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Myanmar Company Incorporation - What you should know http://consult-myanmar.com
- 1. Myanmar Company Incorporation What you need to know Presented by Andrew Tan Director, Consult-Myanmar Co Ltd
- 2. In the previous video The key legal framework in Myanmar • State Owned Economic Enterprises Law (Reserved Sector) • Restricted Industry Opportunities created by the legal framework • Market weaknesses or gaps identified by the govt • Foreign investors can own 100% of a Myanmar incorporated company or • up to 80% of a JV subject to certain conditions May 2013 www.consult-myanmar.com 2
- 3. • This YouTube video is entitled “Myanmar Company Incorporation – What you need to know” • The YouTube video URL is in the description box below • Or you can search in YouTube for “Myanmar Company Incorporation – What you should know” This is Part 2 of Myanmar Investment Series www.consult-myanmar.comMay 2013 3
- 4. Key Legal Framework State Owned Economic Enterprises Law (SOEEL) 12 reserved industries that only SOEEL can exploit Restricted Industry * Prohibited Must JV with local Must seek permission from relevant ministry Must meet certain other conditions Foreign Investment Law (FIL) Administered by Myanmar Investment Commission ( MIC) Myanmar Companies Act (MCA) Issue of Permit to Trade and Company Registration *Not a legislation Covered in previous video www.consult-myanmar.comMay 2013 4
- 5. What is the objective of the FIL? As a foreign investor we want to invest responsibly We want to invest in areas that are profitable for us and at the same time beneficial to the people of Myanmar FIL outlines the long term objectives that the Myanmar people want to achieve both economically and intellectually May 2013 www.consult-myanmar.com 5
- 6. Objective of FIL economic development job creation export promotion import substitution development of high tech manufacturing regional development exploration and extraction of new energy development of modern industry protection and conservation of environment www.consult-myanmar.comMay 2013 6
- 7. Myanmar people want to catch up Years of sanction have the left the Myanmar people isolated and stagnant Govt realizes that Myanmar people do not have the technology, management knowhow and capital to exploit many of the opportunities Foreign investors can play a positive role by investing in those segments whereby Myanmar people are weak in Investors that invest in remote and poor region and create jobs there – can get extended Exemptions and Reliefs from the govt May 2013 www.consult-myanmar.com 7
- 8. • One Stop Shop • Review investment proposal • Issue MIC Permit • Extend benefits should investors invest in remote region • Punish if investors are breaking the terms of the investment agreement The Myanmar Investment Commission is formed under the FIL www.consult-myanmar.comMay 2013 8
- 9. 3 Key Benefits of FIL May 2013 www.consult-myanmar.com 1. Tax Exemption & Reliefs 2. Right to use Land 3. Guarantees 3 Pillars to Fruitful Investment 9
- 10. Tax Exemption or Relief Income tax exemption for 5 years Exemption from income tax if profit is put into reserve fund and re-invested in the business within 1 year Accelerated depreciation for machinery, equipment, building and other assets. Relief of 50% on profit from exported goods manufactured by the company Carry forward loss for up to 3 consecutive years Exemption from custom duty for machinery, equipment, spare parts and materials used in the construction of the business Exemption from custom duty on raw materials imported for production for the first 3-year after the completion of the construction of business. Exemption or relief from commercial tax on goods produced for export www.consult-myanmar.comMay 2013 10
- 11. Right to use land Investor allow to lease land for up to 50 years MIC may extend the period by 2 consecutive 10-year period Investor can leased land from citizen subject to approval from the government MIC may stipulate longer period of lease where investment is in remote region of the country www.consult-myanmar.comMay 2013 11
- 12. Guarantees The Myanmar Government guarantees that a business formed under the permit shall not be nationalized within the term of the contract or the extended term if such term is extended. The Myanmar Government guarantees not to suspend any investment business carried out under the permit of the Commission before the expiry of the permitted term without any sufficient cause. On the expiry of the term of the contract, the Myanmar Government guarantees the invest or invested in foreign capital to disburse his rights in the category of foreign currency in which such investment was made www.consult-myanmar.comMay 2013 12
- 13. 3 General classifications Industrial Manufacturing Services Consulting Design Trading* Import/export Note: *Trading is reserved for Myanmar nationals. Foreigners are not permitted to conduct trading business. www.consult-myanmar.comMay 2013 13
- 14. Comparison Table With FIL w/o FIL Legislation Foreign Investment Law + Myanmar Companies Act Only Myanmar Companies Act Sector Reserved Sector, Restricted Industry, Manufacturing, Services Service company, Branch & Rep Office Lease 50 + 10 + 10 yrs 1 yr Import Licence Yes No Tax Incentive Yes No Guarantee Yes No Minimum Capital Industrial – US$500k Services – US$300k Industrial – US$150k Services – US$ 50k Branch – US$50k www.consult-myanmar.comMay 2013 14
- 15. • There are 24 slides in this presentation • The YouTube video URL is in the description box below • Or you can search in YouTube for “Myanmar Company Incorporation – What you should know” Go to YouTube to see rest of presentation May 2013 www.consult-myanmar.com 15
- 16. • is a 100% foreign-owned company that is incorporated in Myanmar. Myanmar Registration No: FC 25/2013-2014. • member of Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) • for more information please contact us at investopp@consult- myanmar.com • or visit our website at http://consult-myanmar.com • our address is at 47 Kaingdan St, 1st Floor, Lanmadaw Township, Yangon. Tel: +95-1-122-1268; Tel: +95-9-42000-1988 • subscribe to our newsletter • wishing a you fruitful and profitable investment experience in Myanmar Consult-Myanmar Company Limited www.consult-myanmar.comMay 2013 16
Notas del editor
- Hello this is Andrew here. I am the Director at Consult-Myanmar Company Limited.This is the 2nd video in a 2 part series on investing in Myanmar. Today we are going to talk about “Myanmar Company Incorporation – What you need to know”
- In the previous video we discussed about the key legal framework in Myanmar and the industry or sector opportunities that are revealed by the new legal framework. This new framework gives foreigner investors the opportunity to hold controlling interest in their investment in Myanmar via 100% ownership or via a joint-venture. If you have not watch the previous video – please go to Part 1 video now as the investment strategy you adopt will decide on the type of investment vehicle you use. The company incorporation is that vehicle that you decide to use once you have decided on your investment strategy.
