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August 19, 2019

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LEGISLATION

Gemstones and jewelry omitted from Union Tax Bill 2019

Image result for gemstones in myanmarGemstones and jewelry have been omitted from the special commodities list in the 2019 Union Tax Bill submitted to the Pyidaungsu Hluttaw on August 7.

The Myanmar Gemstones Law came into operation this year and covers taxation for gemstones and jewelry. The law was passed by the Pyidaungsu Hluttaw in late December last year and was enacted from late January this year. In the 2018 tax bill, raw jade allocated for exports were taxed at 15pc while rubies, sapphires and other raw gemstones were taxed at 10pc. Jewelry made from jade, rubies, sapphires and other gemstones were taxed at 5pc.

Data from the Natural Resource Governance Institute(NRGI) showed that Myanmar registered selling an average of US$1.2 billion a year worth of jade between 2012 and 2016 at emporiums the government organized but China, which buys most of the jade, reported importing US$2.6 billion over the same period, according to The Diplomat. NRGI data also showed that in fiscal year 2015-16, Myanmar’s jade production alone was between US$3.7 billion and US$43.1 billion.

Source: Myanmar Times 

Draft law to create trade authority, empower commerce ministry

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The Ministry of Commerce (MoC) has drafted a law to establish a trade development body made up entirely of cabinet ministers and empower the new authority and MoC to issue lists of restricted items and non-tariff regulations. The legislation is expected to be approved by parliament within this year and the drafting was supported by the World Bank and German’s development agency GIZ. Under the draft trade law, businesses can import, export and re-export goods by obtaining trade registration certificates and licences issued by the commerce ministry, according to law firm DFDL.

Section 6 of the bill stipulates the formation of a trade development commission tasked with implementing the law. The proposed body, packed with ministers, will be chaired by one of the vice presidents, with finance minister U Soe Win as deputy chair. Section 27 authorises the commerce ministry to issue restrictions and prohibitions on goods and regulations in relation to the country of origin and other compliance certificates. It does not mention tariffs.

Section 34 empowers the ministry to send trade missions abroad and undertake trade promotional activities and exhibitions domestically and overseas. In addition, a one-stop service board will be set up to manage trade-related licencing and approval procedures. The draft law intended to regulate the e-market as well, which is largely an unregulated sector in Myanmar. The commission will carry out trade negotiations on goods and services, including intellectual property rights, and will further set up committees.

Source: Myanmar Times 

Myanmar encourages development of automobile assembly industry

Related imageMyanmar is encouraging the development of automobile assembly industry, allowing auto manufacturers to import products that are essential to make vehicles in the country. According to the Supervisory Committee for Motor Vehicle Imports and Related Business, between April 2018 and January 2019, the committee has allowed eight auto manufacturers to import such products. There are about 120 car sale centers with 44 showrooms as of May this year.

The committee has outlined a new auto import policy for 2019, saying that only vehicles with left-hand drive can be imported to suit the country’s traffic route direction. Besides, 2016 vehicle will be the oldest to be issued a permit for private cars with non-commercial purpose under consignment system. Permitted models are 2015 and later for passenger vehicles such as mini-bus, city bus, express bus and commercial trucks; 2007 and later for fire trucks and ambulances; and 15 years old or less models for heavy equipment such as excavators, bulldozers, wheel loaders and tower cranes. Impacted by the new car import policy starting this year, Myanmar’s second-hand car sale centers are likely to close down as these kinds of cars are mostly right-hand drive which will be no longer allowed.

At present, vehicles imported under a system of vehicle assembly, known as Completely Knock-Down (CKD) or Semi Knock-Down (SKD), are on the upward trend with the U.S. dollar exchange rate appreciation and Myanmar currency depreciation and cars installed locally are expected to get more market share in 2019. Meanwhile, Myanmar’s Internal Revenue Department announced earlier that it will collect advanced income tax by 15 percent for vehicles imported through normal trade, while 2 percent be on those imported for industrial use via border trade.

Source: Xinhua 

Trade laws protecting local producers now being drafted: MOC

The Ministry of Commerce (MOC) is drafting new trade laws to safeguard local producers while promoting exports of domestically-produced goods.

Due to the lack of investments and technology, Myanmar producers face stiff competition from their regional peers, who are able to manufacture at faster speeds and lower costs and produce higher quality goods.

As such, the legislation, drafted in collaboration with the World Bank and German development agency GIZ, will include a new Safeguard Law on Increased Import and Antidumping and Countervailing Law. The laws aim to safeguard domestic manufacturers from cheap imports and support demand for locally-made products.

At the same time, the government is also raising efforts to promote economic growth through exports by adding new priority sectors to its National Export Strategy (NES).

Gems and jewellery, the digital economy, fruits and vegetables, agricultural product-based food products and industrial art products have been added to the NES 2020-2025, which replaces the first NES 2014-2019, according to the MOC.

