FOREIGN INVESTMENT LAW

(UNION PARLIAMENT LAW NO 21, YEAR 2012)

( 3rd FULL MOON DAY OF THADINGYUT, 1374 ME)

(2012, November 2)

The Union Parliament has enacted this Law.

CHAPTER (1)

NAME AND DEFINITION

1. This law shall be called Foreign Investment Law.

2. The following expression contained in this Law shall have the meaning given under:

(a) Nation means The Republic of the Union of Myanmar;

(b) Commission means Myanmar Investment Commission which is formed by this Law;

(c) Union Government means the Government of the Republic of the Union of Myanmar;

(d) Citizen means Associate Citizen or the person who is eligible to become an Associate

Citizen. In this definition, the business entity which is formed by citizens is also included

according to this Law;

(e) Foreigner means the person who is not a citizen. The said expression also includes the

business organization which is formed with the foreigners;

(f) Promoter means either citizen or foreigner who has made the proposal with regard to the

investment to the Commission;

(g) Proposal means the application of investment approval submitted by the investor to the

Commission which includes application forms together with draft agreement, financial

evidences and documents related to Company;

(h) Approval means the permission of the Commission with regard to the Proposal;

(i) Foreign Capital means the following investment which is made by the foreigner according to

the approval:

(i) Foreign Currency;

(ii) Machines, Machineries, Parts of the machines, Spare parts, appliances and other

materials which is required and not available in the nation;

(iii) Intellectual Properties which include License, Patent, Industrial Design, Trade Mark,

Copy Right, etc;

(iv) Technical know‐how;

(v) Reinvestment capital which has received from the investment profit or dividend of the

share;

(j) Investor means the person or business organization making investment as per approval;

(k) Bank means any Bank in the nation which is approved by the Union Government;

(l) Investment means various properties within the boundary of the nation which are

managed by the investor according to this Law. The followings are included in this meaning:

(i) Movable and immovable properties and their rights;

(ii) Shares of the Company, Stocks and Debentures;

(iii) Monetary rights or activities according to the Agreement with regard to the

monetary and financial value;

(iv) Intellectual Property Rights according to the existing Laws;

(v) Business Rights including the rights for exploitation of natural resources according

to the Agreement or related Laws;

(m) Land Leaser or Land User means the leaser or the user who has right to lease the land

for the precribed period by making payment of the appropriate leasing rate of the land

to the nation;

CHAPTER (2)

APPLICABLE BUSINESSES

3. This Law covers the businesses which shall be announced by the notifications from the

Commission with the prior approval of Union Government.

4. The following investment activities shall be restricted or prohibited:

(a) The businesses which destroy the norms and culture of the ethnic groups of the nation;

(b) The businesses which affect the public health;

(c) The businesses which destroy the environment and biodiversity;

(d) The businesses which bring dangerous in the nation or which produce toxic wastes;

(e) The businesses which produce or use the dangerous chemical designated by the

international conventions;

(f) The businesses only for the citizens under the categories of manufacturing and service

according to by‐law;

(g) The products related to the technology, pharmaceuticals, appliances and their related

businesses which are under testing or not yet approved for consumption in the foreign

countries;

(h) Agricultural businesses, short term and long term cultivations which are able to do by

the citizens;

(i) Livestock and Breeding businesses which are able to do by the citizens;

(j) Fishing at the Myanmar’s continental shelf which are able to do by the citizens;

(k) The businesses which locate within 10 miles from the border lines between the nation

and its neighbouring countries except for the designated economic zones which are

approved by the Union Government;

5. The Commission is able to approve the restricted or prohibited investment businesses according

to the Article 4 with the view to the benefit of the nation and citizens especially for the people of the nation.

6. The Commission shall report to the Union Parliament through the Union Government about the

foreign investment which can severely affect to the security, economic situation, environmental

situation and socio‐economic situation of the nation and its people.

