Malaysians invest RM6b
in O&G, hospitality sectors in Myanmar
KUALA LUMPUR: Myanmar is rife with business opportunities in the
resource and non resource-based industries as well as domestic markets,
according to speakers at seminar here.
The keynote speakers
were Matrade (Malaysia External Trade Development Corp) Yangon’s marketing
representative M.T. Rajah, Myanmar Vigour managing director U Soe Win and
Myanmar Investment Commission (MIC) member Prof Dr Aung Tun Thet.
Rajah told StarBiz that investments of US$2bil (RM6.2bil) from
Malaysian companies in the hospitality and oil and gas industries had been
injected into the second largest country in South-East Asia, which has a
population of 60 million people of which 5 million are based in Yangdon.
The seminar gave local
investors an overview of the amendments pertaining to companies, joint ventures
and for individuals under the Myanmar Income Tax Law, Commercial Tax Law, Union
of Myanmar Foreign Investment Law (FIL) and latest notifications issued by the
ministry.
“Malaysia is perceived to be competent in high-tech industries and
manufacturing quality products, so this opens us to big local markets that have
yet to be saturated,” Rajah said.
Myanmar is rich in
natural resources but challenges in this cash-based, underdeveloped nation mean
poor infrastructure, high land premiums and rents, power shortages, no
financing facilities offered by local banks and untrained labour.
The speakers encouraged
investors to take advantage of the low but growing wages.
“We’re looking at
substantial investments toward the power, electricity generation and mining
industries that will stay for the long haul. These are billions of dollars
worth in resources,” he said.
The seminar outlined
that foreigners can run businesses with Myanmar via foreign direct investments
(FDIs) or joint ventures and that land acquisition by foreigners was
prohibited.
Currently, demand is
higher than supply so investors will have to put up with high lease fees.
The MIC has been formed
under the FIL for governance.
FDIs that are not
registered with the MIC will not benefit from tax incentives, receive a licence
to import, nor receive the covering of the FIL, which entails employment
requirements, dispute resolution and tax incentives.
Dr Aung listed further opportunities in industries such as
transportation, energy, food security and physical infrastructure.
“We have huge projects
in place such as the Dawei Dee Seaport in Kyauk Phyu (on the country’s west
coast),” he said, adding that their government would welcome all businesses
that edify its economy.
“We cannot afford to
repeat past mistakes, where we allowed investors to leave in a hurry with their
gains. In our quest to attract FDIs, we cannot ignore the political
sensitivities as we need to protect the domestic interest. This is the
challenge we face.”
Agriculture, livestock
and breeding, as well as marine fisheries are among 11 restricted activities as
stated in the FIL issued last November.
“We welcome investors,
but we must be discretionary about sectors that benefit the citizens. It will
be case-to-case. Ultimately, we will not have Myanmar a guinea pig for untested
businesses,” Aung said.
Income tax for
non-resident companies start at 35%, while corporate gains tax has increased
from 10% to 40%.
The Double Taxation
Agreement (DTA) treaty between Myanmar and Malaysia has yet to be activated,
although it has been firmed up for Singapore, India, Vietnam, South Korea,
Thailand and the UK.
PricewaterhouseCoopers
Tax Services executive director Pauline Lum, who also spoke at the talk, urged
investors to review their business structure, implementation strategies and
repatriation processes.
“Many charge in without
a wholistic perspective of the scenario in Myanmar. Likewise with foreign
investors who start business in Malaysia,” she said.
“Look at legal form incentives,
environmental issue upon entry into Myanmar. When exiting, consider the
exchange controls, repatriation and regulations.”
Source: The star
Date: 27 February 2013
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