BUSINESS & TRADE

FUNDAMENTAL RULES & OBJECTIVES

- Domestic and Foreign Trade Activities
- The Field of trade
- Trade Policy
- Export
- Import from Abroad

DOMESTIC AND FOREIGN INVESTMENT AND COMPANY REGISTRATION

- Foreign Investment
- Domestic Investment [Myanmar Citizen's Investment]
- Company Registration
 

FUNDAMENTAL RULES AND OBJECTIVES

The State has been implementing, laying down three fundamental trade and commerce rules: the objectives of three rules are for the welfare of the State and her citizens who should not be oppressed by commercial activities and these activities to be carried out not aiming at profit but only for long-term continuance.
The Ministry of Trade and Commerce has carried out the activities based on four objectives namely "to support the activities of domestic and foreign trade, to promote the nation's economy, to make trading enterprises capable and business-like organizations, to get more foreign currency for the State by exporting more, to provide supportive measures for commercial activities of the cooperative and private entrepreneurs." Myanmar adopted the market oriented economic system in the year 1988 after adopting the centralized planning economic system for more than two decades. Substantial stabilization and reform measures had been undertaken to be in line with the new economic system. The initial step taken towards a more liberalized economy is to allow foreign direct investment and to encourage the private sector development. In the area of legal framework one of the first laws on investment promulgated by the state Law and Order Restoration Council is the Union of Myanmar Foreign Investment Law, promulgated on 30th November 1988 to induce foreign investment and to boost investment particularly in the private sector.

Domestic and Foreign Trade Activities

The following fundamental activities are included in domestic and foreign trade:-
(a) The Field of trade
(b) Exports
(c) Imports
(d) Border trade
(e) Activities of buying and selling rice, paddy, pulse and maize.

The Field of trade

Since 1988, the market-oriented economic system has been in practice in Myanmar Processes such as giving freedom to the agricultural sector, encouraging foreign investment, giving legal service for border trade, encouraging the participation of private sector in foreign trade and letting companies, joint-ventures, traders and Association of Union of Myanmar Chamber of Commerce and Industry have been organized in sequences and are being implemented step by step.

Trade Policy

Myanmar Naing-Ngan believes in the concept of freedom in commerce and wishes for an independent and fair commercial system all over the world. Myanmar is one of the first countries in GATT. Now, Myanmar is a member nation of the World Trade Organization which was organized through GATT. Therefore, foreign trade activities of Myanmar Naing-Ngan are carried out according to the system of W.T.O.
Myanmar Naing-Ngan signed agreements with the countries within Asian regions, the Republic of Korea, the People's Republic of China, Thailand, Bangladesh, India, Pakistan, Vietnam, Laos, the Philippines, Malaysia, so also with seven Eastern European Countries. Such agreements are aimed at the reinforcement of possible trading techniques for long-term development, based on the attitude of mutual benefit. Moreover, the terms contained in these agreements are in accordance with the norms of W.T.O.
Major trading countries of Myanmar Naing-Ngan are the People's Republic of China, Singapore, Japan, Thailand, India and Malaysia which are countries within Asia. European Economic Community is the second important trading counterparts.

Export

In October 1988 , the State gave up Planning And Economic System centrally controlled and practiced independent market-oriented economic system. As a result, economic and trading businesses developed considerably.
The main exports are farm produce such as rice, pulses, maize, animal food and wood products such as teak, hardwood , sawed wood, metallurgical products and jewellery.

Statement Showing Domestic Export of Principal Commodities
(Kyat in Million)
 

Domestic Export and Import [1998-99 to 2001-2002]
(Kyat in Million)
 

Import from Abroad

The State has been steadily increasing the volume of imports of commodities in order to adequately fulfil the basic needs of the people and the commodities required by the infrastructure development projects being implemented by the State. A comparison of the imports is shown below:-

 (Kyat in Million)
 

Foreign Investment

In late 1988, the government of the Union of Myanmar changed the economic system from centrally planned economic system to a market-oriented one. Accordingly, series of legislation were regulated, new laws being promulgated, and moreover, existing laws that are no longer appropriate for the new system were amended to be compatible with the changing economic environment.

