On Friday, Burma’s Pyidaungsu Hluttaw (joint sitting of both houses of Parliament) passed the much anticipated Foreign Investment Law.
The new law comes into effect a day after the bill was authorized following amendments by President Thein Sein.
The new Foreign Investment Law replaces a 1988 version, and is designed to attract foreign businesses in the wake of a lifting of economic sanctions by the US and the EU.
The 20-chapter law states that foreigners can make full investment in undertakings permitted by the Myanmar Investment Commission (MIC), which will designate the minimum amount of the investment capital with the consent of the government.
The law essentially allows joint venture operations between foreigners and local citizens, governments or organizations.
As per Section 31 of the new law, land use rights may be granted to foreign investors depending on: the duration of the business; whether it is a manufacturing industry; or the amount of their investment.
The new law seeks to provide guarantees to foreign investors in Chapter 13, stating that the Union Government will not nationalize foreign businesses nor terminate them before the expiry of the contracted period without giving adequate reasons.
Restrictions on foreign investment are effected in several sectors, most notably those where local citizens should be able to carry out all levels of production, such as some service sectors, agriculture, livestock breeding, and fishing.
Chapter 14 states that foreign investors can conduct agricultural and livestock businesses on a contract basis, but only in joint ventures with national investors.
The law requires that only Burmese citizens can be employed in businesses where no skill is demanded, while in those areas which require a special skill, at least 25 percent of the employees must be Burmese for the initial two years of operations, 50 percent for the subsequent two years, and 75 percent for the third period of two years.
In addition, foreign employers have a responsibility to train local skilled employees and to upgrade their skills, the new law states.