Myanmar opens to foreign investment

Foreign investments can assume sole ownership of Myanmar companies, but only in unrestricted sectors, after President Thein Sein signed the highly anticipated Foreign Investment Law last Friday.

Foreign firms are still required to go into joint ventures with local investors in restricted areas, including manufacturing, services, agriculture, fisheries and livestock. 

“This new breakthrough legislation is expected to be the key for laying a solid foundation for attracting significant foreign investments in coming months and years,” said in a statement investment banking advisory firm Mandalay Capital.

Mandalay Capital is a subsidiary of Silk Road Finance whose asset management arm, Silk Road Management, launched Myanmar’s first ever private equity focused fund.

After a ten month drafting and deliberation process, ten of the President’s recommendations were approved as part of this law. The most significant changes are the removal of a proposal that would have put a cap on joint foreign investments. Now joint venture partners can decide the ownership ratio amongst themselves.

However, the Myanmar Investment Commission (MIC), Myanmar’s investment industry watchdog, received increased powers from the bill. The MIC can now determine the foreign investment levels in joint ventures within the restricted sectors. The previous draft saw foreign investment limits as low as 35 percent in certain sectors but under the new law the MIC can determine whether to allow foreign investment in such projects at all.

Foreign firms may also be entitled to a tax holiday for the first five years of a company’s operations if deemed in the national interest. The news will likely be well received by US firms with Myanmar ambitions, who in July welcomed the US government's easing of Myanmar investment sanctions.

Industry sources say private equity players poised to invest in Myanmar include Leopard Capital, Cube Captial, Link Road Capital Management and Bagan Capital.