The government of Myanmar is currently in the process of implementing its recently-enacted Myanmar Investment Law (MIL), which is designed to draw more foreign director investment (FDI) to the country. As part of this initiative, Myanmar’s authorities recently announced that they will target 20 fields in their efforts to promote investment, to spur greater economic growth in the nation.
Extra foreign investment
It is hard to overstate the value of FDI. When investors enter a market, the country’s small to medium-sized enterprises (SMES) receive the capital, as well the educational and technological, resources they require to broaden their offerings and compete globally, increasing profit and inspiring economic development. Myanmar’s government has made it a goal to draw more FDI to the nation’s vital SMEs.
We have increasingly seen, for example, that the country’s authorities are committed to fostering the favourable regulatory environment needed to attract investors to Myanmar’s small business. This strategy is already paying dividends, as figures indicate that for the previous fiscal year, the country eclipsed its FDI goal of US$6 billion, attracting around US$7 billion for the 2016 – 2016 period.
Myanmar’s new law
The MIL, which came into force late last year, serves as the centrepiece of this strategy to promote a more favourable climate for investors. It is basically designed to standardise investment regulations for both domestic and foreign firms in the country, streamlining the investment process for global companies, so they have more incentive to enter the Myanmar market, leading to FDI expansion.
There are a range of provisions in the MIL, which are geared towards achieving this aim. It has, for example, relaxed rules in areas such as local employment requirements and long-term land use, reducing the hurdles foreign firms face when investing. It has also raised Myanmar’s standard five-year corporate tax exemption in the nation’s less developed areas to seven years, while reducing it to three years in more developed areas e.g. Yangon, to promote FDI in the state’s more rural regions.
More details released
The government is now detailing how it will implement the MIL, illustrating how it can raise FDI. They recently, for example, handed the power to approve investments to regional investment commissions. This prerogative formerly rested solely with the national Myanmar Investment Commission (MIC), which retains the final say on investments worth over US$5 million, so this will streamline the investment approval process for foreign firms, increasing the likelihood of participation.
Meanwhile regional financial news portal Asia Nikkei reports that the authorities have now announced that they will promote investment in 20 areas, across 192 kinds of businesses and services, to inspire higher FDI inflows. These sectors include agriculture – one of Myanmar’s most lucrative industries, accounting for a significant 37.8% of its gross domestic product. The agriculture industry has already seen its fortunes boosted by private investment, so this measure should inspire further progress.
Other sectors the government will target, in its drive to push FDI levels up, include urban development, manufacturing, medicine and communications. However, fields such as mining and finance have not been included in this list, shedding more light on where the government believes Myanmar should focus, to inspire economic progress. Experts have commented that this list of fields is actually longer than they expected, illustrating just how committed the authorities are to attracting more investment.
Htet Tayza’s commentary
We are slowly starting to see how Myanmar’s government will implement the MIL. By focusing investment promotion efforts on the country’s most important sectors, the authorities could capitalise effectively on our nation’s potential, upping FDI and boosting the economy. It is critical, for example, that Myanmar’s lacklustre infrastructure is upgraded, so SMEs can utilise vital services e.g. telecoms, and get their goods and services to consumer, via well-maintained transport facilities such as roads. This initiative should provide infrastructure orientated businesses with the FDI they require to make this goal a reality, benefitting everyone in Myanmar through greater economic growth.