On 31 January 2013, as per the Foreign Investment Law of 2012 (the “FIL”), the Ministry of National Planning and Economic Development (the “MNPED”) issued the Foreign Investment Rules (the “FIR”) as per the Myanmar Investment Commission (“MIC”) Notification No. 1/2013 (the “FIN”). The FIR provides additional details and guidance on the FIL, including for example business classifications and various terms and conditions for foreigners investing in Myanmar.
One of the most significant features of the FIR is that shares in entities formed under the FIL may, with MIC approval, be transferred to foreigners. At least from a technical read of rules 65 and 69 of the FIR, it appears that with the pre-approval of MIC, which is left to the discretion of MIC, shares may be transferred to foreigners by Myanmar citizens and to Myanmar citizens by foreigners.
Another positive change is that the role of Directorate of Investment and Companies Administration (“DICA”) in foreign investments in Myanmar has been affirmed and thus has more authority in carrying out its stated functions. One of such stated functions is DICA’s role in coordinating between a proposed foreign investor’s project and the ministries that oversee the relevant industry or sector of the project. Also, the Director General of DICA will be the head of the Investment Proposal Supervisory Committee (the “IPSC”), which is to be formed under the FIR. The IPSC shall have the power to seek a recommendation letter from the relevant ministries for proposed foreign investments and the relevant ministry must respond within 7 days from the date of receipt of the letter from IPSC. This should speed up the process of obtaining a permit issued by the MIC (the “MIC Permit”) to foreign investors. The MNPED may prescribe a fee for such MIC Permit.
The FIR mandates that investors must complete the relevant construction relating to their project within the timeframe set forth in their formation documents. For good cause the MIC may extend such timeframe for no longer than one half of the original agreed to construction period. If the construction cannot be completed within the original agreed to period or the extension period, the MIC Permit will be withdrawn.
Please contact us should you have any questions.
James Finch
james.finch@dfdl.com
William Greenlee
william.greenlee@dfdl.com
DFDL Myanmar
myanmar@dfdl.com
