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Myanmar.ca Foreign Investment Law 2012 Unofficial Translation (Updated 18Nov2012)

Foreign Investment Law 2012

Chapter 1Title and Definition

1. This Law shall be called the Foreign Investment Law.2. The following expression contained in this Law shall have the meanings

given hereunder:(a) State means the Republic of the Union of Myanmar;(b) Commission means Myanmar Investment Commission formed

under this Law;(c) Union Government means Union Government of the Republic of

the Union of Myanmar;(d) Citizen includes an associate citizen or a naturalized citizen. The

said expression also includes an economic organization formed with citizens only;

(e) Foreigner means a person who is not a citizen. The said expression also includes an economic organization formed with foreign investment only;

(f) Promoter means any citizen or any foreigner submitting an investment proposal to the Commission;

(g) Proposal means the prescribed application submitted by a promoter to the Commission for approval of an intended investment and accompanying draft contract, financial documents and documents relating to company;

(h) Permit means the order in which the approval of the Commission of a proposal is expressed;

(i) Foreign Capital includes the following which are invested in an economic enterprise by any foreigner under a permit:-(1) foreign currency;(2) property actually required for the enterprise and which is not

available within the State such as machinery, equipment, machinery components, spare parts and instruments;

(3) rights to evaluate including intellectual properties such as licenses, patent rights, industrial designs, trademarks and copyrights;

(4) technical know-how;(5) re-investment out of the benefits accrued to the enterprise

from the above or of share of profits;(j) Investor means a person or an economic organization making an

investment under a permit;(k) Bank means any bank permitted by the Union Government in the

State;(l) Investment means every kind of asset, owned or controlled by an

investor, including but not limited to the following:

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(i) movable and immovable property and other property rights such as mortgages, liens or pledges;

(ii) shares, stocks, bonds and debentures of a company;(iii) claims to money or to any contractual performance related to

a business and having financial value;(iv) intellectual property rights which are conferred pursuant to

the existing Laws;(v) concession rights relating to exploration and extraction of

natural resources conferred by Law or under a contract.

(m) Person entitled to land lease or land use is entitled to lease or use land in accordance with the prescribed terms after causing payment of fees prescribed by the Government to be made for land lease or land use.

Chapter 2Economic Activities Concerned

3. This Law shall deal with economic activities prescribed in the notification issued by the Commission with the prior approval of the Union Government.

4. The following investment activities may be considered as restrictive or prohibited economic activities-(a) activities harmful to traditional culture and customs of national

races;(b) activities harmful to public health;(c) activities harmful to natural environment and ecology;(d) activities which may carry dangerous or toxic wastes to the State;(e) activities which may produce dangerous chemicals in factory or use

dangerous chemicals under international agreements;(f) production and services activities prescribed by the Commission

which can be conducted by citizen;(g) technology, pharmaceuticals, and utensils activities which are under

experiment at abroad or approval is not yet allowed to use; (h) short and long term agriculture activities prescribed by the

Commission which can be conducted by citizen;(i) livestock and breeding activities prescribed by the Commission

which can be conducted by citizen;(j) fisheries activities at Myanmar marine fisheries water prescribed by

the Commission which can be conducted by citizen;(k) foreign investment activities conducted within ten miles of territory

by demarcating the States and the boundary of other States except at economic zone established with the permission of the Union Government.

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5. The Commission may allow with the approval of the Union Government investment activities restricted or prohibited under section 4 if the activities are for the benefit of the State or for the citizen, especially for the benefit of the native citizens.

6. The Commission shall submit to the Pyidaungsu Hluttaw through the Union Government, heavy foreign investment activities which are largely beneficial to the security, economics, environment and social conditions.

Chapter 3Objectives

7. The Law purposes to explore abundant resources of State and people use adequately and to export and sell the extra; to create more employment opportunities for citizen as economic activities increase more; to develop human resources; to promote the infrastructure such as bank and monetary activities, high classed roads, highways communicated between two States, national electronic and power production activities and high technologies including updated information and technology; to develop communication networks, transport activities with internationally standardized train, ship, aircraft and academic fields, all round growth of the State; to strengthen competitiveness with citizen and foreigner; to emerge economic activities and investment in line with international standards.

