BRIEFING ON THE LOGISTICS SERVICE AND TIPS ON.

Transcription

1 BRIEFING ON THE LOGISTICS SERVICE AND TIPS ON RUNNING FACTORIES IN MYANMAR Aung Khin Myint com

2 Policy and Economic Landscape in Myanmar 2015 Kyaukphyu SEZ - to be developed AEC and AFTA SEA GAMES 2013 ASEAN Chairman ship 2014 Thilawa SEZ - in the process Dawei SEZbeing developed

3 Building up Myanmar s connectivity in the region Myanmar has a total of nine ports catering mainly for its seaborne and coastal trade; spreading over 2228km of coastline. Current cargo flow of 300, TEU, 16.7 million tons, largely flow through Yangon ports, which have: o Infrastructure to support larger vessels o 47miles (75 km) to the river mouth o Yangon Port SEZ (Special Economic Zone) o 13 existing industrial zones o Strong garment / apparel manufacturing, with comparatively low wage rates

4 India, China, Japan, and Thiland Infrastructure investments in Myanmar India CHINA India started to develop port at Sittwe This will open a gateway from northeastern part of India & link to a sea line through Kaladan River & Sittwe Port Sittwe Kyauk Phyu Yangon Port Thilawa Thailand Laos China developing deep sea port & transportation connectivity at Kyauk Phyu Japan Interested in investing in port & industrial complex at Thilawa S. Korea & Japan are investing in Thilawa Special Economic Zones (SEZs) Thailand developing deep sea port & industrial zones in Dawei. This will create new alternative international trade route other than the present maritime route through the Malacca Strait 4

5 Yangon Former call as Rangoon Gate way to Myanmar

6 AWPT Yangon Inner Harbour Area HOB BSW - 3 Wharf MIP - 2 Wharf NANDHIDAR - 1 Wharf AWPT - 3 Wharf SPW - 7 Wharf HOB - 1 Wharf (Fuel Loading/Unloading) TOTAL Existing Port/Terminals 17 Nos ICD I & II 6

7 Location Map for Future Port Development at Yangon Inner Harbour Area HOB AWPT Expected Area for Development of International Port/Terminals Existing Port/Terminals Yangon Terminal - 17 wharves Thilawa Terminal - 6 wharves Total - 23 wharves ICD I & II 7

8 Terminals & Feeders along Yangon River AWPT MIP BSW ICD1&2 New Bridge Existing Bridge MITT AWPT (Asia World Port Terminal) ACL Samudera China Shipping IAL Intra Asia Line TS Line MIP (Myanmar Industrial Port) KMA Khin Maung Aye shipping RCL Express Feeders (pending) OOCL (pending) MITT (Myanmar Int l Terminal Thilawa) OEL PACC Evergreen (pending) 8 BSW (Bo Aung Gyaw Street Wharf) MFSL LAN PYI Ever Flow River/EFR

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12 Top Commodities traded in Myanmar ( ) Heavily dependent d on the energy and mineral sector 55% of exports by value. Top 10 Exports No Items Value (US$ mil) 1 Natural Gas 2,522 2 Minerals 2,204 3 Matpe Bean Garment Fish Rubber Teak klog Green Mung Bean Hardwood Log Rice 194 Source: Myanmar Ministry of Commerce 55% Approx. 4% Top 10 Imports No Items Value (US$ mil) 1 Petroleum Products 1,462 2 Machinery Spare Parts Iron & Steel Construction 430 materials 4 Plastic Raw Materials Palm Oil Vehicles & Spare Parts Pharmaceuticals Ships, Boats Cement Fertilizers

13 Main Export categories in ( with container) (by TEU) Type of Commodity Bean Yll Yellow Maze Sesame % Rice 40% Timber Timber (other) Garment Sea Food Rubber Others Empty 5% Total % 7% TEU py

