service companies without much capital expenditure, will no longer qualify,” Vanderbruggen said.
Foreign investment into Burma grew from 3.7 percent of GDP in 2011/12 to 5.2 percent in 2012/13, according to a recent World Bank report, which added that most of this investment was in the energy sector, garment industry, information technology, and food and beverages. Recent data from the MIC shows that Burma received US $1.8 billion worth of foreign direct investment in the months between April and August this year, as much as the entire previous year.