CHAPTER (3)

OBJECTIVE

7. The objectives of this Law are as follows:

‐ To exploit the nation’s rich resources for the benefit of its people and to export for the

surpluses;

‐ To enhance employment opportunities by the expansion of the businesses;

‐ To develop human resources;

‐ To develop infrastructure such as, banks and financial institutions, roads and highways to

connect between countries, electricity and energy production;

‐ To develop high technology including advance information technology;

‐ To develop nationwide in the areas of technologies inclusive of communication network,

transportation networks such as, railways, marine transportation and air transportation by

international standards;

‐ To enhance the participation of the citizens with the international businesses;

‐ To develop economic activities and investment activities according to the international

standards;

CHAPTER (4)

BASIC PRINCIPLES

8. The investment activities are approved by the following principles:

(a) Support the objectives of the national economic development plan and to support the

businesses which are insufficient of financially and technologically by the nation and its

citizens;

(b) Enhance employment opportunities;

(c) Export promotion;

(d) Import substitution;

(e) Production of capital intensive products;

(f) Development of high tech production and technological transfer;

(g) Support the capital intensive manufacturing and service industries;

(h) Elaboration of energy saving business activities;

(i) Development of the Region;

(j) Encouragement of renewable energy, bio based energy and sustainable energy sources;

(k) Development of technology based industries;

(l) Environmental control;

(m) Support for exchange of information and technology;

(n) Prevention for the security of nation’s sovereignty and the citizens;

(o) Development of intellectual for the citizens;

(p) Development of banks and banking systems in accordance with the international standards;

(q) Development of advance service industry required by the nation and the citizens;

(r) Secure consumption of nation’s energy and resources in terms of short term and long term

period;

CHAPTER (5)

FORM OF INVESTMENT

9. Either form of investment shall be done as follows:

(a) 100% foreign investment by the foreigners in the business activities which are approved by

the Commission;

(b) Joint Venture between foreigners and either local citizens or the government department,

organization;

(c) Any system agreed by the Joint Venture Agreement;

10. (a) Form of investment according to the Article 9 shall follows:

(1) Incorporation of the company according to the existing law;

(2) If the Joint Venture is formed according to the Article 9 (b), the ratio of share capital is

based on the mutually agreed terms;

(3) The Commission shall adopt the minimum capital requirement based on the business

sectors by the permission of the Union Government when the investment made by

foreigner;

(4) If the foreigner wants to make investment in the restricted/prohibited sector in the

form of Joint Venture with the local partner, it is allowed to propose the capital ratio

according to the ratio prescribed by‐law;

(b) According to the Sub‐article (a), investment activities shall abide the existing laws of the

nation for liquidation of the business by either approved early termination of the

Agreement or end of the contract.

CHAPTER (6)

FORMATION OF COMMISSION

11. (a) The Union Government shall –

(1) Form Myanmar Investment Commission with the appropriate members from

concerned

Union Ministries, Government Departments, Government Organizations, technicians

from Non‐Governmental Organizations and other appropriate persons chaired by

appropriate Union level person to implement the responsibilities of this Law;

(2) Appoint Vice Chairman, Secretary and Joint Secretary from the members of the

Commission;

(b) The Commission Members who are not government staff shall have the right to receive

salary, expenses and other allowances by the approval of Ministry of National Planning and

Economic Development.

CHAPTER (7)

DUTIES AND POWERS OF THE COMMISSION

12. Duties and responsibilities of the Commission are as follows: ‐

(a) The Commission shall take into consideration facts such as whether it is in line with the basic

principles stated in the Chapter (4) of this Law, financial credibility, economic justification of

the business enterprise and appropriateness of technology when it is scrutinizing a proposal;

(b) The Commission shall take necessary and prompt action in respect of complaints made by

investors on failure to receive, benefits entitled to under this Law;

(c) The Commission shall examine the proposal whether it is conflicting with the existing laws;

(d) The Commission shall submit the implementation report for once every six months to the

Union Parliament through the Union Government;

(e) The Commission shall advice to the Union Government from time to time to support and to

facilitate the local and foreign investments promotion;

(f) The Commission shall adopt the changes of types of investment, investment capital amount

and validity period with the prior approval of Union Government;

