Jo Daniels, managing partner of Baker & McKenzie Myanmar, said at a media roundtable that the new law could be one of Myanmar’s most significant legal reforms once approved by the parliament. While praising the move, she believes much of the benefits still hinge on the enforcement efforts of the Myanmar Investment Commission (MIC).
The new law, a consolidation of existing Myanmar Citizen Investment Law and the Foreign Investment Law, introduces a new form of approval called MIC Endorsement, in addition to issuing MIC permits.
If a company’s business activities do not fall under one of the restricted categories, it will not require an MIC permit to do business in Myanmar. Instead, they can apply for an MIC endorsement, which will provide the same benefits as an MIC permit such as long-term lease and tax incentives.
“It is one of the significant changes proposed in the new law. We assume that the MIC endorsement process will be less rigorous than the MIC permit application, but that remains to be seen,” she said.
The draft law will revoke the automatic tax exemption and make all tax exemptions entirely at the discretion of the MIC. Tax exemption may be granted for up to seven years. Currently, tax exemption is granted for only three years.
It also offers longer land lease periods. Currently, companies holding an MIC permit are granted long-term leases of up to 50 years with an option to extend for an additional 20 years. According to the new law, companies that invest in less economically developed and remote regions can apply for longer lease periods than the aforementioned with special approval of the MIC.
Daniels said that an unusual provision about national security was included in the draft law. It is not clear what sort of issue would be subject to national security, or how broadly this clause may be interpreted by the government, or how frequently it might be invoked, she added.
But announcements are expected soon, the lawyer said, as Myanmar has drafted the Myanmar Investment Law, the new Companies Act and the Intellectual Property Law.
She also expects the new corporations law and a public-private partnership law in the near future.
Daniels noted that reform efforts on Intellectual Property (IP) law, particularly on trademarks, were necessary to attract international players.
“We do have a system currently of some sort of registration which does not protect your IP but people do trademark cautions in the newspapers. But that is only to take advantage of a common law. There still are problems when someone pertains to be associated with your brand.”
However, key issues were hard to forecast due to the uncertain and transitional nature, she warned.
“I am not sure how it will play out in practice, which is that it makes perfect sense to say things on a policy like prioritising regions that need investments instead of Yangon … I do not think things will be that black and white,” she said.
Daniels said local and international lawyers should work together to support investments from local firms and multinationals. The law firm now has four partners and 11 other legal staff in its Yangon office, which was opened in February 2014.
Aside from adopting policies and strengthening the legal framework, Myanmar also needs to improve infrastructure, fight against corrupt practices and money laundering, and maintain political stability, in order to attract more foreign investors, she said.
There were talks about the United States sanctions at the event, as the remaining sanctions are still a concern for potential investors. Currently, there is speculation about possible easing of more sanctions during Myanmar State Counsellor Aung San Suu Kyi’s upcoming trip to the US.
“In partnership with sanctions specialists in our other offices, we can help clients navigate the sanctions restrictions and show them what possibilities are opening up in Myanmar. We also provide relevant publications on these topics,” Daniels said.