14 Main Export categories in (in Tons) 201,813, 7% 179,567 7% 217,938 8% Rice 182,476 1,439,013 54% Type of Commodity Bean Yellow Maze Ton 1,439, ,476 Sesame 41,926 Ri 133,318 Timber 148,214 Timber (other) 42,060 Garment 61,131 Sea Food 217,938 Rubber 36,416 Others 201,813 Empty Total 179,

15 Main Import categories in ( with container) 78,937 38% (by TEU) Type of Commodity 23,478, Garment 11% Electronic goods Car & accessories Paper Tyre Foods stuff Construction materials Plastics Medicine Engine oils Cement Other Empty 22,485, 11% Total TEU 9,134 15,087 23, ,880 4,068 17,980 22, ,132 4,219 3, , , ,982

16 Main Import categories in (by Tons) 1,449,997 49% 343,288 11% 443, % Type of Commodity Garment Electronic goods Car & accessories Paper Tyre Foods stuff Construction materials Plastics Medicine Engine oils Cement Other Empty Ton 70, , , ,901 34, , , ,423 53,240 61,525 11,697 1,449,997 31, Total 2,986,893

17 STATUS OF FREIGHT RATE (OUTBOUND FREIGHT-USD) 17

18 STATUS OF FREIGHT RATE (INBOUND FREIGHT-USD) 18

19 Air Myanmar has just structured a framework for its National Air Transport Policy and is now preparing to formulate the comprehensive and transparent National Air Transport Policy. As tourism is one of the major assets of any country in terms of foreign exchange earnings, trade and business, and Myanmar has a tremendous potential to become a major tourist destination in South-East Asia, it is progressively liberalizing its air transport relations with other states, in order to develop tourism. To date, Myanmar has a total of forty-six bilateral air services agreements some of which have been liberalized to varying degrees in such area as ownership criteria, designation of airlines, routes and traffic rights. In addition to concluding the bilateral air services agreements, Myanmar has signed and ratified the ASEAN Multilateral Agreement on the Full Liberalization of Air Freight Services, the ASEAN Multilateral Agreement on Air Services, the ASEAN Multilateral Agreement on the Full Liberalization of Passenger Air Services and each of their implementing protocols as a member state of the ASEAN.

20 AIR Today Myanmar has six national airlines, Myanma Airways, Yangon Airways and Air Mandalay, Air Bagan, Asian Wings Airways and Air KBZ, which are operating twenty-seven domestic destinations with F 28, F 100, ATR 72, ATR 42 and MA 60 aircrafts. Myanmar is now using 32 airports out of a total of its 69 airports. Of these, three are opened as international airports, Yangon International Airport, Mandalay International Airport and Nay Pyi Taw International Airport, while the others are used as domestic airports. Yangon International Airport at Yangon, the commercial capital of Myanmar, is the main gateway to Myanmar. A new international passenger terminal building at Yangon International Airport was opened in May 2007 and is capable of handling 2.7 million passengers a year. Mandalay International Airport was opened in September 2000 near Mandalay, the cultural capital of Myanmar and is a modern airport with passenger terminal facilities capable of handling 3 million passengers a year. Nay Pyi Taw International Airport, the newest international airport of Myanmar, was opened on 19 December 2011 after completion of phase (1) of its three-phase construction project. It is located about 17 km south of Nay Pyi Taw, the administrative capital of Myanmar and is intended to serve the capital. It is a world-class airport with adequate passenger terminal facilities capable of handling 3.5 million passengers a year.

21 The number of passenger and freight movement at Yangon International Airport over the last 5 Years Year Passenger Total % -4.68% % % % Freight Total % % +9.89% % +1.91%

22 Rail Transport System Myanmar Railway system is under public administration. Nowadays, containers transportation services are offered and available for Yangon to Mandalay by Myanmar Railway service.

