guide to investment and doing business

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    Guide to Investment and Doing

    Business

    Myanmar represents excellent potential for business investment.

    The Government implemented market-oriented economic policy in 1988 inorder to attract foreign investment and to increase local private sectorsparticipation in the economy.

    nvestment prospects !as boosted after the promulgation of the "nion ofMyanmar #oreign nvestment $a! %#$& in 'ovember 1988.

    $egislative provisions under the #oreign nvestment $a! are very simple andrepresent one of the most progressive and favorable nvestment $a!

    #oreign and Myanmar (ompanies can be format in the "nion of Myanmarunder the Myanmar (ompanies )ct* !hich has legal and common languagekno!n to all under entrepreneurs in the competitive commercial !orld.

    Myanmar !elcomes foreign investments in all forms. The Government is intent inmaintaining good economic relationship !ith all foreign organi+ations and individuals*regardless of their political or social systems and its attempting to build stronger economicrelations !ith all countries.

    Foreign Investment Environment

    Foreign Direct Investment Policy

    Myanmar,s #oreign irect nvestment policy is a component of the overall restructuringand development policy of the Government. The main components of the policy are

    )doption of market oriented system for the allocation of resources.

    /ncouragement of private investment and entrepreneurial activity.

    0pening of the economy for foreign trade and investment.

    The objectives of the Republic of Union of Myanmar Foreign Investment Law

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    romotion and expansion of exports

    /xploitation of natural resources !hich re2uire heavy investment

    )c2uisition of high technology

    3upporting and assisting production and services involving large capital

    0pening up of more employment opportunities

    evelopment of !orks !hich !ould save energy consumption

    4egional evelopment

    n order to oversee and administer the #$* the Myanmar nvestment (ommission %M(&!as formed and it acts as initial approving authority for investment proposals.

    Forms of Investment

    #oreign investors can set up their business either in the form of a !holly foreign-o!ned ora 5oint venture !ith any partner %an individual* a private company* a cooperative society ora state- o!ned enterprise&. n all 5oint ventures* the minimum share of the foreign party is67 percent of the total e2uity capital.

    Minimum apital Re!uirement

    The minimum amount of foreign capital re2uired to be eligible under the #oreignnvestment la! is

    #or an industry "3 7*#or a service organi+ation "3 6*

    "ligible "conomic #ctivities

    /conomic activities allo!ed under the foreign nvestment la! cover almost all sectors ofthe economy. t has been notified by the Myanmar nvestment (ommission %M(&. )nyeconomic activity not include in the notification can be considered individually.

    Liberal Investment Incentives

    Ta$ Incentives un%er the Foreign Investment Law

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    ) flat tax rate of 6 percent is applicable to an enterprise operating under thela!. /xemption from income tax for 6 consecutive years beginning !ith theyear in !hich the operation commences and further tax exemption or relief foran appropriate period in case if its considered beneficial for the 3tate.

    The (ommission may also grant

    /xemption or relief from income tax on profit !hich is reinvested !ithin one

    year.: 4elief from income tax up to 7 percent on the profit from exports.: 4ight to pay income tax of the foreign employees and to deduct the samefrom the assessable income of the enterprise.: 4ight to pay income tax of the foreign employees at the rate applicable to theciti+ens of Myanmar.: 4ight to deduct the research and development expenditure.: 4ight to accelerate depreciation: 4ight to carry for!ard and set off losses up to 6 consecutive years* from theyear the loss is sustained.: exemption or relief from customs duty and other taxes on-%a& mported machinery and e2uipment for use during the construction period.%b& mported ra! materials for the first 6 years commercial productionfollo!ing the completion of construction.

    Right to Transfer Foreign urrency

    ) person !ho has brought in foreign capital can transfer the follo!ing-

    #oreign currency entitlement of him.

    'et profit after deducting all taxes and provisions.

    #oreign currency permitted for !ithdra!al by the (ommission !hich mayinclude the value of assets on the !inding up of business.

    ) foreign employee can transfer his salary and la!ful income after deductingtaxes and other living expenses incurred domestically.

    Guarantee

    /nterprises operating under the #oreign nvestment $a! shall have the 3tate guaranteeagainst nationali+ation and expropriation.

    Application Procedures for Foreign Investment

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    ) promoter for foreign investment must submit a proposal in prescribed form to theMyanmar nvestment (ommission. ;ith the proposal the follo!ing must be attached.

    %1& ocuments supporting financial credibility. % audited final accounts of most recent yearof the person or the firm that intends to make investment&.

    %& f it is a hundred percent foreign investment* a draft contract to be executed !ith anorgani+ation determined by the Ministry concerned.

    %7& f it is a 5oint venture* a draft contract to be entered into bet!een the foreign investorand local counterpart.

    %?& f it is a 5oint venture in the form of a limited company* draft Memorandum and )rticlesof )ssociation and also a draft contract bet!een the foreign and local investors.

    %@& The promoter may apply for the exemptions and reliefs from taxes stated in (hapter 1)rticle