The changes will focus on sectors in which foreign investment is restricted and are likely to be introduced in December or early next year, said Daw Mya Sandar, deputy director of the ministry’s Business Promotion Section.
“We are working to change it but the issue date depends on the senior officials,” she said.
“The revisions will focus entirely on the categories in which foreign investment can be allowed – for example, the service sector – and I guess that the number of [restrictions] will be reduced in that category.”
The changes will be based on feedback provided by government ministries and some sectors are likely to be opened up to foreign investment for the first time in several decades, a number of government officials said.
“Directors and other officials have been given responsibility for revising each sector. [They found that] the present sectoral restrictions have some contradictions, such as in construction,” said Daw San San Myint, the director of the Directorate of Investment and Company Administration’s Yangon branch.
The Foreign Investment Law was approved by the Pyidaungsu Hluttaw, or national parliament, on November 2, 2012. The law stipulated that the rules, which provide detail on the law, be issued within 90 days, and they were enacted on January 31. However, ministry officials said this did not give them enough time to ensure the rules are clear and without contradictions.
“We had to rush to issue the present rules. We had to do them and the by-law within 90 days after the law was enacted,” said a ministry official, who asked not to be named. “We worked with the ministries to improve the rules but the ministries were also rushed to complete it on time.”
The official said the changes will have to be approved by cabinet.
‘’We will have to submit [the amendments] to the Myanmar Investment Commission and cabinet. After cabinet has approved [them] we will publicise the changes,” the official said.
“There will be some changes based on the feedback provided by the relevant ministries. I can’t tell you all of these but some new sectors, including railway transport, will be opened up to foreign investment.”
The current rules create five categories for business sectors, ranging from those that allow 100-percent foreign-owned businesses to those in which investment is not permitted. Other categories allow investment as a joint venture with a local
partner, with approval from the relevant ministry or with approval from the ministry and a requirement to conduct an environmental impact assessment and social impact assessment.
Restricted sectors include defence, the distribution of electricity, broadcast media, jade and gem exploration, and, in manufacturing, the production of Myanmar traditional medicine. In sectors including large-scale retail, natural resources, production and distribution of soft drinks and beer, and power generation, foreign investment is only permitted with ministry approval.
Meanwhile, construction and real estate, tourism services, and the production of some food products, pharmaceuticals and plastics are only possible through a joint venture.
Despite these restrictions, foreign direct investment in the first half of the 2013-14 financial year has already exceeded the amount for the whole of 2012-13, data from DICA shows.
Myanmar recorded contracted investment of US$ 1.618 billion from April to September, $128 million more than the $1.419 billion in 2012-13.
Fifty-seven businesses, including a foreign owned power plant, Heineken beer factor and a Nissan car factory have been approved so far this year, the majority in Yangon and in the manufacturing sector.
The foreign investment law changes may not necessarily spark a rush of new investment.
Jeremy Rathjen, vice president of consulting firm Thura Swiss, said Myanmar’s foreign investment law was already “in the top 10 percent” when compared with other countries. Prospective investors, he said, are more concerned about infrastructure, electricity supply and rule of law.
“There are other issues that are much more pressing [such as] allowing foreigners to own shares in Myanmar-owned companies. If that were in the new rules, it would have an immediate impact,” he said.
“[Myanmar companies] could instantly access more capital. At the moment the process is very convoluted … what you need to do is start a new joint venture company and transfer existing assets into that company. If there is an asset a foreigner cannot own, like land, then you have problems.”
Nevertheless, some tweaking of the rules would be welcomed, he said.
“I can’t imagine that their rules will be more arcane or it will be a step back,” he said. “I imagine that any new rules or regulations will be well thought-out and aimed at encouraging foreign investors.”
source: The Myanmar Times
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