23 RAIL s States and Regions Route Mileage and Station Region Area (Sq.Mile) No. of Station Route Mile Ayeyarwaddy Region 13, Bago Region 15, Chin State 13, Kachin State 34, Karen State 11, Kayah State 4, Magway Region 17, Mandalay Region 14, Mon State 4, Rakhaing State 14, Sagaing Region 36, Shan State 60, Taninthayi Region 16, Yangon Region 3, Total : - 261,

24 Rail routes of Myanmar

25 FREIGHT TRAFFIC Classification Year Tons Carried (in Million) Ton/Day (in thousand) Ton Miles (in Million) Avg: Lead Miles/Tons

26 Commodities FREIGHT TONNAGE (In Thousand) Fiscal Year Rice and Rice Products Sugar Cane Forest Products Pulses and Beans Other Agricultural Products Coal & Coke Oil Mine Products Stone Salt Military. Others Departmental Parcels Other Parcels Total

27 Commodities FREIGHT TON-MILES (In Thousand) Fiscal Year Rice and Rice Products Suger Cane Forest Products Pulses and Beans Other Agricultural Products Coal & Coke Oil Mine Products Stone Salt Military. Others Departmental Parcels Other Parcels Total

28 Mandalay Rail Station

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31 Truck to Rail

32 ROAD Current Payload of Local Cargo Truck

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37 Operating Cost The general operating costs dependonthe route. The variable costs -fuel/lube/tires make up on average around 85% of all operating costs. The Yangon-Mandalay route (1,500 km round trip) flat terrain (roundtrip fuel costs of around USD 450). The Yangon-Muse trip (2,400 km round trip) (round trip fuel costs of USD 800). Wages of Drivers/Assistant Drivers along the NSC Driver / Assistant Driver Yangon-Mandalay Yangon-Muse 12-wheeler USD 60 / USD 30 USD 120 / USD wheeler USD 120 / USD 60 USD 240 / USD 120 Toll fees amount to around USD 0.11/0.09 per km for a 12-wheeler/10-wheeler truck with a load of 25 tons/21 tons, which is around USD 200(170000Kyats) on a 2,000 km trip. (140 kyats/mile) Yangon-Muse Fuel 800+Driver and helper 180+ toll 200=Total 1180 US$( Kyats).

38 Inland Waterway Transport System Ayeyarwaddy and Chindwin are the main rivers 218 inland waterways ports Can be used all seasons Maximum drafts port are about 4.5 ft to 5.55 ft. No proper terminals to handle containers for intermodal transportation at the inland waterways. Not only national transport but also regional t t

39 Truck to Inland Waterway

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43 Globalization

44 Transportation mode Supply chain Transport Transport Transport Transport Logistics Logistics Logistics Logistics Suppliers Manufacturers Wholesalers Retailers Consumers

45 Logistics - Science of managing (controlling) the movement and storage of goods (or people) from acquisition to consumption. Goods: Raw Materials Final products, and everything in between. Logistics for services & people similar to goods logistics. Ex. Police, fire, ambulance, passenger airlines, taxi cabs, etc. Movement = Transportation ti (between locations). Storage = Inventory, Warehousing (at locations). Difference between acquisition and consumption is a matter of space and time. Focus: Best way to overcome space and time that separates acquisition and consumption. NOTE: Logistics does not deal with Technology of Production, such as the design of machines and vehicles and the design of finished products.

46 Issues related ed to logistics The Five RIGHTS of Logistics

47 Logistics FUNCTIONS TRANSPORT Transport CONTENTS long trip, line haul, traffic function, one to one Pick Up ik short trip, area access function many to one Delivery STORAGE AND DEPOSIT Storage short trip, area, ingress function, one to many Longtime inventory Deposit Short time inventory Assembling Handling Processing Assembling Packaging, Wrapping Packaging Wrapping Cargo Handling Loading Unloading Handling Information Physical Distribution Check, Sorting, stock, picking, allotment Construction, Slice, Cutting, Measurement Pricetagging tagging, Unitization, Packing For transport and inventory For marketing From facility to transport mode From transport mode to facility Replacement, reshipment, material handling Quantity control: cargo tracing, inventory control Quality control: temperature, humidity Handling management: sorting machine, picking system Commercial Trade Placing and receiving order: POS,EOS,VAN,EDI Financing: banking on line, EDI

