Tender for temporary power plant

We (somewhat belatedly) wish to draw your attention to this tender opened by Electric Power Generation Enterprise for a temporary power plant with a capacity of 300 MW: http://tinyurl.com/hje5f94.

Deadline to submit quarterly performance report to the MIC

The MIC wishes to make investors aware that businesses with an MIC permit have to submit quarterly performance reports; the deadline for the submission of the performance report for the first quarter of the 2016/17 financial year has been set for 27 July (http://tinyurl.com/gl4chjq). Section 42 Foreign Investment Law and section 32 Citizens Investment Law specify penalties for non-compliance.

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Will foreigners soon need work permits?

The Myanmar Times reports (http://tinyurl.com/htbueom) that the Ministry of Labour is about to submit the draft of a work permit law to the Union Attorney General’s Office for review. This law, if enacted, will require foreigners working in Myanmar to obtain work permits - a development which is maybe not so welcome and which requires monitoring.

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Review of Yangon’s high-rise building projects: Legal implications included in our land law seminar on 4 August

The review of Yangon’s high-rise building projects has caused quite a stir: Developers have been told to significantly alter the designs of projects and dismantle floors already built. For some developers, these requirements seem to be life-threatening. Against this background, we will change the topics of our land law seminar on 4th August a bit and include a section on (i) zoning in Yangon, (ii) obtaining building permits and (iii) legal protection against unilateral measures by the government. 

Date and time	Thursday, 4 August 2016, 2:30pm - 4:00pm
Place	Sule Shangri-La, 223 Sule Pagoda Road, Yangon
Topics	- The different types of land and their uses - How to register lease agreements - How to use farmland for other purposes - Frequent issues in land due diligences - The Yangon high-rise building projects review: (i) zoning in Yangon, (ii) obtaining building permits and (iii) legal protection against unilateral measures by the government - Stamp duty
Speakers	- Sebastian Pawlita - U Nyein Chan Zaw
Language	English
Fee	The event is free of charge.
Registration	Please register by sending an e-mail to sebastian@lincolnmyanmar.com or nyeinchanzaw@lincolnmyanmar.com, stating the name of your company and the names of the participants.

To contact the author or subscribe to our newsletter, please visit us on our homepage: www.lincolnmyanmar.com

Latest version of the draft of a new Myanmar Investment Law

On 12 July 2016, DICA published the latest version of the draft of the new Myanmar Investment Law. The new law will, if enacted, merge the present Foreign Investment Law and the Citizens Investment Law. Foreign investors in non-MIC businesses may, according to the draft, be eligible to lease land long-term and obtain tax exemptions. Furthermore, they benefit from other advantages under the draft law (e.g. guarantee against confiscation, explicit right to repatriate profits) that are presently only available to MIC companies.

Please find an analysis of the draft below. We have prepared an English translation of the draft which is available on our homepage.

1. Domestic investor and foreign investor

A domestic investor is defined as a citizen investing in the country. The term “citizen” includes business entities established only by citizens. This is at odds with the draft of the new Companies Law (the latest version can be found here: http://tinyurl.com/jm4vu9x) according to which companies with a foreign shareholding not exceeding a “prescribed ownership amount”are treated as a local company.

A foreign investor is a person who is not a citizen. 

2. Two routes to invest

As is also the case now, the draft law provides for two routes to invest in the country: (i) with permission from the Myanmar Investment Commission (“MIC permission”) and (ii) without it.

MIC permission is required for businesses that (i)are important for the State’s strategy, (ii) require a high amount of capital, (iii) have a high impact on the natural environment and residents, or (iv) are classified by the Government as requiring MIC permission. Further details will be provided in implementing rules. It should be noted that the requirement to obtain MIC permission applies to both foreign and domestic investors.

Other businesses do not require MIC permission. Differently from now, however, the draft provides that foreign investors in non-MIC businesses may be eligible to lease land long-term and obtain tax exemptions. Furthermore, they benefit from other advantages under the draft law (e.g. guarantee against confiscation, explicit right to repatriate profits) that are presently only available to MIC companies.

3. Approval application

Foreigners wishing to invest in businesses for which no MIC is required may file an application to obtain MIC approval for the long-term lease of land (50+10+10 years) and/or obtaining tax exemptions. 