In this context, with an aim that foreign investors can participate actively in exploiting natural and human resources thereby enhancing long-term mutually beneficial economic cooperation, the Union of Myanmar Foreign Investment Law was promulgated on 30 November 1988 and the Procedures relating to the said Law were endorsed on 7 December 1998.

In exercise of the powers conferred under section 7 of the Union of Myanmar Foreign Investment Law, the Government formed the Union of Myanmar Foreign Investment Commission (FIC) by Notification 12/88 dated 7 December 1988 with the Minister for Planning and Finance as the Chairman and a Secretary to be appointed.

FIC was reformed by Notification 4/93 dated 21 April 1994. Two Deputy Prime Ministers act as Chairman and Vice-Chairman respectively. There are 16 Ministers in FIC with the Minister for National Planning and Economic Development acting as the Secretary and the Joint Secretary is to supervise the office. Director-General of the Directorate of Investment and Company Administration (DICA) has been appointed as the Joint Secretary and DICA is serving as the Secretariat of FIC.

With the promulgation of the Myanmar Citizens Investment Law, the government formed the Myanmar Investment Commission (MIC) by Notification 7/94 dated 4 May 1994 with the same numbers. MIC will act as an authority for both foreign and Myanmar citizens' investments. The Secretary to MIC is now the Minister for the State Peace and Development Council Chairman's Office.

Duties and powers of MIC are to accept proposals which will promote the development activities and which are in line with the rules and regulations laid down by the State, to scrutinize the proposal with regard to financial credibility, economic justification and appropriateness of technology. MIC also grant terms and conditions on issuance of Permit, monitor and evaluate foreign investment situation , relax and amend the terms and conditions previously defined, provide suggestions and recommendations to facilitate and promote foreign investment and take necessary and prompt action in respect of issues regarding foreign investment.

The basic principles of the Union of Myanmar Foreign Investment Law are as follows:-
 (a) Promotion and expansion of exports;
 (b) Exploitation of natural resources which require heavy investment;
 (c) Acquisition of high technology;
 (d) Supporting and assisting production and services involving large capital;
 (e) Opening up of more employment opportunities;
 (f) Development of words which would save energy consumption; and
 (g) Regional development.

The Law provides attractive incentives to foreign investors in the form of tariff and taxes. It also provides repatriation of profit after deduction of all taxes and the prescribed funds. Moreover, the Law provides irrevocable State guarantee that an enterprise permitted under the said Law and shall not be nationalized during the permitted period.
Since the Law has been promulgated, and up to the end of January 2001, a total of 350 foreign investment projects in 11 economic sectors have been committed by foreign investors from 25 countries and regions around the world, with the total amount of US$ 7357.27 million. Detail information of foreign investment by economic sectors and by country and region is presented in Table-1 and Table-2 respectively.

Among the five leading investors in Myanmar, there are three ASEAN countries namely, Singapore, Thailand and Malaysia. At present, five ASEAN countries are investing in Myanmar and up to the end of January 2001, the ASEAN countries have committed US$ 3786.21 million in 151 projects, realizing 52.12 per cent of the total permitted amount of foreign investment during the same period.

TABLE-1
Foreign Investment of Permitted Enterprises up to 31-1-2001 [By Sector]
(US $ in Million)

Sr. No	Sector	Permitted Enterprises
		No.	Approved Amount
1	Oil and Gas	51	2355.92
2	Manufacturing	140	1563.43
3	Hotel & Tourism	42	1054.41
4	Real Estate	18	1025.14
5	Mining	51	523.36
6	Livestock & Fisheries	20	283.32
7	Transport & Communication	14	283.27
8	Industrial Estate	3	193.113
9	Construction	1	17.267
10	Agriculture	4	34.35
11	Other Services	6	23.69
Total		350	7357.27

Domestic Investment [Myanmar Citizen's Investment]

With a view to promoting investment of Myanmar citizens and to provide equal treatment as foreign investors by granting them the right to enjoy tax incentives, the Myanmar Citizens Investment Law (MCIL) was promulgated on 31 March 1994 and its Procedures were prescribed on 3 August 1994.
The objectives of the said Law are as follows;-

 (a) to cause investments of Myanmar citizens to be beneficial to the State;
 (b) to promote development of production and services;
 (c) to cause production of goods by utilizing the natural resources of the country;
 (d) to establish enterprises for import substitution;
 (e) to promote and expand export;
 (f) to promote development of technology;
 (g) to open up more employment opportunities;
 (h) to promote development of private and cooperative sectors;
 (i) to contribute towards regional development; and
 (j) to enable extensive participation in the money market.