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49 East Asia & Pacific

50 Logistics Performance Index

51 High Income Country

52 Domestics LPI

53 How logistics professionals assess institutions and processes Concerned about the quality of telecommunications and IT infrastructure Concerned about the quality of the physical transport infrastructure (ports, roads, warehouses) Satisfied with customs Satisfied with other border government agencies Satisfied with private logistics services Concerned with frequent solicitation of informal payment Satisfied with transparency of border processes Imports cleared and delivered as scheduled

54 ASEAN Logistics Development Study

55 Measuring Regulatory Restrictions in Logistics Services Examples of restrictions on (and definitions of) logistics services Restriction Description of restriction Customs documentation Customs broker Submit import/export documentation at the customs border of the respective economy. Limitations on a person or firm, licensed by the treasury department of their country when required, to engaged in entering and clearing goods through Customs for a client (importer). Electronic Data Interface (EDI) Generic term for transmission of transaction data between computer systems. EDI is typically via a batched transmission, usually conforming to consistent standards. Harmonized System (HS) Codes An international goods classification system for describing cargo in international trade under a single commodity-coding scheme. DMii DeMinimis i level l The threshold value for waiver of duty on imported goods below which the tax will not be collected. Local employment requirements Cabotage Regulations that require firms to hire local labor for their operations. Restrictions that restrict the domestic movement of cargo or persons by a foreign service supplier, and applies to maritime, aviation and road transport services. Fifth freedom rights Commercial aviation rights granting ga country's airlines the privilege to enter and land in another country's airspace. Cargo reservation laws Freight forwarder Cargo-handling g Hours of operation Restrictions on foreign direct investment Policies that constrain the type of cargoes that may be carriers by the carriers. A person whose business is to act as an agent on behalf of the shipper. A freight forwarder frequently makes the booking reservation. Policies that restrict the loading and discharging of cargo off and on a ship, plane or truck. Restrictions that prohibit operation on certain days of a week or hours of the day. Government regulation that impedes foreign firms from investing locally. This regulation prohibits any foreign direct investment or limits foreign direct investment to a maximum proportion.

56 Logistics sector restrictiveness index Customs Customs documents Investment Movement of People Maritime Transport Aviation Transport Road Transport Customs signatures Equipment Commercial presence Licensing requirements on Cabotage restrictions Take off and landing slots Import licensing usage management Foreign equity participation Cargo reservation Ground handling Customs inspections Movement of people p Permanent Hours of Licensing Cargo handling Cargo handling and operation Import restrictions Movement of people Temporary warehousing Discriminatory licensing Storage and warehousing Customs Electronic Data Interchange Local employment requirements Foreign investment in Factors affecting investment Container station and depot domestic airlines Harmonized Commodity Description and Coding System Difficulty in firing services Possibility of a review Open skies agreement General competition Customs operating hours legislation Seventh freedom rights Customs brokerage services Monopolized handling of Cabotage restrictions port related services Customs clearance Multiple designation on international routes Customs procedures time Customs charges or fees Improper penalties or fees Discriminatory fees or inspection practices DeMinimis level

57 Restrictiveness indices for ASEAN+6 economies Domest Foreign Australia Brunei Darussalam Cambodia China India Indonesia Japan an Korea, Rep p. Laos Malaysia Myanmar ar New Zealand Philippines Singapore Thailand Vietnam Countr

58 Economic impact of bottlenecks in business processes of cross border trade Each additional day of delay (e.g. because of trade logistics procedures) reduces trade by at least 1% Source: Simeon Djankov, Caroline Freund, and Cong S. Pham. (2007). Trading on Time. Washington, D.C.: World Bank. Direct and Indirect Cost from import/export-related procedures and required documents is about 1-15% of product cost. Source: OECD. (2003). Quantitative Assessment of the Benefits of Trade Facilitation. Paris: OECD Publications 58