(g) The Commission shall have a cooperation and coordination with the Regional and State

Governments for the implementation of foreign investment projects by the agreement of

Union Government with the view to economic development of the concerned Regions and

States;

(h) The Commission shall take action immediately when the investor finds natural resources

and the antique objects not included in the original agreement that is not relating to

business permitted, above and underground of the land of which the investor is entitle;

(i) The Commission shall inspect the investment activities which are whether implemented

according to this law, rule and regulations, notifications, orders by this law and terms of the

agreement and shall take action according to the law if it is found guilty;

(j) The Commission shall define the types of business which are not entitled to the tax

exemptions and reliefs;

(k) The Commission shall perform the duties according to the instruction of Union Government

from time to time;

13. The powers of the Commission are as follows:

(a) The Commission may accept any proposal which in its opinion will promote the interests of

the State and which is without prejudice to any existing law;

(b) The Commission shall issue a permit to a promoter or an investor, on a proposal being

accepted;

(c) In case an extension, relaxation or amendment of the terms of the permit or the agreement

is submitted by those concerned, the Commission may allow thereof as it may deem

appropriate or may refuse;

(d) The Commission may, at any time require a promoter or an investor to furnish such

evidence or facts as the Commission may deem necessary;

(e) In case it is found reliable witness and evidences the investor is not follow the proposal, its

attached documents and agreement submitted to the Commission then the Commission

may issue the order to suspend the business activities;

(f) The Commission may accept or refuse the bank which shall transact financial matters under

this Law proposed by a promoter or an investor;

14. The Commission may form Committees and Groups to perform the duties of the Commission.

15. The Commission shall, from time to time report its performance to the Cabinet of the Union

Government.

16. The Commission shall report every three month for the implantation and progress of the

approved investment activities to the Union Government.

CHAPTER (8)

DUTIES AND RIGHTS OF THE INVESTOR

17. The duties of an investor are as follows:

(a) The investor shall follow the existing Laws of the Republic of the Union of Myanmar;

(b) The investor shall perform the business activities by incorporating the company in

accordance with the existing Laws of the Republic of the Union of Myanmar;

(c) The investor shall follow the articles of this Law, its regulations, procedures, notifications,

directives and the restrictions prescribed in the permit;

(d) The investor shall follow the restrictions, rules and regulations prescribed in the agreement

by the Commission for leasing or using of the permitted land;

(e) The investor shall inform and get permission from the Commission for the transfer of

business, transfer of share, sub leasing of the land that is leased and being used by the

investor within the validity period to other person;

(f) The investor shall not allow to repair, alter amend and use the natural surface appearance

or attitude of the land for which investor has obtained the right of lease or use without the

prior approval from the Commission;

(g) If the investor finds natural resources or antique object or treasure deposit not include in

the original agreement that is not relating to the business permitted, above and

underground of the land of which the investor is entitled to lease or use shall inform

immediately to the Commission. If the Commission permits, it may be continued to carry

out on such land. If the permission is not obtained, it shall transfer to the place arranged in

substitution and carry out.

(h) The investor shall prevent to cause environmental pollution and environmentally damage

while the business activities are carried out;

(i) If the investor is a foreign company and transfer of all shares to other foreigner or citizen,

shall get prior approval from the Commission and return the permit before registration of

the transfer of shares by the existing laws;

(j) If the investor is a foreign company and transfer of part of the shares to other foreigner or

citizen, shall get prior approval from the Commission before registration of the transfer of

shares by the existing laws;

(k) The investor shall transfer the business related high technology systematically to the

concerned enterprises, departments or organizations as per agreement;

18. The rights for the investor are as follows:

(a) The investor has the right to sell or exchange or transfer by any forms for their assets in

accordance with the existing laws;

(b) If the investor is foreign company it has the right to sell or transfer all the shares to other

foreigner or local citizen;

(c) The investor has the right to expand the business activities or increase the investment

amount by getting approval from the Commission;

(d) The investor has the right to request to the Commission to review for the fulfillment of the

rights in accordance with the existing laws;