Chapter 4Basic Principles

8. Investment shall be permitted based on the following principles:-(a) Facilitating main objectives of national economic development plan

and economic activities which have not yet been operated owing to insufficiency of finance and technology;

(b) Opening up of the more employment opportunities;(c) Promoting expansion of exports;(d) Production involving large capital;(e) Production with high technology in acquisition of high skill and

technology;(f) Supporting and assisting production and services involving huge

capital;(g) Development of works which would save energy consumption;(h) Regional development;(i) Growing renewable energy resources like new energy and bio-based

energy;(j) Development of advanced industries;(k) Environmental protection and conservation;(l) Protection of small and medium industries performed by citizen;(m) Enhancing exchange of information and technology;

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(n) Helping not to endanger State sovereignty and public safety;(o) Development of knowledge and technology;(p) Development of bank and banking transaction in accordance with

international standards;(q) Emerging modernized services for State and citizen;(r) Promotion sufficient energy and resources for local utilization for

short and long terms.

Chapter 5Type of Investment

9. Investment may be made in any of the following form:(a) investment made by a foreigner to the extent of one hundred percent

foreign capital in economic activities permitted by the Commission;(b) joint-venture made between a foreigner and citizen or with

Government Department or Organization;(c) performance of contractual arrangement agreed by both parties.

10. (a) In doing investment under section 9:-(i) a company shall be formed;(ii) if a joint-venture is formed the foreign capital and local

citizen capital ratio shall be negotiated between parties and agreed upon;

(iii) the Commission shall prescribe a minimum amount of capital in foreign investment depending on the nature of activity with the approval of the Union Government;

(iv) if a joint-venture between foreigner and citizen is formed in prohibited or restrictive activities equity ratio may be as prescribed by the Commission.

(b) In carrying out the business under sub-section (a), termination of business before the expiry of its term, or liquidation on the termination of business, shall be complied with existing Laws of the State.

Chapter 6Formation of the Commission

11. (a) The Union Government:-(1) shall form the Myanmar Investment Commission, with

regard to the investment business to carry out the functions in this Law, with a suitable member of Union level as chairman, expertise from Union Ministry concerned, Government Department, organizations and non-governmental organizations; and suitable persons as members,

(2) In forming the Commission, shall assign the deputy chairman, secretary, assistant secretary among members.

Date : 2-Nov-2012


(b) Members of the Commission who are not in civil service are entitled to the salary, expenses and honorarium allowed from Ministry of National Planning and Economic Development.

Chapter 7Duties and Power of the Commission

12. The duties and powers of the Commission are as follows:-(a) scrutinizing a proposal reviewing whether the proposal is in

conformity with the basic principles in Chapter 4, financial credibility, economic justification of the business enterprise and appropriateness of technology, maintenance and protection of environment, etc;

(b) taking necessary and prompt action in respect of complaints made by investors on failure to receive fully, rights entitled to under this Law;

(c) scrutinizing the proposals in accordance with existing Laws;(d) reporting its performance to the Pyidaungsu Hluttaw through Union

Government every six months;(e) recommending to the Union Government from time to time measures

necessary to facilitate and promote local and foreign investments;(f) prescribing the type of investment, amount of the investment value

and the term of the business with the prior consent of the Union Government;

(g) make known immediately to the Commission and to take action if natural mineral resources or antiques not relating to the permitted enterprise and which are not included in the original agreement are found above or under the land which he is entitled to lease or use;

(h) scrutinizing business activities whether investor abides by the provisions of the Law, rules, procedures, orders, directives issued under this Law and conditions of the permit or not. If not, to abide by the Law, rules, procedures, orders, directives issued under this Law and conditions of the permit and taking action the business activities which the investor did not abide by;

(i) in the interest of the nationals, term relating to the right of Myanmar nationals, to re-purchase and investment ratio in full or in part and change of share ratio shall be mentioned in contracting for any activity for any form of investment approved by the Union Government under Chapter 5;

(j) according to sub-section (i) to make the investor to sell stipulated equity ratio of investment to Myanmar Citizen;

(k) prescribing economic activities which do not need to grant tax exemption and relief;

(l) carrying out the duties assigned from time to time by the Union Government.

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13. The powers of the Commission are as follows:(a) accepting the proposal which will promote the interests of the State

and which is without prejudice to any existing Law;(b) issuing a permit to a promoter on an accepted proposal;(c) allowing or rejecting to scrutinize an extension or amendment of the

term of the permit or the agreement as submitted by those concerned;(d) requiring at any time a promoter or an investor to furnish such

evidence or facts;(e) allowing or rejecting to prescribe the bank which shall transact

financial matters under this Law.

14. The Commission may, from time to time, form committees and bodies as may be necessary in carrying out the purposes contained in this Law.

15. The Commission shall submit its performance reports to the Union Government meetings.

16. The Commission shall submit on the situation of the finished implementation and development to the Union Government quarterly.