59 Some countries are easier & faster to trade, but some countries are more difficult to trade with. Complications in terms of required documents and procedures, and time for exporting a standardized container of goods (regional averages) As an example, the average time to export from OECD high-income income countries is about 3 times faster than the average in South Asia & Sub-Saharan Africa countries Organisation for Economic Co-operation (20 Countries)

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61 Toward Improvement of Logistics performance Efforts by both public and private sectors in collaboration is needed for improvement of logistics performance. Improvement of Average Speed Maintenance and development of hard infrastructure Simplify export & import procedures, etc. --Improvement by public sector Time Quality Improvement of Transport Quality Maintenance and development of hard infrastructure HRD in logistics related officers HRD in logistics related staffs (Genba Kaizen), etc. -Improvement by public & private sector Improvement of Cost per Ton Kilometer Building up institutional/legal framework Encourage a competitive environment Improvement of Logistics management skills, etc Improvement by both public and private sector Cost

62 GRAND OBJECTIVE NATIONAL LOGISTICS COMMITTEES GOVERNMEN T LOGISTICS ASSOCIATION LOGISTICS COMPANIES Cooperation three parties isrequired and they must have specific skills and knowledge GOVERNMENT ASSOCIATION companies In charge of Logistics Obtaining of Law and Policy Drafting skills Obtaining of Management and Administration of Organization Obtaining of Management Administration of the Company and Logistics operation

63 Freight Policy Policies to improve freight movement -Freight corridor planning Integrated across and between modes, holistic view Where located in government? -Performance measures What to monitor for speed, reliability, safety, security Data available? At what cost? - Safety -Environmental issues Source: U.SDepartment of Commerce I Intemotional Trade Administration

64 More Freight Policy Options within freight policy planning o Improved and predictable processes for regulatory processes, environmental reviews, and other decisions o Expanded coordination among local, state and division governments Concrete support for trade performance o Policy as part of a value-chain approach to supply chain - from port to end user o Trade missions, role of transit traffic in corridor planning o Related to strong trade and freight growth projections for next 25 years

65 Policy Developments Key supply chain-related requirements: o Development and Implementation of a National Freight Policy o Designation of a National Freight Network (within one year) o Creation of National Freight Strategic Plan (within three years) Plan will be national, intermodal o Prioritizes new projects that improve freight movement

66 Myanmar Legal Framework English Common Law System Constitution of 2008 o Promulgated in 2008 o Effected on 31 Mar 2011 Legislature o 440 seat People s Parliament and 224 seat National Parliament Judiciary i o Key judicial principles in the absence of specific nature o Basic court structure 66 Executive Branch o Union Government o Region/State Government 66

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68 Operators Classification of operators (UNESCAP) Freight forwarders, Main Functions NVOCCs and MTOs are often defined differently Freight forwarder means in the different person or company, countries. as an agent, concluding a contract Freight Forwarder with a customer on freight forwarding services relating to the carriage, consolidation, storage, handling, packing or distribution of the goods as well as ancillary and advisory services in connection therewith. NVOCC MTO A NVOCC arranges transport of goods as a carrier and issues own bills of lading or equivalent document but does not own or operate a major means of transport. MYANMAR Multimodal transport operator means any person who on his own behalf or through another person acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who assumes responsibility for the performance of the contract.

69 Relevant rules and regulations on different operators Operator Responsible Applicable regulations government agency Freight forwarder International Domestics Ministry of Transport NVOCC International Ministry of Transport MTO ASEAN Ministry of Transport Shipping International Domestics Ministry of Transport Air Transport International Domestics Ministry of Transport Road Transport Domestics CBTA, Inter state Ministry of Rails Rail Transport Domestics Ministry of Rails Road & Bridge Domestics Ministry of Construction Construction Logistics ASEAN Ministry of Transport

70 Overview of regulations for freight forwarders Country Government regulation Industry self-regulation Bangladesh YES YES China YES YES Indonesia YES YES Philippines YES YES Republic of Korea YES YES India NO YES Lao PDR NO YES Myanmar NO YES Singapore NO YES Thailand NO YES