Notably, the new sectors appear to involve higher value-add and selected across a wider spectrum of industries compared to the current NES, which prioritises raw commodities including rice, pulses, oilseed crops, marine products, textile and garments and wood and wood products.

In the first six months of this financial year, the country’s export earnings totaled some US$8 billion, which is up by more than US$650 million from the same period last year, buoyed by overseas demand for locally produced garments and despite lower exports of rice, beans and pulses.

Meanwhile, spending on imports rose to US$8.9 billion during the same period, resulting in a trade deficit of more than US$100 million, according to data from the MOC.

Source: Myanmar Times

DICA chief promoted as investment ministry’s top civil servant

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The government has appointed U Aung Naing Oo as permanent secretary of the recently-created Ministry of Investment and Foreign Economic Relations, the official gazette announced.

As the top civil servant leading the ministry, he will support and advise the cabinet minister, career diplomat U Thaung Tun, on how to drum up foreign investments and build on reform initiatives. Observers hope the new body will be the reflected voice of business in government, challenging line ministries on red tape while ensuring that related draft regulations are consulted on.

U Aung Naing Oo was transferred to be director general of the Office of the Union Investment and Foreign Economic Relations on March 29.

The civil servant is widely praised by the business community for drafting new laws and consulting stakeholders in an open and effective manner as director general of the Directorate of Investment and Company Administration (DICA).

It is under his guidance that the 2016 Investment Law and 2017 Companies Law “achieved their intended outcome,” said Nishant Choudhary, co-chair of EuroCham Myanmar’s legal group.

For Mandalay Technology managing director U Zaw Naing, U Aung Naing Oo’s “excellent leadership at DICA” has made a big difference for the private sector.

“Business people in Myanmar see him as a key driver for corporate reform, including MyCo Online Register, the new electronic registry system, and the digitalisation of the investment application process. He will be able to make a bigger impact on economic reform in his new position, and brings with him a wealth of experience to support the minister,” the businessman commented.

The investment ministry was established last November. Two departments formerly under the Ministry of Planning and Finance – DICA and the Foreign Economic Relations Department – were brought under the new body.

The move represents Daw Aung San Suu Kyi’s belated efforts intended to win support for her much-criticised handling of the economy. The National League for Democracy-led government is facing huge challenges from its economic governance, especially in the implementation of new policies and laws, and investor confidence is further hampered by sluggish reform and the northern Rakhine crisis.

From a peak of $9.4 billion in 2015-16, approved foreign investment has reduced to $6.6 billion in 2016-17 and $5.7 billion in 2017-18. A further $1.7 billion was recorded from April 1 to September 30, 2018, while in the 2018-19 fiscal year to March 15 it reached $1.9 billion.

The country’s GDP is expected to grow by 6.6 percent in 2019 and 6.8pc in 2020, according to the Asian Development Bank.

U Thaung Tun, who’s also the Myanmar Investment Commission chair, last November pledged to establish a “single-window” system for investment proposals, based on a list of standard operating procedures agreed on by relevant ministries. This is welcome by investors but yet to materialise.

Many local businessmen, U Zaw Naing observed, are looking at how the government, including the new ministry, manages Belt and Road-related projects as well as investments from China.

He is confident that the permanent secretary will work effectively with development partners, foreign governments and multilateral institutions to “mobilise external resources in order to assist Myanmar’s transition”.

“I am certain that U Aung Naing Oo would further work towards improving the business landscape and regulatory environment,” Mr Choudhary added.

U Thant Zin Lwin, who has been DICA deputy director general since 2016, is set to take over as DICA chief.

Source: Myanmar Times

Property investments now more clear-cut for foreigners

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Property developers and investors have been looking forward to stable regulations and foreign participation in the local real estate sector since the Condominium Law was enacted in 2016 and gradually enforced.

Firmer home ownership laws are expected to draw higher volumes of foreign investment, which, in turn, will benefit businesses along the supply chain, from construction to interior design.

The 2016 Condominium Law addresses land ownership as well as foreign participation in the local property market.

According to the law, foreigners now have the right to own up to 40 percent of the units in a condominium project, while each individual can buy up to 25pc of the units.

Foreigners who do not hold a National Registration Card can purchase condos in Myanmar, excluding those who have been blacklisted by the country. The purchase can only be done via official foreign currency remittance from overseas.

The law allows not only purchasing rights but also construction rights and joint venture investments as well. Units of a joint venture development can be sold only after this is reported to the Management Committee via a registration officer.

If a condo unit holder, both foreign or local, wishes to resell his property, this can be sold to another foreigner, until foreign ownership in the project hits the 40pc threshold.

Within the next 2-3 months, units registered under the Condominium Law will be in the market and can be sold to foreigners, said U Myo Myint, a member of the Yangon Regional Condominium Management Committee.

Only buildings constructed on a minimum of 0.5 acre (20000 square feet) of land exceeding six-storeys will be classified as condominium apartments.

In the recently-enacted condominium rules, it was also stipulated that all condo buyers, including foreigners, will own the land title of the condo according to the number of shares or units owned. However, property ownership of foreigners is limited to the duration of the life of the building.