Chapter 8Duties and Rights of Investor

17. The duties of the investor are as follows:-(a) abiding by the existing Laws of the Republic of the Union of

Myanmar;(b) forming company by investor under Myanmar existing Laws;(c) abide by the provisions of this Law, rules, procedures, orders,

directives issued under this Law and conditions of the permit;(d) using the land which he is entitled to lease or use in accordance with

the stipulation prescribed by the Commission and terms prescribed in the contract;

(e) with the approval of the Commission, sublease, mortgage or transfer the share and business concerning the land and building to another person for investment business within the term granted under the permit;

(f) undertake not to modify or alter, without permission of the Commission, the topography or the contour of the land for which he obtained lease or land use;

(g) inform immediately to the Commission if natural mineral resources or antiques not relating to the permitted enterprise and which are not included in the original agreement are found above or under the land which he is entitled to lease or use. Continuing to operate on such land if the Commission permits and shift to substituted area chosen by the investor and approved by the Commission;

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(h) not causing environmental pollution and destruction in respect of business within existing Laws;

(i) registration of the transfer of foreign company’s shares of business in accordance with the existing Laws, after the prior approval of the Commission and return the permit if he sells all shares to any foreigner or citizen;

(j) registration of the transfer of foreign company’s shares of business in accordance with the existing Laws, after the prior approval of the Commission and after receiving the permit if he sells some shares to any foreigner or citizen;

(k) proper transfer of the high skill and technology to enterprise, department and organization concerned as mentioned in the contract;

(l) resell investment value out of the investment of foreigner to Myanmar Citizens after reaching the year stipulated under section-12(i) of Chapter 7.

18. The rights of the investor are as follows;(a) making sale, exchange or transfer by other means the assets with the

approval of the Commission in accordance with Law;(b) carrying out the extension of the business stated in the original

proposal or increasing the foreign capital with the approval of the Commission;

(c) submitting to the Commission to review and scrutinize for acquiring his rights fully in accordance with the existing Law;

(d) applying to the Commission for acquiring his rights in accordance with the Law and for taking action in respect of his grievances;

Chapter 9Application for Permit

19. A promoter or investor desirous of making an investment shall submit a proposal to the commission for approval in accordance with prescriptions.

20. The Commission:-(a) if a proposal submitted under section 19 is received may accept or

refuse within 15 days after necessary scrutinizing.(b) if the proposal is accepted, shall approve or refuse a proposal within

90 days.

21. If a promoter or investor obtains the permit issued by the Commission he shall execute the required business contract with government department, government, organization or individual, organization concerned.

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22. The Commission may allow as may be necessary when the investor applies for extension or relaxation or amendment of the term of the contract or agreement accordance with Law.

Chapter 10Insurance

23. The investor shall affect the prescribed type of insurance with any insurance enterprise permitted to operate insurance business.

Chapter 11Employment of Staff and Worker

24. The investor-(a) in employing citizens skilled workers, technicians and staff for

expertise works, shall employ at least 25 percent of citizens within the first two year, 50 percent within second two years and 75 percent within the third two years from commencement year of the business. But in the case of intellectual property based business the Commission may extend and alter the suitable time limitation;

(b) shall arrange and provide necessary training for the improvement of the skill of the employees and staff in appointing under sub-section (a);

(c) shall employ citizens only at the works where expertise is not required;

(d) shall carry out labour recruitment through the Work and Labour Recruitment Office, local labour recruitment agents or by own arrangement;

(e) shall engage citizen skilled workers, technicians and staff, by signing the employment agreement mutually agreed between the employer and employee in accordance with the existing labour Laws and rules;

(f) shall manage and carry out rights relating to national staff which shall not be discriminated with foreigner staff proportionately at expertise level.

25. The foreigners working in the investment business under permit shall apply the work permit and stay permit issued by the Republic of the Union of Myanmar.

26. The investor-(a) shall conclude the employment agreement in service in accordance

with the prescriptions;

(b) shall coordinate, in determining the rights and duties of the employer and employee or terms and conditions relating to employment

Date : 2-Nov-2012


contained in the employment agreement, minimum wages, leave, holiday, overtime fees, compensation for dismissal and workmen’s compensation, social security and other insurance relating to workers including the rights contained in the existing labour Laws and rules;

(c) shall settle the disputes arising between the employers, employees, employer and employee, employee and technician or staff in accordance with existing Laws concerned.