71 Minimum capital requirement for freight forwarders and/or MTOs vis-a-vis national minimum i capital requirement for general business Country Co set up FF Asso: Member NVOCC MTO Assets Capital Singapore 0.8 US$ US$ 79,264 min China US$ 123,617deposit Thai US $ 65,833 min Myanmar 50000US$ nil nil US$ 128,280 ASEAN US$ 128,280 Myanmar 100% Foreign own Service company allowed

72 Models for regulatory framework for freight forwarders, NVOCCs and MTOs Model 1: industry self regulation Model 2: licensing Model 3: registration/filing There is no government regulation exclusively designated for freight forwarders, NVOCCs and MTOs and the industry relies on self regulation through association There is government regulation and licenses are required There is government regulation, and licenses are not required, but registration/filing is required

73 MIFFA BACKGROUND Myanmar International Freight Forwarder s Association Non-Profit Organization in Myanmar Formed and organized the local freight forwarders MIFFA consists (96) Regular members and ( 65 ) Associate members. Member of FIATA, AFFA, GMS FRETA, UMFCCI MIFFA Private Company Limited 2013

74 Logistics training center UNESCAP FOUNDATION COURSE Module 1. Trade & Transport Linkage Module 2. International Sale Transaction and Documentary Credit Module3. Introduction to INCOTERM Module 4. Transport Document Module 5. Plan Execute on Export Shipment Module 6. The evolution role of Freight Forwarders Module 7. Concept of Logistics and Supply Chain Module 8. Cargo Packaging Module 9. Unitization and carriage of DG Module 10. Selecting & Assessing Transport Route Module 11. Multimodal Transport Operation. Module 12. The Scope of Liabilities Module 13. Risk Management & Insurance

75 Japan s Program for Improving Efficiency of Logistics and Distribution of the East West Economic Corridor and the Southern Economic Corridor Pilot Training For Training of Trainers in Hanoi, Vietnam Training Curriculums for Logistics Service Providers Module 1. Five S Activities Module 2. The Concept of Logistics Module 3. Material for Packaging Introductory Training Module 4. Truck Terminals Module 5. Inland Clearance Depot for Distribution/Logistics Center Module d l 6. Cross Boarder Transport Module 7. Risk Management System to Enhance Safety Module 8. Truck Operation ( including practical training ) Module 9. Forklift Module 10. Warehouse

76 Details of the Financial Sector Types Number Network State-owned t banks branches Domestic private banks branches State-owned insurance 1 38 branches Private-owned leasing company. 1 - (subsidiary of Myanmar Oriental Bank) Myanmar Securities Exchange Co. 1 Ltd. (MSEC) (50-50 JV between MEB and Daiwa, Japan.) Microfinance Institutions branches Source: Central Bank of Myanmar

77 State-owned Banks ( ) Details MEB MFTB MICB MADB Branches ( ) Correspondent banks 46 banks in 13 countries 268 banks in 52 countries 174 banks in 31 countries - Types of products and services Commercial Banking (Domestic) Commercial Banking (Foreign) Commercial Banking (Domestic & Foreign) Lending to agriculture sector Source: Central Bank of Myanmar Assets (billion kyats) 77

78 Private Banks No. Banks Assets (kyats in mil) Branches ( ) Branches ( ) 1. Myanmar Citizens Bank 40, First Private Bank 98, Cooperative Bank 563, Yadanabon Bank 10, Myawaddy Bank 732, Yangon City Bank 33, Yoma Bank 32, Myanmar Oriental Bank 103, Asia Yangon Bank 1, Tun Foundation Bank 58, Kanbawza Bank 1,774, MIDB 118, MLFDB 397, Sibin Tharyar Yay Bank 119, Innwa Bank 245, Asia Green Development Bank 209, Ayeyarwady Bank 197, United Amara Bank 112, Myanma Apex Bank 275, Total 5,126, Source: Central Bank of Myanmar 78