(e) The investor has the right to request to the Commission to receive exemptions and reliefs

and to take action for the requirements according to the existing laws;

(f) The investor has the right to claim for better exemptions or reliefs if the permitted

investment business has discovered new technology, improved better quality of products,

increased production and reduced environmental effects;

(g) The investor has the right to get better exemptions and reliefs if the investment business

has been made at the remote areas where less economic development and difficult to

access with the view to develop all over the nation;

CHAPTER (9)

ACCEPTANCE OF PROPOSAL

19. The Promoter or investor who wants to do investment in the nation shall submit the proposal to

the Commission with the requirements to get approval.

20. The Commission shall –

(a) perform necessary scrutinizing process to the proposal submitted in accordance with the

Article 19 and accept or refuse within 15 days;

(b) issue the permit if the proposal is approved or reply if the proposal is not approved within

90 days;

21. The investor or promoter shall conclude the necessary agreement with the concern government

departments, government organization or individual, organization after getting the permit issued by the

Commission.

22. The Commission may approve in accordance with this law for the extension, relaxation and

amendments of the agreement or the validity of the agreement.

CHAPTER (10)

INSURANCE

23. The investor shall buy prescribed types of insurance at any permitted insurance enterprises in

the nation.

CHAPTER (11)

RECRUITMENT OF EMPLOYEES AND LABOURS

24. The investor shall‐

(a) appoint at least 25% of local skilled labour at the technical works for the first two years

started from the commencement of the investment business, at least 50% for second two

years and at least 75% for third two years. However, for the intellectual based business

activities, the Commission may change to increase reasonable time restriction.

(b) conduct trainings to improve the skill of the local employees to perform to the sub‐article (a).

(c) recruit only local citizen in the business activities which do not need the skills;

(d) perform recruitment through the labour offices, local recruitment agencies and with the

own programme;

(e) recruit the local skilled labours, technicians and employees by employment agreement

signed by employer and employees in accordance with the existing laws, rules and

regulations;

(f) manage the equal rights and benefits for both foreign employees and local employees by

the level of technical skill;

25. The foreigners who are working at the permitted investment business shall apply to Commission

to obtain work permit, stay permit issued from the nation.

26. The investor shall –

(a) conclude the employment agreement in accordance with the terms and conditions when the

recruitment of labours and employees are made;

(b) implement as per the terms and conditions of the employment agreement such as duties

and responsibilities of the employers and employees, work disciplines, minimum salary and

wages, leaves, holidays, overtime, compensation, social security and insurance related with

the workers by applying the existing labour laws, rules, regulations and the allowances;

(c) shall settle the disputes occurred between employers, employees, employers and

employees, employees and technicians in accordance with the existing laws;

CHAPTER (12)

EXEMPTIONS AND RELIEFS

27. Commission, with the view to encourage the foreign investment shall allow under mentioned

sub‐article (a) of exemption or relief among the exemptions and reliefs. Moreover, the Commission may

allow one of the exemptions or reliefs or all of the exemptions or reliefs upon the request by the

investor: ‐

(a) in respect of any enterprise for the production of goods or services, exemption from income

tax for a period extending to 5 consecutive years, inclusive of the year of commencement of

production of goods or services; in case where it is beneficial for the State, exemption or

relief from income tax for a further reasonable period depending upon the success of the

enterprise in which investment is made;

(b) exemptions or reliefs from income tax on profits of the business if they are maintained in a

reserve fund and re‐invested therein within 1 year after the reserve is made;

(c) right to accelerate depreciation in respect of machinery, equipment, building or other

capital assets used in the business, at the rate fixed by the Commission to the extent of the

original value for the purpose of income tax assessment;

(d) if the goods produced by any enterprise are exported, relief from income tax up to 50

percent on the profits accrued from the said export;

(e) right to pay income tax on the income of the residence foreigner at the rates applicable to

the citizens residing within the country;

(f) right to deduct from the assessment income, such expenses incurred in respect of research

and development relating to the enterprise which are actually required and are carried out

within the State;

