MIC to attract more investments by swifter actions

Aung Naing Oo, secretary-general of the Myanmar Investment Commission and director-general of the Directorate of Investment and Company Registration, said that the commission has been trying to quicken the process as soon as possible since opening the one stop services in Yangon.
“According to our Foreign Investment Law, every proposal must be approved within 90 days. So the timing is likely to be within 60-90 days. Very simple cases usually take about 45-60 days. But some cases took longer than 90 days because we needed to make everything sure, e.g. environmental impacts assessment,” said Aung Naing Oo.
The official admitted that he was unhappy with unnecessary, complicated procedures which would make the process longer.
“One of the reasons why procedures take too long is a bit complicated because we need to ask for the comments and consents from various ministries and regional authority. Sometimes, I really feel that does not make sense. So we are trying our best to make it short-term,” he said.
Easing of restrictions
Apart from opening the One Stop Services Office in Yangon, MIC has been easing restrictions since it was chaired by Energy Minister Zay Yar Aung.
In August, 2014, MIC issued a notification mentioning 11 economic activities in which foreigners are not allowed to invest and 30 sectors in which foreigners are allowed to invest only in the form of joint venture with Myanmar citizens.
According to the notification, foreign investors cannot invest in manufacturing of arms and ammunition, supervisory control of electric power system, inspection of electrical works, air navigation services, pilotage, management of natural forests, production of jade/gem stones, production of minerals in medium scale and small scale, and exploitation of minerals including gold in the waterway. Moreover, they cannot also invest in periodicals published in languages of national races including Myanmar, and cross ownership between print media and broadcasting media service without the approval of the Union Government.

International and domestic air transport service, small and medium scale production of electricity, development of affordable housing, residential apartments /condominiums, office/commercial buildings, and international standard golf courses and resorts can only be carried in the form of joint venture with local businesses. Such kinds of economic activities include packaging, manufacturing of food products except milk
and dairy products, all kinds of confectionery, purified drinking water, purified ice, rubber and rubber products, plastic wares, all kinds of rope, all kinds of paper including raw materials, enamelware, cutlery, crockery of all kinds, pharmaceutical raw materials, and chemicals.
“Nowadays, there are only a few sectors with some restrictions. Apart from those sectors, foreign investors can make 100 per cent on your own or perhaps you can set up JV with local partners by your own decision,” said the official.
“In 2012 and 2013, there are a number of sectors we do not allow foreign investors to invest. But we reduced the number of restrictions so that more and more foreigners could enter the country to invest.”
Modification of laws
Besides the easing of restrictions, MIC is attempting to merge the Foreign Investment Law and Myanmar Citizens Investment Law into a single law. Before the decision to merge the two laws, MIC conducted the investment policy review in cooperation with Organisation for Economic Co-operation and Development. Based on OECD’s recommendations to improve the investment environment, MIC finally decided to merge two investment laws into one.
“These two laws will be merged in accordance with international practices. We will also upgrade some regulations in the laws so that the new law will be more protective. We will focus not only on easy entry but also on how the investments are going well. So at the time of approval of the new investment law, there will be much easier entry for all investors, meaning the time will be shortened,” he said.
When asked about the differences between the old and new investment law, Aung Naing Oo said, “If you look at the existing foreign investment law, we provide tax incentives to all investors. We provide all investors which have obtained permits from MIC to enjoy tax holidays. But in the new law, if the business is more beneficial to our country, we will provide more incentives. Likewise, if the business is less beneficial, we will provide less incentive. This is one of the examples of the new law we are preparing.”
He added that MIC is trying to follow and comply with the World Trade Organisation guidelines and Asean commitments, ensuring local contents requirement to be in line with those of WTO agreements as well as Asean guidelines, and eliminating the performance requirements according to the Asean comprehensive investment agreement.
“However, if foreigners want to import and foreign investors want to export to other markets, they will definitely try to make it happen because definition of county of origin comprises of regional value contents. Myanmar has some favourable conditions for exporting our products, especially to the European Union. Definitely, all foreign investors want to export their products to other markets. They are trying to put local contents to enjoy GSP privileges in their destination,” he said.
Support for SMEs
Together with the activities to attract more investment, the commission is set to help develop small and medium enterprises to be supportive industries for foreign direct investment.
“We are not just promoting FDI but we are also promoting local investments as well. Particularly, we promote local SMEs to be developed. One of the good examples is that there was there was a minimum investment requirement for local SMEs before 2011. If they do not meet such criteria, they are not allowed to obtain permits from MIC. Now we have already abolished such minimum capital requirement for local SMEs. So even if they have a small amount of money, they can start their own businesses and obtain permit from MIC. They also enjoy incentives like foreigners. This is how we help develop local SMEs,” he said.
“But there are still a lot of challenges which MIC itself cannot overcome because they do need to have enough financing. It is beyond MIC’s capacity. So we do understand there are some support to local SMEs from the government and other sectors. We will also do whatever we can for SMEs growth.”
Next steps for MIC
Aung Naing Oo said that MIC is expecting investments respecting responsible business conducts, providing technical transfer, and creating job opportunities.
“Tourism is one of our promoted sectors. But we are currently highlighting and promoting investments in labour-intensive industries. The next step will be the promotion of investment in value-added industries,” he said.
“If you look at the exports of Myanmar to other markets, we are mostly exporting hydro products, oil and gas. As we want to export more value-added products, promotion of investments in value-added industries will be our second step.”
The third step will be the promotion of investments in healthy industries and high-tech industry. Currently, it is not possible for Myanmar to promote investments in healthy industries because infrastructure is not ready to promote investments in such sectors. Currently, Myanmar is promoting investments in oil and gas sector plus investments in agriculture and infrastructure development. So telecoms investment permission is one of the prominent examples.
“We have set policies to allow foreign investors to invest in infrastructure development as it is one of the urgent needs for the country. Currently, we are promoting investments not only in labour-intensive industries but also in infrastructure development. And the next step will be value-added industries including tourism. The final step will be investments in high technologies,” he said.