79 Foreign Banks Representative offices Initially foreign banks are allowed to open representative offices which may work only as liaison offices. To date, eighteen Representative ti offices have been opened in Yangon. These are: 1. DBS Bank Ltd., 10. CIMB Bank Berhad, 2. United Overseas Bank Ltd., 3. Overseas-Chinese Banking Corporation Ltd., 4. Malayan Banking Berhad (MAYBANK) Malaysia, 5. Bangkok Bank Public Company Ltd., 6. National Bank Ltd., 7. Brunei Investment Bank (BIB), 8. First Overseas Bank Ltd., 9. First Commercial Bank Singapore Branch, 11. Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi-UFJ Ltd., Bank for Investment and Development of Vietnam, 14. AB Bank Ltd., 15. Industrial and Commercial Bank of China Ltd., 16. Mizuho Corporate Bank Ltd., 17. Siam Commercial Bank Public Co., Ltd., 18. MARUHAN Japan Bank PLC. 79

80 Myanmar Labour Framework Myanmar Labour Laws, which is minimum Myanmar does not have legislated minimum wage levels There is no SocialSecuritySecurity Schemesunder the SocialSecuritySecurity Act, 1954 There is no statutory fixed notice period for employment contract termination o Usually one month only There is a minimum severance pay of between one to five months depending on length of service 80 80

81 Myanmar Foreign Investment Framework A. How do we know if any specific industry/sector is open to FDI? 1. Reserved Industries are listed in the State Owned Economic Enterprises Law of 1989 ( SOEEL ) 2. There are 12 industries/sectors listed in the SOEEL In theory, those industries outside the 12 can be wholly owned by any foreign organization. However; i. Myanmar Government may, through regulation/notification, include or exclude any industries/sectors from the Reserved list ii. Trading activities iti are only permissible ibl to Myanmar national and companies wholly owned by Myanmar nationals iii. Projects that involves manufacturing/industrial, require the use of land and/or seeks fiscal exemptions will need approval of Myanmar Investment Commission (MIC) under the Foreign Investment Law Investments into Service industries can be established via the Companies Registration Office and under the Myanmar Companies Act 81

82 Myanmar Foreign Investment Framework B. The 12 industries/sectors listed in the SOEEL: Extraction and Sale of Teak 2. Forest Plantation 3. Exploration, extraction and sale of Petroleum and Natural Gas, its by products and the production included 4. Exploration, extraction and export of Jade, Pearl and Precious Stones 5. Certain kinds of breeding and production of Fish and Prawn 6. Postal and Telecommunication services 7. Air and Railway transportation services 8. Banking and Insurance services 9. Broadcasting and Television services 10. Exploration, extraction and export of metals 11. Electricity Generation services 12. Manufacturing of products relating to Security and Defense Investment in these industries are only possible with explicit approval from the Myanmar government and through JV or collaboration with state enterprises 82

83 Myanmar Industries with foreign interest Oil & Gas industries* Power Generation* (Sembawang and Keppel Corp) Commodity Mining Food Processing (Tiger Breweries) Tourism and Hotels Transportation and Communications Light Manufacturing (Apparels, Footwear, Agri commodity processing) Industrial Zone Management and Construction 83 * Refers to active government effort to attract FDI 83

84 Location of Dry Port in future Mandalay

85 Investment Laws The Union of Myanmar Foreign Investment Law (FIL) was enacted on 30 November 1988 and the parliament has approved a new foreign investment law on 2 nd November The Foreign Investment Law (The Pyidaungsu Hluttaw Law No. 21/2012) The 3 rd Waning of Thadingyut, 1374 M.E. 2 nd November 2012

86 Investment Law Chapter V- Forms of Investment 2 A Citizen Or 1 The relevant Government department and Organization Joint Venture 100% Foreign Owned The Ratio of foreign capital and citizen capital may be Any System prescribed in accord with the approval of both parties. Contained in the Mutually Agreed If JV in PROHIBITED and RESTRICTED business, propose the ratio Contract t of Foreign capital NOT MORE THAN 80%. (Rules para 20). or MIC Notification No(1/2013) BOT, BTO, PPP (rules) 3