(g) right to carry forward and set‐off up to 3 consecutive years from the year the loss is

sustained in respect of such loss sustained within 2 years immediately following the

enjoyment of exemption or relief from income tax as contained in sub‐section (a), for each

individual enterprise;

(h) exemption or relief from custom duty or other internal taxes or both on machinery,

equipment, instruments, machinery components, spare parts and materials used in the

business, which are imported as they are actually required for use during the period of

construction;

(i) exemption or relief from customs duty or other internal taxes or both on such raw materials

imported for the first 3 years' commercial production following the completion of

construction;

(j) exemption or relief from custom duty or other internal taxes or both on machinery,

equipment, instruments, machinery components, spare parts and materials used in the

business, which are imported as they are actually required for use for the expansion of the

investment by increased investment capital approved by the Commission within the

permitted period;

(k) exemption or relief from commercial tax for the goods to be exported;

CHAPTER (13)

GUARANTEES

28. The Union Government guarantees that an economic enterprise formed under a permit shall

not be nationalized during the term of the contract or during an extended term, if so extended.

29. The Union Government guarantees that an economic enterprises formed under the permit of

the Commission shall not terminate before the permitted period without any reliable circumstances.

30. On the expiry of the term of the contract, the Union Government guarantees an investor of

foreign capital, the rights he is entitled to, in the foreign currency in which such investment was made.

CHAPTER (14)

PERMIT TO USE OF LAND

31. Commission may allow an investor for the land leasing period or period for being used of the

land with the initial period of 50 years based on the economic enterprises, types of industries and

investment amount.

32. Commission may allow extension of land leasing or being used of the land according to the

Article 31 after the expiry of the permitted period continuously 10 years and next 10 years after the

expiry of the period based on the investment amount and types of investment.

33. Commission may allow the investment on the land by concluding initial agreement from the

person entitled to lease land or a person having right to use land with the prior approval of the Union

Government with the view to economic development of the nation.

34. Commission may adopt the rate of the land lease for the rental of land owned by the

Government departments and Government organizations with the prior approval of the Union

Government from time to time.

35. The investor is only allowed to invest with the form of joint venture together with the local

citizen investor for the investment of contract farming at the farm land permitted to aforesaid local

citizen investor for doing agricultural farming and plantation by seasonally.

36. Commission may allow longer period of leasing land than the period allowed by this law to the

investor who are making investment at the remote areas of the country by the agreement of the Union

Government with the view to enhance development all over the country.

CHAPTER (15)

FOREIGN CAPITAL

37. Commission shall register the foreign capital with the permitted foreign currency by the bank

with the name of the investor. The type of foreign currency for the foreign capital is mentioned when it

is registered.

38. The investor who brings foreign capital has the right to withdraw foreign capital approved by

the Commission within the designated period when the investment business is terminated.

CHAPTER (16)

TRANSFER OF FOREIGN CURRENCY

39. The investor has the right to transfer the following foreign currency with the prevailing rate of

exchange from the designated bank to the foreign bank: ‐

(a) foreign currency entitle to the person who has brought the foreign capital into the country;

(b) foreign currency permitted by the Commission to the person who has brought the foreign

capital;

(c) net profit from the annual profit received by the person who has brought the foreign capital

after deduction of the tax and the prescribed funds;

(d) legitimate balance, after causing payment to be made in respect of taxes and after

deducting in the manner prescribed, living expenses incurred for himself and his family, out

of the salary and lawful income obtained by the foreign personnel during performance of

service in the State;

CHAPTER (17)

MATTERS RELATING TO FOREIGN CURRENCY

40. The investor has the right to‐

(a) remit to abroad through the bank which has a rightful authority to carry out foreign banking

in the country with the relevant foreign currency at the prevailing rate of exchange;

(b) carry out financial transactions relating to the investment business by opening foreign

currency account and kyat account at the any bank which has a rightful authority to carry

out foreign banking in the country;

41. Foreigners employ under any economic organization formed with the permission shall open

foreign currency account and kyat account with any designated bank which has a rightful authority to

carry out foreign banking within the country.