Chapter 12Exemptions and Reliefs

27. The Commission shall, for the purpose of promoting foreign investments within the State, grant the investor exemptions or reliefs from taxes mentioned in sub-section (a) out of the following exemptions or reliefs from taxes. In addition, the Commission may grant any or more than one or all of the remaining exemptions or reliefs from taxes: -

(a) in respect of any enterprise for the production of goods or services,

exemption from income-tax for a period extending to 5 consecutive years, inclusive of the year of commencement of production of goods or services; in case where it is beneficial for the State, exemption or relief from income-tax for a further reasonable period depending upon the success of the enterprise in which investment is made ;

(b) exemption or relief from income-tax on profits of the business if they are maintained in a reserve fund and re-invested therein within 1 year after the reserve is made ;

(c) right to accelerate depreciation in respect of machinery , equipment, building or other capital assets used in the business, at the rate fixed by the Commission to the extent of the original value for the purpose of income-tax assessment;

(d) if the goods produced by any enterprise are exported, relief from income-tax up to 50-percent on the profits accrued from the said export;

(e) right of an investor to pay income-tax payable to the State on behalf of foreigners who have come from abroad and are employed in the enterprise and the right to deduct such payment from the assessable income;

(f) right to pay income-tax on the income of the above-mentioned foreigners at the rates applicable to the citizens residing within the country;

Date : 2-Nov-2012


(g) right to deduct from the assessable income, such expenses incurred in respect of research and development relating to the enterprise which are actually required and are carried out within the State;

(h) right to carry forward and set-off up to 3-consecutive years from the year the loss is sustained in respect of such loss sustained within 2 years immediately following the enjoyment of exemption or relief from income-tax as contained in sub-section (a), for each individual enterprise;

(i) exemption or relief from customs duty or other internal taxes or both on machinery, equipment, instruments, machinery

components, spare parts and materials used in the business, which are imported as they are actually required for use during the period of construction;

(j) exemption or relief from such customs duty or other internal taxes or both on such raw materials imported for the first 3 years’ commercial production following the completion of construction;

(k) If the original investment is increased during the term of original investment and with the approval of the Commission, exemption or relief from customs duty other internal taxes or both on machinery, equipment, instruments, machinery components, spare parts and materials used in the business, which are imported as they are actually required for the expansion of the business;

(l) exemptions or reliefs from commercial tax on the goods that are produced for export.

Chapter 13Guarantees

28. The Union Government guarantees that economic enterprise formed under a permit shall not be nationalized during the term of the contract or during an extended term, if so extended.

29. The Union Government guarantees that economic enterprise operating under a permit shall not be terminated without sufficient cause before the expiry of the permitted term.

30. The Union Government guarantees that foreign investor may repatriate their rightful funds the same currency invested at the end of the contract.

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Chapter 14Rights of Land Use

31. The Commission shall may permit the investor the term of land lease or land use which the investor actually needs depending on category of business, type of industry and amount of investment for an initial period of 50 years.

32. The Commission, if desirous to continue to operate, after the expiry of the permitted term under section 30, may extend consecutive term of 10 years depending on the amount of investment and type of investment business and further 10 years of extension after the expiry of the said term.

33. With prior agreement of the Union Government, the Commission may, for the purpose of promoting the economic development of the State, may allow investment to be made on such land with the initial agreement of the person who is entitled to lease the land or the person who is entitled to use the land.

34. The Commission may prescribe from time to time rental fees on land owned by government department and organization with the prior approval of the Union Government.

35. The investor is entitled to carry out cultivation business under contract farming agriculture/livestock system on the land which citizen may only operate by joint venture with citizen.

36. The Commission may prescribe extra rights to lease or use land located in economically backward and difficult to communicate areas for the purpose of development throughout the country.

Chapter 15Foreign Capital

37. The Commission shall mention the type of foreign currency.

38. In the event of termination of business the person who has brought in foreign capital may withdraw foreign capital which he is entitled to withdraw as prescribed by the Commission within the time stipulated.

Chapter 16Right to Transfer Foreign Currency

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39. The following shall be transferable abroad in the relevant foreign currency through the bank prescribed by the Commission, at the prevailing official rate of exchange:-(a) foreign currency entitled to by the person who has brought in foreign

capital;(b) foreign currency permitted for withdrawal by the Commission to the

person who has brought in foreign capital;(c) net profits after deducting from the annual profits received by the

person who has brought in foreign capital, all taxes and the prescribed funds;

(d) legitimate balance, after causing payment to be made in respect of taxes and after deducting in the manner prescribed, living expenses incurred for himself and his family, out of salary and Lawful income obtained by the foreign personnel during performance of service in the State.

