The new law requires the government to set up a “central body” which, in its turn, is to set up one “central working body” and management committees for each SEZ. Investment permits for setting up a business in an SEZ are to be issued by the management committees, rather ambitiously within 30 days after submission of the complete application dossier.
It is not entirely clear from the wording of the law if the management committees will need approval from the central working body. The example of neighbouring countries shows that the less central interference there is, the better it is usually for the investor, at least if there are enough industrial zones to choose from. In Vietnam, most industrial zone authorities are in fierce competition against each other and are quite helpful when it comes to assisting investors against bureaucracy.
The management committees are supposed to be one-stop service centres issuing investment permits, registering companies, issuing entry visas, work permits, construction permits and certificates of origin and collecting taxes.
SEZs are set up by private developers. The developer is selected by the central body in an open tender “according to international standards”. Foreigners can bid, either alone or in a joint venture with a local partner. Priority is to be given to a developer who is “well experienced in the management of SEZs” and gives rise to the expectation for “prompt implementation of the project”.
The law stipulates several criteria that a location must fulfil in order to be considered as a candidate for the setting up of an industrial zone (being on the government’s list for regional development, easy import and export routes, sufficient prospects for the development of infrastructure and availability of workers). Other areas may be considered as well, provided that the project is feasible and beneficial to the state and the people.
In order to establish a special economic zone, the central body requires approval from the government and the Pyidaungsu Hluttaw.
The private developer has to lease the land for the SEZ from the management committee (i.e. from the state). The maximum lease term is 50 years; one renewal for up to 25 years is possible. The developer then subleases plots of land to the investors. The maximum sublease term is also 50 years with the possibility to renew once for 25 years. However, if the investor has a permit to operate a factory for 30 years, the sublease term would also be only 30 years.
Like the Foreign Investment Law, the new SEZ Law contains a guarantee against nationalisation. The developer and investors “have the right to exchange and transfer their own foreign currency within the SEZ and overseas”. Joint-venture partners may agree on foreign dispute resolution.
On an interesting note, the law says that “foreign insurance companies and insurance companies formed as a joint venture between a local and a foreigner” may “operate their agency offices and insurance businesses within the SEZ”. Presently, foreign insurance companies can only have a rep office in Myanmar.
Sebastian and Kyaw Zay Ya are consultants with Polastri Wint & Partners Legal & Tax Advisors.
source: The Myanmar Times
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