According to Aung Naing Oo, secretary of Myanmar Investment Commission and director general of the Directorate of Investment and Company Administration, the MIC will also encourage agricultural-based industries, aside from its two priorities.
He also explained about the two things MIC would look at before allowing any investor to do business in Myanmar.However, he said proposed investments had to meet standards. “First, any investment must be in line with our existing laws and regulations. Second, we prefer quality investments rather than trying to improve on the quantity level. For example, if a mega project may bring negative impacts to the country, we do not think it is a good investment,” he said.
Other things that the government investment agency takes into consideration include a project’s prospects for profitability, how it can improve the national income and revenue, while creating job opportunities. The MIC also considers how a proposed project sits in the international and local market situation, generates demand for domestic consumption, makes use of innovation, and results in the application of relevant technology. A project must also have arrangements to minimize environmental and social impacts.
During the new government’s term,From April to early October, the MIC has approved 45 foreign investments totaling more than $400 million and 22 citizen investment projects worth about $100 million.
and Ks170 billion.By August 31, Myanmar had approved 1,131 firms from 45 countries for investments of $64.4 billion. China stands as the top investor with 141 firms that have committed to invest $18.1 billion, followed by Singapore (214 firms, $13.5 billion) and Thailand (98 firms, $10.6 billion). Among the Top 10 investors are Hong Kong, the United Kingdom, South Korea, Malaysia, the Netherlands, India and Vietnam.
Oil and gas, power, and manufacturing are the sectors in which Myanmar receives the most FDI. These three sectors are followed by transport and communications, real estate, mining, hotels and tourism, livestock and fisheries, agriculture, industrial estate, construction, and other services.
By September, the commission has allowed more than 46,000 local investors and over 5,000 foreign investors to do business. To cope with the increasing activity, MIC staffing was increased from 200 to more than 500 staff during the administration of President Thein Sein.
With the opening of its regional office in Hpa-An township in Kayin state on October 6, MIC now has nine branches, and two more branches will be opened by the end of this year, in the Bago and Magway regions.
“We hope to open branches in every state and region by 2017. If we can expand our network by opening new branches, things will get easier when we do investigation on project sites,” Aung Naing Oo said. He said he was confident that the MIC has the capacity to keep away dirty money.
“It is impossible to invest in Myanmar with black money, because we usually check the financial documents of all the companies, whether they register under the Foreign Investment Law or with Myanmar Citizens Investment Law,” he said.
Applicants’ finance is thoroughly checked, starting with their bank statements. Only transactions through banks are accepted, and this is under the monitoring of the Central Bank of Myanmar.
“It is really hard to transact black money via recognised banks.”
For investment by local entities, MIC cooperates with the Internal Revenue Department to check if the applicants pay taxes. The commission also has to report to the Home Affairs Ministry if a proposed investment exceeds 100 million kyat (Bt2.6 million), in case the ministry wants to check if money laundering is involved.
“Every investor has to attach necessary documents whenever they submit investment proposal. For example, if an investor submits a proposal to invest 10 million kyat but his bank account shows he possesses less than the proposed budget, we usually investigate how he will earn the remaining amount of money. This may involve a loan from an international organisation or a commercial bank and we may assess how he will manage to pay the interest etc,” Aung Naing Oo said.
Scrutiny in 2 steps
He said a project is scrutinised in two steps. “First, by MIC staff and secondly by the investment proposals assessment committee, which consists of high-ranking officials from relevant departments including ministries of commerce, labour, industry, construction, forestry and environmental conservation, the customs department, the internal revenue department, etc.” he said
“They also review the projects from their own perspective. If all of us are not satisfied with the proposal, we usually ask the investors for clarification and some necessary documents. Only when we all are happy, we will allow them to do business in Myanmar,” he said.
Aung Niang Oo noted that Myanmar welcomes all kinds of investment proposals. But the MIC may be unfamiliar with some projects and has to seek opinions from ministries, which sometimes lead to delays in the approval process.
Issuing permits is merely part of the MIC’s responsibilities. After issuing the permits, it has to check if the investors have followed their commitments in the proposals. This monitoring is the most exhausting process, the official said.
“Nowadays, we have more things to do than ever. We also have to help investors with their exports and imports after they receive the permits. So, our staff are usually super busy. That checking is usually carried out on weekends,” he said.
An investor who does not honour their commitments is liable to four types of penalties. First, a warning will be issued, then incentives like a tax holiday could be revoked. In some cases, a company’s operations will be suspended until the investors can satisfy the MIC. Lastly, a company can be blacklisted.
During the previous government term, two Korean garment factories were forced to shut down businesses for failing to follow the rules.