4. Market access restrictions

The draft provides for the following market access restrictions:

(a) Certain businesses which are deemed to be harmful are prohibited to domestic and foreign investors alike.

(b) Concerning state monopolies, the draft only states that access is “restricted” without differentiating between domestic and foreign investors. One would expect, however, that - as is the case already now - access may be possible on a case-by-case basis.

(c) Businesses which a foreign investor is not allowed to engage in, or only allowed to engage in if he forms a joint venture with a citizen.

(d) Businesses which require approval of the relevant ministries. The draft does not distinguish between local and foreign investors in this regard.

The MIC shall, with the approval of the Cabinet, issue a notification which shows the restricted businesses (b)-(d).

5. Tax incentives

The draft provides for the following tax incentives:

(a) For investments in sectors listed in a notification issued by the MIC in order to promote investment: Exemption from corporate income tax for seven, five or three years depending on whether the investment takes place in an underdeveloped, reasonably developed or well-developed region or state.

(b) Exemption from customs duties and other domestic taxes on the import of machines, equipment and other specified items required during the construction period of a new business, or during the expansion period of an existing business that obtained permission from the MIC to increase the investment amount.

(c) Exemption from customs duties and other domestic taxes on the import of raw materials and partially manufactured goods by an export-oriented business if these items are used in the production of goods for export.

(d) Exemption from corporate income tax on profits reinvested within one year.

(e) Accelerated depreciation (although this would often not work as an incentive).

(f) Right to deduct R&D expenses from the corporate income tax base if R&D is done in the interest of the State (although these expenses would be deductible under the ordinary tax laws anyway).

(g) Better incentives may be granted to citizen-owned businesses.

6. Labour matters

Unlike the present Foreign Investment Law, the draft contains no requirement as to the hiring of a specified percentage of skilled employees. However, investors (both domestic and foreign) are obliged to implement skill development programmes.

7. Dispute resolution

The draft obliges the MIC to implement a mechanism by which disputes can be resolved before reaching the official dispute resolution stage.

Investors are free to agree on a dispute resolution method of their choice.

To contact the author or subscribe to our newsletter, please visit us on our homepage: www.lincolnmyanmar.com

Our latest newsletter...

...can be found on our homepage: www.lincolnmyanmar.com

Seminar invitation: Land law (as an aside: stamp duty)

Date and time	Thursday, 4 August 2016, 2:30pm - 4:00pm
Place	Sule Shangri-La, 223 Sule Pagoda Road, Yangon
Topics	- The different types of land and their uses - How to register lease agreements - How to use farmland for other purposes - Frequent issues in land due diligences - Complicated stuff: Leasing land from the government - Complicated stuff (II): Splitting the floor space between the owner and the construction company - Stamp duty
Speakers	- Sebastian Pawlita - U Nyein Chan Zaw
Language	English
Fee	The event is free of charge.
Registration	Please register by sending an e-mail to sebastian@lincolnmyanmar.com or nyeinchanzaw@lincolnmyanmar.com, stating the name of your company and the names of the participants.

To contact the author or subscribe to our newsletter, please visit us on our homepage: www.lincolnmyanmar.com

Our latest newsletter

The Ministry of Commerce issued a notification on 7 July 2016 allowing Myanmar/foreign joint ventures to import and sell “construction materials”. Although there may presently not be so much demand - given that the Yangon Region government has shut down the construction of high-rise buildings -, the notification marks a welcome liberalization of the Ministry’s otherwise restrictive policy of disallowing foreign-invested companies to trade. We will, however, have to wait and see how the notification will work out in practice as it is quite vague - it implies, for instance, that there should be a minimum local shareholding, but does not specify the percentage.

Please find a translation of the notification inside the newsletter.

The MIC is operational again and so far has given out 19 investment permits.

More than 80 participants attended our debt collection seminar last Thursday.  Our next seminar is on land law and stamp duty. It will take place on 4 August; please find the invitation inside the newsletter.

Please welcome U Lynn Shein, a Higher Grade Pleader who joined our firm on 1 July 2016.

We are looking to expand our office and are in search of an enterprising foreign lawyer wishing to join as a partner. The ideal candidate has a bit of a business case of his own in Myanmar and either (i) speaks Korean or Chinese or (ii) has a track record of advising companies in the oil and gas sector and the electricity sector.

To contact the author or subscribe to our newsletter, please visit us on our homepage: www.lincolnmyanmar.com