87 FDI MIC permit Concerned Ministry Submit direct for Natural Resource UNION GOVERNMENT Promoter 1. Prepare Proposal Fill Application Form 1 with 21 facts Land Lease Contract (Draft) Agreement Contract (Draft) (if JV) Requirement not met. MIC Office MIC Corresponding Division (or)state Government Reply within 15 days Reviews accuracy & Completeness 2. Submit Proposal By Checking committee (from 10 Ministry) once a week Collect all Proposal APPROVAL 3. Proceed to Commission Requirement met. 4. Accept (or) Refuse PROPOSAL 6. Scrutinized the proposal Accept Proposal with Application Scrutinized the Case No Yes Forest Ministry Environment Department If not, What is the process here? Can they appeal? No Systematic confirmation That there will be No major environmental and social damage Yes 5. Reply comments within a week Notify to nearest commission meeting No Yes Concerned Ministries Scrutinized the Case 7. Issue Permit Perform within 90 days

88 14. For the benefit of the Union and citizens especially for the benefit of the ethnic groups of the Union, Commission shall examine based on the following criteria when the foreign investor has proposed to invest in the businesses which are restricted ti t or prohibited: (a) feedback of the native people or social organizations upon the proposed investment; (b) recommendations of the concern administrative bodies for the proposed investment; (c) recommendations from the Nay Pyi Taw Council or government of concern region or state depends on the proposed location;

89 Myanmar Investment Commission Notification No. (1/2013) January 31, 2013 Designation of Economic Activities By Categories 1. List of Economic Activities Under Prohibition For Transport ONLY Aviation Services; Marine Navigation Services; 2. List of Economic Activities Permitted only for JV with Citizens 35. Local Airline Service Industry; 36. International Airline Service Industry; 37. Shipping Industry both for passengers and cargo;38. Ship building and ship repairing at the shipyards; 39. Inland water port service by constructing dry port and warehouses ; 40. Production of locomotives; 3. List of Economic Activities Permitted only under special condition 1.recommendations of relevant Ministry, 2.permitted with other conditions, 3. required for assessment of Negative Impact for Environment conservation)

90 3. List of Economic Activities Permitted only under special condition 1.recommendations of relevant Ministry, Shall get approval from Union Government and recommendation from Ministry of Transport. Investment business for airport construction and VIP lounge service Civil Aviation Training Service Aircraft maintenance service Air Transport Service and marketing service Air ticketing service by computer network Aircraft leasing service without crews Aircraft leasing service with crews Air cargo transportation service Air cargo handling service

91 Shall get approval from Union Government and recommendation from Ministry of Transport. Production and distribution for airline Catering service Aircraft fuel distribution service to the airlines Aircraft minor inspection and maintenance service Ground supporting service at the airport during the flight landing, transit and take off. Passengers baggage supporting service Passenger service during arrival and departure Passenger service during arrival and departure Airport Hotel Business Selling and marketing of aircraft spare parts Establishment of Marine Technological Training Institute Agency service for Trans Ocean Liners Shipyard Business related with inland water transport at the places owned by Department of Inland Water Transport Other related businesses and construction of buildings

92 3. List of Economic Activities Permitted only under special condition 2.permitted with other conditions, Warehousing Not allow for Small and Medium Size Warehouses. Under the Joint Venture form, local share shall be minimum 40%

93 List of Economic Activities Permitted only under special condition 3. required for assessment of Negative Impact for Environment conservation) NIL

94 Mandalay Merchandise Center Merchandise Center Shop house(30 x80 ) 160 Nos Shop house(60 x40 ) 34 Nos Ware House(60 x80 ) 236 Nos Extra Block 13 Nos Landscape 1 Nos Total 346 Total Area sq-ft Acre

95 Invite investment

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