1. Submitting a Proposal
A promoter must submit a proposal in the prescribed form, enclosing the following documents, to the Foreign Investment Commission:-
(i) Documents in support of the investor's financial credibility (audited final accounts of the most recent year of the person or firm intending to make the investment).
(ii) Bank recommendation regarding business standing.
(iii) Detailed calculation relating to economic justification of the proposed project indicating, inter alia, estimated annual net profit; estimated annual foreign exchange earnings or savings as well as foreign exchange requirements for the operation; recoupment period; prospects of new employment; prospects of increased national income; local and foreign market conditions and distribution.
(iv) If it is a firm, limited company or joint-venture of any kind, a draft contract to be entered into between the foreign investor and the local counterpart.
(v) If it is a limited company or a joint-venture in the form of a limited company, draft Memorandum and Articles of Association.
A promoter must state the following particulars (some of which will by definition be comprised within the documents referred to above) in submitting a proposal. As you will see the requirements are very extensive and all encompassing:-
(a) name of promoter, citizenship, address, place of business, place of incorporation, type of business;
(b) if the investment is to be made by a joint-venture, the particulars mentioned in (a) above in respect of each the persons wishing to participate in the joint-venture;
(c) evidence in support of (a) and (b) above;
(d) commercial and financial references of the promoter or persons wishing to participate in the joint-venture;
(e) particulars relating to the production or services enterprises in which investment is to be made;
(f) intended form of organisation in which investment is to be made in the State;
(g) if a partnership is to be formed, draft partnership agreement, the ratio and amount of capital to be contributed by the partners, the profit sharing ratio and the rights and liabilities of the partners;
(h) if a limited company is to be formed, draft contract, draft of the Memorandum of Association and Articles of Association, authorised capital of the company, types of shares, the number of shares to be subscribed by the shareholders;
(i) name, citizenship, address and designation of the executives of the organisation in which investment is to be made;
(j) the total capital of the organisation in which investment is to be made, the ratio of local and foreign capital, total amount of foreign capital to be brought into the State, the value of the various types of foreign capital and the period within which such foreign capital is to be brought in;
(k) the intended term of investment, the period of construction;
(l) place or places in the State where investment is to be made;
(m) techniques and systems to be used in the production and sale;
(n) the type and quantum of energy to be used;
(o) the quantity and value of the main machinery equipment, raw materials and similar materials required to be used during the period of construction;
(p) the type and area of land required;
(q) the volume and value of annual production of the enterprise and volume and value of services;
(r) annual requirement of foreign exchange to carry on the business and the estimated amount of foreign exchange earnings;
(s) the volume and value of goods to be sold locally and abroad annually;
(t) the number, category and tenure of personnel required locally and from abroad;
(u) economic justification.
7. An application containing the above particulars is to be made in the Application for Foreign Investment Permit and to be signed in person by the promoter and submitted.
8. If it is an economic enterprise in which one hundred per cent foreign capital is brought in to the State and invested, the promoter must submit with the application a draft contract to be executed with an organisation determined by the Ministry concerned.
2. Scrutiny of the Proposal
9. The Commission will scrutinise the financial credibility of the proposal in the following manner:-
(a) where necessary, by examining the audited annual final accounts of the entity which will bring in foreign capital;
(b) by requiring the Myanmar Foreign Trade Bank to make enquiries through its foreign correspondent banks regarding the business standing of the entity which will bring in foreign capital;
(c) by requiring supporting evidence and scrutinising the same, in particular as to whether any citizen subscribing capital actually has sufficient capital for that purpose or not.
The Commission will examine the following particulars in relation to the economic justification of an enterprise in which investment is to be made:-
(a) estimated annual net profit;
(b) estimated annual foreign exchange earnings and requirements;
(c) recoupment period;
(d) prospects of new employment;
(e) prospects of increased national income;
(f) local and foreign market conditions;
(g) requirement for local consumption;
(h) prospects of foreign exchange savings.
The Commission may form technical bodies as may be necessary in order to examine the appropriateness of technology.
3. Issue of Permit
On approval of the proposal by the Commission, a permit will be issued.
4. Termination of the Business before the Expiry of its Term
On submission of a desire to terminate the business by mutual agreement before the expiry of the term of the contract, the Commission may, based on the following particulars, examine as to whether or not it is correct and justified to allow the termination:-
(a) substantial and continuous losses in the enterprise;
(b) breach of the terms of contract by one of the parties to the same;
(c) occurrence of force majeure;
(d) incapability of implementing the original aims and objects of the enterprise.
NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".