Chapter 17Matter relating to Foreign Exchange

40. The investor:-(a) remit relevant foreign currency abroad with stipulated exchange rate

through the bank which is entitled to operate foreign bank business in the State;

(b) shall open a foreign currency account in the type of foreign currency accepted by the bank which is entitled to operate foreign bank business in the State, and a kyat account and carry out all financial transactions relating to the business enterprise.

41. In an economic organization formed under a permit, staff and foreigners shall open a foreign currency account in the type of foreign currency accepted by the bank, and a kyat account in the bank which is entitled to operate foreign bank business in the State, and carry out all financial transactions relating to the business enterprise.

Chapter 18Administrative Penalties

42. The Commission may pass any or all of the following administrative penalties on an investor who violates the provision of this Law, rules, procedures, orders and directives issued under this Law or any condition of the permit:-(a) warning;(b) temporarily suspending the tax exemptions and reliefs(c) revoking the permit;(d) listing the name of the enterprise on the black listed of economic

enterprises to which no permit will be issued in future.

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43. When any dispute arises with regard to investment business-(a) shall settle amicably the disputes between the disputing parties,(b) if failure to reach agreement-

(1) comply with existing Laws of the State if there is no method of dispute settlement prescribed in the relevant contract;

(2) comply with the prescribed method if there is method of dispute settlement prescribed in the relevant contract.

Chapter 19Miscellaneous Provisions

44. The Commission may after scrutiny with the intention to export the surplus after attaining the essential energy for the State and Citizens, permit a proposal submitted for investment under the joint venture system on the production between the State or Citizen and the investor by fully using up the investor’s capital in the production of oil and natural gas, minerals etc, involving large capital; in the study of feasibility of production in the allotted plot within the prescribed period of time; in making test exploration, measuring, mining and in taking measures to reach the stage of potential commercial production.If that investment business is capable of commercial production in order to recover the profit interest, a ratio of profit interest shall be shared between the Union Government or Government Department, Government Organizations bestowed with powers by the Union Government according to Law, the citizen and the investor who conduct joint venture.

45. Before this Law is enacted, the foreign investor under the Union of Myanmar Foreign investment Law (The State Law and Order Restoration Council Law No. 10/1988) shall be recognized as investors specified by this Law.

46. The investor shall be liable for criminal action, if sufficient evidence is found that he has intentionally falsified or concealed the accounts, documentary evidence, financial matters and appointment of workers ect; that are enclosed with the proposal which is submitted to the Commission, the relevant Government department, Government organization.

47. Notwithstanding anything contained in any existing Law, the matters relating to any provision of this Law shall be carried out only in accordance with this Law.

48. The Commission shall hold meetings in the manner prescribed.

49. The decision of the Commission made under the powers conferred by this Law shall be final and conclusive.

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50. No suit, prosecution or other proceeding shall lie against any member of the Commission or committee or body or any public servant for any act done in good faith and for having enough evidence under power assigned in accordance with this Law.

51. For the purpose of carrying out the provisions of this Law the Ministry of National Planning and Economic Development shall-(a) undertake the responsibilities to carry out the office works of the

Commission.

(b) bear the expenses

52. According to the Republic of the Union of Myanmar Foreign Investment Law (State Law and Order Restoration Council Law No. 10/1988) repealed by this Law the investor under the permission of the Commission shall be entitled to operate continuously and shall have the rights subject to the conditions of the permit and stipulations in relevant contract to the end of tenure of the permit.

53. The Commission shall submit if it affects to the welfare of the State and citizen in allowing foreign investment businesses under section 3 and 5 as important matter to nearest Pyidaungsu Hluttaw through the Union Government.

54. In implementing the provisions contained in this Law;(a) the Ministry of National Planning and Economic Development may,

with the approval of the Government make necessary rules, regulations and by-Laws, procedure, order, notification and directives, issue within 90 days from the day of enforcement of the Law.

(b) the Commission may issue necessary orders, notifications and directives.

55. In the event of the conflict between any provision in this Law and any provision in international treaties and agreement ratified by Myanmar the provision under international treaties and agreement shall prevail.

56. After enacting this Law, during the period before rules, procedures are enacted, rules, procedures issued by Law (State Law and Order Restoration Council Law No. 10/1988) shall continue to be applicable if it does not contradict with this Law.

57. The Republic of the Union of Myanmar Foreign Investment Law (State Law and Order Restoration Council Law No. 10/1988) is repealed by this Law.

Signed. Thein Sein – President , The Republic of the Union of Myanmar.

Date : 2-Nov-2012

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