CHAPTER (18)

PENALTIES RELATED TO ADMINISTRATION

42. The commission may charge the following one of the administrative penalty or all of the

penalties to the investor who violate any the provision of this law, by‐laws, rules and regulations,

procedures, notifications, orders, directives or any condition of the permit‐

(a) warning;

(b) temporary suspension of tax exemption and relief;

(c) revocation of the permit;

(d) black listed with no further issuance of any permit in the future;

CHAPTER (19)

SETTLEMENT OF DISPUTES

43. If any dispute arises out of investment activities:‐

(a) shall be settled amicably with the friendly manner between the disputed persons;

(b) If such dispute cannot be settled according to sub‐article (a)‐

(1) unless the mechanism of dispute settlement is stipulated in the concerned

agreement, the existing laws of the country shall be applied.

(2) if the mechanism of dispute settlement is stipulated in the agreement, the said

mechanism shall be followed.

CHAPTER (20)

GENERAL PROVISIONS

44. The Commission may allow under this law if any proposal for production sharing or profit

sharing between the investor and Union Government or Government department/ organization legally

empowered by Union Government to carry out feasibility study, exploration, calculation and extraction

up to the commercial production stage by utilizing the capital of the investor on joint‐venture with the

state or citizen in the extraction works of capital intensive invest, such as oil & gas sector, mining sector

to fulfill the energy requirements of the state and citizens and to export the surplus. If the investment

activities can be carried out in terms of commercially, equal share of the benefit shall be divided

between the Union Government or any authorized government departments/ organizations, local

citizen and joint partner investor.

45. The investor permitted by the foreign investment law of Union of Myanmar (State Law and

Order Restoration Council, Law No.10/1988) before the existence of this law shall be deemed to be

invested under this law.

46. The investor shall be criminally prosecuted if any reliable evidence is found to be deliberately

and misrepresenting in connection with the calculations, data and information, documents, financial

evidences and employment recruitment attached with the proposal to the commission and concerning

government departments/ organizations.

47. Notwithstanding the provision in any existing law, the matters regarding any provision of this

law shall be exercised by this law.

48. The commission shall hold meetings in the manner prescribed.

49. The decision of the Commission made under the powers conferred by this Law shall be final and

conclusive.

50. No suit, prosecution or other proceedings shall lie against any member of the Commission or

Committee or body or any public servant for any act done in good faith under this Law.

51. To carry out the provision of this Law by the Commission, the Ministry of National Planning and

Economic Development or any organization shall –

(a) undertake and perform administrative works;

(b) bare the expenses incurred;

52. The investor permitted by the Commission under the Union of Myanmar Foreign Investment

Law (State Law and Order Restoration Council, Law No.10/1988) about to be revoked shall continue to

apply the terms and conditions of the permit and restrictions of the concerned agreement until the

expiry of the validity period.

53. The Commission shall submit to the nearest Union Parliament through the Union Government

when the permission made to the investment activities as per Article (3) and Article (5) effect to the

interest and benefit of the state and the people.

54. If any Article of this law conflict with any provision of the international treaty and agreement

approved and accepted by the Republic of the Union of Myanmar, the provision of international treaty

and protocol shall prevail.

55. The period before the enactment of rules and procedures of this Law, the rules and regulations

issued under the Union of Myanmar Foreign Investment Law (State Law and Order Restoration Council,

Law No.10/1988), unless inconsistent with this Law, may be exercised.

56. When implementing the provisions of this Law‐

(a) The Ministry of National Planning and Economic Development shall issue the necessary bylaw,

rules, regulations, procedures, orders, notifications and directives within (90) days of

the commencement of this law with the approval of Union Government.

(b) The Commission may issue the necessary orders, notifications and directives.

57. The Union of Myanmar Foreign Investment Law (State Law and Order Restoration Council, Law

No.10/1988) is superseded by this Law.

I have signed as per the Constitution of the Republic of the Union of Myanmar.

(Thein Sein)

President

The Republic of the Union of Myanmar