In the previous issue of Crossroads, Legal Matters dealt with the process of obtaining an Investment Permit, known as Form 2, from the Myanmar Investment Commission (MIC). To continue, the following paragraphs will provide concise explanations for the rest of the Forms -3 to 12- pertaining to foreign investors in Myanmar. The Forms, 1 to 13, are explained in greater detail in Notification No. 11/2013, called Foreign Investment Rules, issued by the Ministry of National Planning and Economic Development on January 31, 2013.
Before starting off with Form 3, it is important to note that after obtaining the Investment Permit, the investor must set out to complete construction, if any is involved, within the time period contained in the investment proposal. If there are any delays in the construction and the cause for delay is deemed reasonable – concluded after investigation by the MIC – the MIC may approve a one-time extension of the construction period, not exceeding 50 percent of the initially approved period. The request for extension must be sent to the MIC 60 days before the end of the approved period. Although the extension can only be awarded once, exceptions can be made in cases of force majeure – natural disasters, political and social instability, states of emergency, insurgencies, wars, etc. Should the investor fail to complete construction within the approved timeframe for reasons other than force majeure, the MIC has the right to revoke the Investment Permit without any obligations to financially reimburse or compensate in any other way for investment losses occurred. The investor must report to the MIC within 30 days of completion of construction. The investor must also commence operations as soon as possible once construction is complete.
Form 3 is the quarterly report form, entitled “Submission of Quarterly Performance Report”. It is a relatively straight forward form to be submitted along with a report on the progress of investment operations, and must be sent to the MIC every three months by mail or any other mode of communication.
Form 4 & Form 5
Form 4 relates to the “Sub-leasing of Permitted Land & Building” and Form 5 to the “Mortgage of Land & Building Permitted for Investment”. The investor is allowed to sub-leased or mortgage land and buildings with the agreement of the “person entitled to lease or use of the land or building”, i.e. the owner. However, the sub-leasing and mortgaging can only be carried out during the tenure of the Investment Permit, can only be done for land and buildings approved for use by the MIC, and must be done without altering the type of business for which both the land and buildings and the investor has been granted the Investment Permit. Additionally, if the land involved happens to be legally considered Vacant, Fallow, or Virgin Land, approval from the union government must be submitted along with the relevant form. The MIC Office will scrutinize the submission based on three criteria: a) whether or not the reasons stated for the sub-leased or mortgage are accurate; b) whether or not the sub-lease or mortgage is detrimental to the well-being and interests of the state and its people; and c) whether or not the investor in question is capable of successfully continuing their business. If the MIC Office finds that the submission meets all three criteria, the MIC will make a decision on approval or non-approval at its next earliest possible meeting.
As guaranteed by the Foreign Investment Law, the investor can transfer all shares of an investment to a citizen or a foreigner. This must be done by submitting Form 6 to the MIC Office, along with a tax clearance letter from the Internal Revenue Department and a letter of authorization from the Union Government if the investment made is on Vacant, Fallow, or Virgin Land. The MIC Office will scrutinize the application applying the same criteria used for Forms 4 and 5. If the application meets the criteria, it will be forwarded to the MIC where it will consider approval or non-approval at its next earliest possible meeting. If approved, the investor must hand in their MIC Investment Permit to the MIC Office. The buyer can either incorporate a new company with the shares and register with DICA or continue operations under the same company name with the seller’s agreement. However, if the buyer is a citizen, they must apply for a new MIC Investment Permit in accordance with the Myanmar Citizens Investment Law (2013). Upon receipt of the Permit, the buyer must incorporate the business as a Myanmar company. The new investor may continue to enjoy any exemptions and reliefs left over from the initial investment by the previous investor. However, if the exemptions and reliefs have expired, there will be no new benefits even if a new MIC Investment Permit is issued.
An investor may also transfer part of the investment’s shares by submitting Form 7 to the MIC Office, which will evaluate the application based on the same criteria used for Forms 4, 5, and 6. If all criteria are met, the MIC Office will forward the documents to the MIC, which will make a decision on it at its next earliest possible meeting. Once approved, the transfer of shares must be registered with DICA, accompanied by the MIC’s approval letter.
In carrying out the functions of scrutiny for Forms 4, 5, 6, and 7, the MIC Office, with permission from the MIC, may whenever necessary form teams of relevant experts from Ministries and government organizations.
From 8 & Form 9
Forms 8 and 9 pertain to foreign employees at foreign companies incorporated under the Foreign Investment Law. Both Forms must be applied to the relevant government departments with the MIC’s endorsement. Form 8 is a work permit to be applied to the Ministry of Labor, Employment, and Social Security, accompanied by an endorsement from the MIC. The Stay Permit Application, Form 9, and visa must be applied to the Immigration and National Registration Department under the Ministry of Immigration and Population. Additionally, employees at foreign companies are also required to register at the relevant Social Security Board and pay fees in kyats or foreign currency. The investor must register with the Board within 15 days of commencement of business, submit a copy of the registration card issued by the Board, and every six months submit proof of clearance of social security fees to the MIC Office.\
This Form is an application to receive the exemptions and reliefs guaranteed to foreign investors by the Foreign Investment Law. After the MIC has approved the application, the investor can start enjoying the exemptions and reliefs at the commencement of operations. Commencement of operations for production and services are determined as follows: a) for production and export businesses, the date specified in documents such as the Bill of Lading, Airway Bill, or any other similar documents used in international trade and commerce. The date referenced cannot be beyond 180 days from the date of completion for construction; b) for production businesses for domestic consumption, the date the business begins generating revenue. This date cannot be beyond 90 days from the date of completion of construction; and c) for services, the date of commencement of business, not beyond 90 days from the date of completion of construction.
Form 11 is a report on the commencement of operations for manufacturing or services. It essentially accompanies Form 10 as part of the procedure for earning the exemptions and reliefs afforded by the Foreign Investment Law. The MIC will scrutinize both forms and upon approval, issue a permit specifying the type and duration of exemptions and reliefs awarded and inform both the investor and the relevant departments or organizations to implement the necessary technical measures.
Land for investment projects can be leased from any person or entity entitled to lease or use land. The investor must submit the land lease application, Form 12, to the MIC, along with a document from the lessor – be it an individual, private enterprise, or government department or organization – stating their intention to lease the land to the investor. Once received, the MIC will forward the documents to the relevant authorities – Naypyitaw Council or State or Regional Government- for approval on the lease. Upon approval, the two parties involved may legally conclude the land lease agreement, which must be sent to the MIC. While Ministry stipulated rental rates have to be used for land leased from government departments and organizations, rental rates for land lease with private entities have to be negotiated between the investor and the lessor. Moreover, the land lease contract must include an agreement on a rental fee to be paid in advance, calculated for a 365-day period from the commencement date of rental. For land leased from government departments and organizations, the respective department or organization may demand a premium from the investor.
Investors are allowed to repatriate profits, capital invested, revenue from sale of shares, compensation received from any legal cases, and any profits or invested capital gained upon winding up. Foreign employees are also allowed remittances after due deductions for tax and living expenses. For any other types of foreign currency repatriation, the investor must submit Form 13 – application for the permit of foreign currency repatriation – to the MIC, together with an auditor’s report and bank statements.