As the Condominium Law lays out clearer regulations for foreign participation in the real estate sector, sales and investments are expected to improve as well as benefit the construction and other sectors in the years to come, real estate agents said.

Before this law, foreigners coming to Myanmar on long term business or for education were forced to rent apartments which were subject to high and volatile rental rates. Now they have more options to invest in a unit or rent at more stable rates.

Source: Myanmar Times

CBM permits yen and yuan transactions

The Central Bank of Myanmar (CBM) officially introduced Japanese yen and Chinese yuan as settlement options for banks in cross border payments and transfers.
With the aim of facilitating border trade, the CBM’s January 30 directive permits banks with Authorised Dealer licenses for foreign exchange to open yen and yuan accounts and settle trades in those currencies. However, opening personal accounts or legal entities in the two foreign currencies are not permitted.
“The objective is for easy settlement when conducting border trades. Local banks can also make transfers among themselves,” said U Pe Myint, senior adviser to CB Bank.
He added that “as China and Japan are strong economies, opening personal accounts in yen and yuan should also have been allowed. However, I think the CBM will allow this in future.”

Source: Myanmar Times

Gov’t takes steps to ease regulations in bid to attract foreign investment

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U Thaung Tun, the Union Minister for Investment and Foreign Economic Relations and the Chairman of the Myanmar Investment Commission, attended the second day of the Invest Myanmar Summit 2019 in Nay Pyi Taw, and re-affirmed plans to establish standard operating procedures (SOPs) and a Land Bank to ease investment procedures.
The setting up of the Ministry of Investment and Foreign Economic Relations, which was formed recently to attract foreign investment, is among the significant changes being made in Myanmar, said the Union Minister.
The ministry’s MyCo System is offering online registration to companies, he added.
He also stressed the important role played by the youth in the Fourth Industrial Revolution, appreciating the aptitude displayed by Myanmar youths who achieved success in the Robot Olympics.
“Myanmar’s enviable geographical location makes the country a strategic place as it is sitting between China and India, and both countries are developing at the highest pace. Understanding the importance of the Belt and Road Initiative, Myanmar is making the necessary investments to improve its infrastructure,” said U Thaung Tun.
When it comes to making and receiving investments, a win-win situation is important for both sides, and all need to work together to achieve it, he said.

Regarding the situation in Rakhine, U Thaung Tun said the Union Government understands the situation in the State and has formed the Central Committee led by the State Counsellor to focus on implementing peace, stability, and development in the state. It has also set up the Union Enterprise for Humanitarian Assistance, Resettlement and Development in Rakhine State (UEHRD), the committee for repatriation and resettlement of displaced people in Rakhine State, and the Rakhine State Advisory Commission led by Dr. Kofi Annan, and is carrying out development works in the state.
Lack of development is one of the main challenges faced by the state, and it is important to work for the development of the state rather than trading blame, he said.
The Union Minister also praised the investors in Rakhine State, especially in the agriculture, production, education and health sectors, and called attention to the Investment Forum in Rakhine State, which will be held next month.

Source: Global New Light of Myanmar

Govt to take action against improper trade documentation

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The Ministry of Commerce says it will now be taking action against individuals or companies for the improper preparation of documentation for export and import invoices or sales contracts.

 Such improper documentation includes creating fake invoices or sale contracts, fraudulent data input, illegal transactions and wrongly listing prices and values in invoices or sales contracts with the aim to evade tax.

If such documentation is found after checks, action will be taken according to the re-verification procedures of export/import prices as notified in June last year, the ministry said in a statement.

The companies found to be at fault will face action under the Import-Export Law, the Commercial Tax Law for tax evasion, and also the relevant laws for fraud, the statement added.

Source: Myanmar Times

Only 61 companies are entitled to public offering: DICA

Apart from 61 public listed companies, any business entities have no right to sell shares to the public, according to a statement by Directorate of Investment and Company Administration (DICA). According to DICA’s statement dated October 1, AMATA Holding Public Co., Ltd and Telecom Public Co., Ltd are able to sell shares to the public.

The DICA will also later release the list of additional public companies which have earned rights for public offerings. On August 8, 2017, the DICA announced the names of 55 public companies which can take part in share trading and which are formed in accord with the Myanmar Companies Act. Four additional public companies were also announced on September 17 via the State-owned Mirror Daily.

U Htay Chun, a member of the Security Exchange Supervisory Commission has warned that some companies are enticing the public to buy shares via online mediums with the high-return honeypot. Authorities and others in the industry had issued warning about such suspicious and illegal businesses in the past.

U Aung Naing Oo, Secretary of Myanmar Investment Commission said that under the Myanmar Companies Act, non-public companies have no rights to sell shares to the public. Even public companies which get the nod for the public offering from the MIC can sell shares. There are neatly 300 public companies in Myanmar. Of them, more than 60 can sell shares. The remaining companies are not allowed to sell shares.

Source: Daily Eleven

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