- Let’s start with Part 2 video: Myanmar Company Incorporation – what you should know as an investor.
- In this video we will focus on:The Foreign Investment LawMyanmar Companies Act
- As a foreign investor it is important that you understand the objectives of the Foreign Investment Law – as we want to invest responsibly, by focusing our investment into areas that are profitable for us and at the same time is beneficial to the Myanmar people. The foreign investment law outlines what are the long term objectives that the Myanmar people want to achieve in order to take the country forward both economically and intellectually.
- One of the key objective of the Foreign Investment Law is that of economic development of key industries that the Myanmar government considers to be crucial. Especially important are those sectors that create employment, export promotion and import substitution.
- Myanmar people want to catch up with its neighbours like Thailand, Malaysia and Singapore. They do not want to be left behind in terms of economic development. The Myanmar people realize that years of sanctions have left the country both isolated and stagnant. The government realizes that in many sectors of the economy Myanmar people do not have the technology, management knowhow or capital necessary to fully exploit those segment or industry and to bring it to an international level quickly. Example would be operating deep sea oil and gas exploration platform or running a 4th Generation mobile network. That is where the Myanmar government feels that foreign capital, technology or management knowhow will do the most good. The Myanmar government is keen to develop the remote region of its country – for example if you can invest in a factory that will create employment in the remote and poor region of the country – the MIC can even look at extending the Exemptions and Reliefs that you received for a longer period.
- The Foreign Investment Law provides the legal framework for foreign investors to invest in Myanmar. In it the roles and responsibilities of the Myanmar Investment Commission or MIC is defined.The MIC acts like a one stop shop. It is vested with the power to review all investment proposals that foreign investors submit. The MIC will co-ordinate with all government ministries to ensure that all investment proposals are treated in an expeditious manner.The MIC can approve the investor’s proposal and issue MIC Permit. It can also extend the benefits if the investor invest in remote region thereby creating employment and the MIC can also impose punitive measures if investors do not abide by the terms of the investment agreement.
- Let’s go through the 3 key benefits that foreign investors will enjoy when they invest under the FIL scheme. I call these 3 benefits the 3 pillars to fruitful investment in Myanmar.
- The first pillar and one of the most important that foreign investors enjoy under the FIL scheme is tax exemption or relief. For capital intensive &/or export-oriented industry – this first pillar is extremely attractive as it reduces the manufacturer’s tax liability significantly.As the investor get income tax exemption for 5 year, exemption from income tax for profit reinvested into the business, accelerated depreciation on capital equipment, 50% relief on export income, exemption from custom duty for import of capital equipment, exemption from duty for import of raw material.For foreign investors that invest in remote region and create employment there - investors can request for extension of the benefits beyond its stipulated period from the MIC.
- The 2nd pillar is the Right to use Land. Under the 1987 Restriction Act – Foreigners are not allowed to buy or own land in Myanmar.However for foreign investors that are in export-oriented manufacturing under the FIL scheme they can easily lease industrial land from the government for up 50 years ; and if need be they can apply for 2 10-year extension on the lease.Foreign investor can also lease land from private land owner with the approval of the government. This is important for example if you are investing in say building 10 supermarkets in Myanmar over the next 3 years and you need land of at least 5,000 sqft for each site in order to run a successful supermarket and your Myanmar JV partner already own prime land in key cities in Myanmar that can be use for that purpose. The local partner can lease the JV company the prime land as their contribution to the joint-venture. If you are willing to invest in remote region and create employment there – the MIC is willing to look at extending your lease to a longer period.
- The 3rd and final pillar is the Guarantees that the government gives to foreign investors under the FIL scheme.The government guarantees that your company will not be nationalized during the term of the FIL agreement. They will not suddenly terminate your company’s permit to trade unless you are breaking the law or violating the terms of the investment agreement. On expiry of the term of the contract, you are able to remit your profit out of the country after paying necessary taxes and liabilities.
- There are currently 3 business classifications used by the Myanmar Companies Act: They are Industrial – which is for business involves in manufacturing;Service – for business such as consulting, design & advertising &Trading - which is import and export business. Take note that trading is reserved only for Myanmar citizen only. Foreigners cannot be involved in trading. Remember that one of the purpose of the FIL is to develop industries that Myanmar people do not have the technology, management knowhow or capital to develop. As trading is a low-tech business this is an area that foreign investors cannot participate in in Myanmar.
- This table here shows a quick summary of the difference in the benefits that a foreign investor enjoy when they invest under the FIL scheme and when they invest without FIL scheme.As you can see for capital intensive industry that qualifies to invest under the FIL scheme – the benefits are substantial.
- My last slide.I would like to let you know that Consult-Myanmar Company Limited is a 100% foreign owned company that is incorporated in Myanmar. We are a member of the Union of Myanmar Federation of Chamber of Commerce and Industry.If you have any questions about the market opportunities that I have just covered in my presentation – please do send me an email. Or you can visit our website.Before we part, I would like to wish you a fruitful and profitable investment experience in Myanmar.Good Bye.