Myanmar Expands List of Mandatory JVs, Cuts Import Tax Benefits, Seeks Investors for SEZ

September 10, 2014 Posted by ASEAN Briefing Reading Time: 3 minutes

With a number of new pieces of legislation and other actions, the Myanmar government has expanded the list of business activities that require the formation of a joint venture (JV), cut import tax benefits for a variety of businesses, and announced that it is seeking investors for a new Special Economic Zone (SEZ).

JV list expanded

The Myanmar Investment Commission (MIC) has recently released new legislation relating to foreign investment in the country. In particular, the government has expanded the list of business activities that require a joint venture (JV).

Of particular importance, the MIC has stated that foreign investment in projects involving midstream oil and gas, as well as upstream services will only be allowed if a JV is formed with the government. Additionally, railroad projects will also require such an arrangement.

Other business activities that now require the formation of a JV include:

Cigarette manufacturing
Forestry
Animal and fish breeding
Agriculture cultivation for domestic sale and export
Hospitals
Most media activities

Some business activities to lose import tax benefits

An additional regulatory change was laid out in Notification 51/2014, which stated that certain business activities will no longer be eligible for the customs duty and commercial tax exemptions offered under Section 27 of the Foreign Investment Law (FIL). These activities include:

Production of liquor, beer, cigarettes, and similar products and services;
Vehicle rental and repair services
Construction and resale of buildings
Restaurants
Exploration and production of natural resources (excluding oil and gas)

However, foreign investors engaged in these activities will still be eligible to receive the five-year income tax holiday.

Investors needed for Special Economic Zone

Government officials are calling for foreign and local investors to bid for construction projects in a special economic zone (SEZ) located in the western state of Rakhine. The Kyaukphyu SEZ will include a 16-meter deep port with a container-handling capacity of 8,000 20-foot equivalent units.

Tenders for the projects will begin to be accepted on September 15, and the winners will be announced in December. Construction is slated to start in 2015.

Key industries for the initial phase of the SEZ include:

Textiles
Construction materials
Food processing
General manufacturing

Kyaukphyu is one of three major SEZs being developed in Myanmar, along with Thilawa and Dawei.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asean@dezshira.com or visit www.dezshira.com.

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