Local businesspeople are optimistic that the country’s new investment law will help create a better environment for domestic and international investors. But the government needs to take care not to spoil the new legislation by making the ac
The long-awaited Myanmar Investment Law passed through both houses of parliament last week. When it comes into force, local and international investors will be covered by the same piece of legislation, which provides a clearer, simplified framework relative to the separate citizen and foreign investment laws it replaces, according to law firm VDB Loi.
Local economists point to the importance of strong laws and policies in attracting foreign investment, which has the potential to be a major driver of economic growth in Myanmar. International and Myanmar investors arehoping the new law helps stimulate business, but want the accompanying rules and regulations to be drawn up carefully.
U Thaung Htike Min, director of Thu Kha Yadanar Construction Company, thinks having one simplified investment law will help government efforts toend tax evasion. He also approves of provisions that will allow the Myanmar Investment Commission (MIC) to adjust tax incentives based on sector and geographic location, which could help spur investment in underdeveloped areas and industries.
“But I want them to draw the rules and regulations carefully so that it’s easy to do business when the law comes into force,” he said.
Local investors have long experience of laws that appear simple in draft form, but are then accompanied by complicated rules and regulations that are time-consuming and costly to navigate. U Hla Maung, a retired director general of the Ministry of Commerce now acting as a consultant to international investors, said it was crucial that regulations be clear and easy to understand.
“Right now it’s just a law,” he said. “It needs the by-laws to be written, and if those are clear and simple, the law will be effective [at improving investment].”
The law’s text has already brought more clarity and simplicity to the investment framework. VDB Loi notes that several “poorly phrased provisions” have been written more clearly. Some “largely meaningless” rules have also been dropped, such as a “staggered maximum on foreign employees”.
A simplified version of the MIC permit – an approval order – is also available for smaller projects. The MIC permit will still be required for projects deemed “strategic”, that require large amounts of capital or have an impact on the environment. But it remains unclear just how these criteria will be defined. VDB Loi also notes the law stipulates that projects requiring only an approval order must first secure permission or a licence from the relevant government agency. Although this is sensible, it will “empower the line ministries to the detriment of MIC”, the law firm said.
“It will be harder for the MIC to play its role as facilitator and promoter of foreign investment if an investor cannot even get to the MIC without first securing line ministry approval,” said VDB Loi. “We are not yet certain if this will be a major problem in reality. The MIC might implement measures to prevent this from happening and the list of projects that continue to need an actual permit might be massive.”
Investors eager for the new law to take affect will have to wait for the rules and regulations to find out just how the framework will work in practice.
Source: Myanmar Times
