As Myanmar (Burma) opens up to foreign investment, its tax and legal systems are undergoing changes at a rapid pace. The Government is making reforms in a number of key areas including taxation, foreign investment law, foreign exchange controls, labor law, trade dispute resolution and in areas such astelecommunications, agriculture and microfinance.
Myanmar’s legal system is complex and reliant on some very old statutes. It is based on a combination of
- Colonial period laws (pre 1948)
- Parliamentary laws (1948 – 1962)
- Revolutionary Council laws (1962 – 1974)
- People’s Assembly laws (1974 – 1988)
- State Law and Order Restoration Council / State Peace and Development Council laws (1988 – 2011)
In addition to statute law, the courts of Myanmar (Burma) continue to apply common law principles dating from the British colonial period. In 1988, the Myanmar government implemented a market economy policy in order to attract foreign investment and revitalize the domestic private sector. It was in this context that the Union of Myanmar Foreign Investment Law of 1988 (the “MFIL”) was enacted, and the Procedures relating to the Union of Myanmar Foreign Investment Law of 1988 were introduced to ameliorate foreign investment conditions. Until recently, foreign investment opportunities were limited. Since the regime change in March 2011, however, the new government has been pro-actively promulgating an open-door policy to foreign investment.
On 2 November 2012, Myanmar’s President Thein Sein signed into law the highly anticipated new framework for investments in the Union of Myanmar. Referred to simply as the Foreign Investment Law (the “FIL”), the new legislation supersedes the MFIL.
The FIL is a law allowing foreign investors special benefits. In general, registration under the FIL is optional, except in the following cases:
- Investments that fall under the State-Owned Enterprise law of 1989
- Infrastructure projects
- Manufacturing
Investments approved under the MFIL will also be deemed as approved under the FIL. Laws intended to promote foreign investment in special economic zones have been enacted. The Special Economic Zone Law of 2011 (the “SEZL”) and the Dawei Special Economic Zone Law of 2011 enable foreign investors to undertake a range of business activities in designated “Special Economic Zones” and also offer various tax reliefs and exemptions to eligible investors. The Myanmar Investment Commission (the “MIC”) is the governmental agency, which administers the FIL and coordinates with various ministries and organizations to facilitate foreign investment in Myanmar (Burma). It is also responsible for reviewing foreign investment proposals.
