The Myanmar Investment Commission (MIC) is working on guidelines that would allow foreign investors to avoid the time-consuming process of asking government ministries for permission under the new Myanmar Investment Law.
Receiving a green light from line ministries is already a “big barrier” for investors in Myanmar, whereas dealing directly with MIC takes much less time, said U Aung Naing Oo, director general of the Directorate for Investment and Company Administration.
U Aung Naing Oo was speaking on the sidelines of a European Chamber of Commerce event last week to launch a new guide to doing business in Myanmar.
He said that the MIC is in consultation with different ministries to draw up clear guidelines for international investors that will avoid them having to ask line ministries for permission. The guidelines will specify which business areas are off-limits, require joint ventures or are open to full foreign investment, he said.
The long-awaited investment law passed both houses of parliament in October, and will come into force next year. In an effort to streamline foreign investment the law creates a simplified version of the MIC permit called an approval order, which is available for smaller non-strategic projects.
But according to the law, investments needing only an approval order will require permission or a licence from the relevant government agency.
This could make it 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 law firm VDB Loi.
If the MIC’s proposed guidelines are put in place, however, there will be no such requirement, said U Aung Naing Oo.
“Every [investment area] will be put in a list, so that once the investment proposal reaches the MIC office the commission can look at the list and decide,” he said. “We won’t [have to] seek consent or comment from the line ministries, which is a big problem for investors in Myanmar.”
U Wai Phyo, vice president of the Union of Myanmar Federation of Chambers of Commerce and Industry, said that removing the need for consent or comment from line ministries would save time and make things more efficient.
“In the old investment law there were businesses that can only be permitted by line ministries, so we need to wait and see what will be changed in the new law as the detailed rules have not been released,” he said. “Though it might save time [to remove line ministry approval] we need to have some checks and balances. Being fast isn’t always good.”
Work is under way on drafting detailed rules and regulations to accompany the new law, which will be completed by the end of January, said U Aung Naing Oo. There are likely to remain some sectors where government approval is necessary, he added.
“Some certain businesses like mining or oil and gas may still need line ministry approval [under the proposed guidelines],” he said. “But regular businesses would not. However, this has not been decided yet.”
During a consultation with government ministries in Nay Pyi Taw last week, there was broad agreement to liberalise some of the existing restrictions ministries have put on foreign investment in their respective sectors, U Aung Naing Oo said.
“We had a very good discussion with the Ministry of Commerce,” he said. “We asked them to liberalise some of their restrictions and we all agreed.”
U Ye Min Oo, a member of the National League for Democracy’s Economic Committee, said that in some cases government ministries would be better placed to comment on foreign investment. But a faster permit and approval system would be positive, he said.
Another important change to the approval system is that for smaller investments – under US$5 million – state and regional governments will be able to give the green light, said U Aung Naing Oo. Anything larger would fall under the MIC’s remit.
U Ye Min Oo said that the decentralisation was a useful step, which gave local authorities with greater knowledge of local conditions more power in directing investment.
U Aung Naing Oo, however, is concerned about the decentralisation of decision-making to states and regions will work in practice.
“Decentralisation is there to streamline procedures for the investors, but I am not sure whether the state and regional governments are ready or have sufficient capacity to implement the new law,” he said. “That could create problems for investors, so I advised my superiors that we must have a standard operating procedure for all states and regions so that they can easily follow the guidelines.”
This operating procedure is being drafted alongside the rules and regulations that will accompany the new law, he added. But there are still likely to be challenges and difficulties given the procedures are new, he added.
“If you look at the last 30 years the MIC used to want to screen everything,” he said. “This is a 180 degree turn, so the decentralisation and liberalisation is going to have some impact on the MIC.”
Source: Myanmar Times