TABLE-2
Foreign Investment of Permitted Enterprises up to 31-1-2001 [By Country and Region]
(US $ in Million)

Sr No.	Country and Region	Permitted Enterprises
		No.	Approved Amount
1	Singapore	70	1541.63
2	United Kingdom	37	1402.46
3	Thailand	47	1264.45
4	Malaysia	27	597.00
5	U.S.A	16	582.06
6	France	3	470.37
7	Indonesia	11	240.00
8	The Netherlands	5	238.84
9	Japan	22	232.88
10	Republic of Korea	29	146.90
11	Philippines	2	146.67
12	Hong Kong	29	140.82
13	Australia	14	82.08
14	Australia	2	72.50
15	Peoples Republic of China	12	60.90
16	Canada	16	59.78
17	Panama	1	29.10
18	Germany	1	15.00
19	Denmark	1	13.37
20	Cyprus	1	5.25
21	India	1	4.50
22	Macau	1	4.40
23	Bangladesh	2	2.96
24	Israel	1	2.40
25	Sri Lanka	1	1.00
Total		350	7357.32

Since the promulgation of the Myanmar Citizens Investment Law, the domestic investment has been increasing yearly. Up to the end of January 2001, a total number of 457 enterprises have been permitted to invest in 10 sectors of the economy. The total investment of such enterprises amounted to K.698625.05 million. Detail list of investment is presented as Table-3.

Majority of the domestic investment was made in Real Estate Development. Second largest investment was made in small and medium industries, which indicates that a strong base has been established for the development of the industrial sector. Besides, it also supplements and supports
the acquirement of technology, employment creation and export expansion.

TABLE-3
Permitted Myanmar Citizens' Investment  [By Sector up to 1-1-2001]
(Kyat in Million)

Sr No.	Sector	Permitted Enterprises
		No.	Approved Amount
1	Real Estate Development	23	27462.21
2	Manufacturing	333	7302.32
3	Transportation	5	4367.74
4	Construction	6	8496.00
5	Hotal & Tourism	13	1103.89
6	Others	10	1260.86
7	Industrial Estate	1	1012.79
8	Livestock & Fisheries	26	2190.56
9	Agriculture	5	1012.79
10	Mining	35	1084.17
Total		457	69862.05

Company Registration

Business organizations such as partnership firms, limited companies and associations not for profit, which are formed in Myanmar, shall register at the Company Administration Department of the Directorate of Investment and Company Administration.

The rights and obligations of a partnership firm is governed by the partnership agreement and the Partnership Act of 1932. Registration of partnership firm is optional, However, if registered, it shall have the right to sue and to be sued. Registration of limited companies is compulsory. The governing laws for the limited companies are the Myanmar Companies Act 1914; Special Company Act 1950; Myanmar Companies (Amendment) Act 1955 and Myanmar Companies Regulations 1957.

Limited companies are classified into Myanmar companies, foreign companies and joint venture companies. Foreign companies are required to apply for a PERMIT, before registration, under section 27A of the Myanmar Companies Act. A joint venture with the participation of the State capital shall be registered under the 1950. Special Company Act and the Myanmar Companies Act. Associations not for profit shall register under section 26 of the Myanmar Companies Act with prohibition of payment of dividend to its members.

The objectives of the company shall be stated clearly in the Memorandum of Association and the following types of companies are categorized in accordance with the respective objectives.

 (a) Industrial, Manufacturing and Construction Company;
 (b) Trading Company;
 (c) Services Company;
 (d) Hotel Services Company;
 (e) Tourism Company;
 (f) Gems Company (for local citizens only);
 (g) Banking Company; and
 (h) Insurance Company.

Business organizations registered at the Company Registration Department up to 31-1-2001 are as follows;-

• Partnership firms 1259
• Myanmar companies 15139
• Foreign companies 1389
• Joint ventures with the participation of State capital 142
• Associations 39

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