Sherpa Hossainy's Blog

A shift of power within MIC

Posted in Business, Investment, Legal, Myanmar, Yangon by Sherpa Hossainy on July 10, 2013

Published in Myanmar Business Today (Vol 1, Issue 20) on June 20, 2013

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The balance of power within Myanmar Investment Commission has noticeably shifted towards the Ministry of Finance and Revenue in a bid to pick projects that are financially and socially favourable for Myanmar, experts said.

The structure of Myanmar Investment Commission (MIC) saw a massive shakeup last month as new chair and members were appointed, according to a notification from the President’s Office.

The position of MIC chair changed from Minister for the President’s Office and former Minister for Industry U Soe Thein to U Win Shein, minister for finance and revenue.

More importantly, a bulk of evaluation and verification of investment proposals are now assigned to the departments of the finance ministry such as the Internal Revenue Department (IRD) and the Customs Department (CD).

The number of representatives of other ministries on the MIC has also dropped as the government increased the private sector representatives from two to five, out of a total of 11.

These three trends have combined in a remarkable power shift in MIC, investment experts say, as the finance ministry is now set to play an increasingly central role in getting an investment licence.

“We have only seen a few meetings under the new chair, however, from now on we expect proposals to be more carefully scrutinised. The MIC seems more careful and better equipped to assess whether the explanation of the applicant holds water or whether the proposal is properly substantiated. The government does not want to give away tax holidays for projects that are not sustainable or correctly represented,” Edwin Vanderbruggen, partner at VDB Loi, a leading law and tax advisory firm, told Myanmar Business Today.

Edwin, whose company’s investment licensing team in Myanmar helps foreign investors obtain MIC permits for investment projects, said the financials of the investment proposal have also become crucial.

“With the IRD and the CD taking care of more of the evaluation effort, more emphasis is put on the financial planning of an investment. The capitalisation, funding, capital expenditure, revenue, labour and other key points of the MIC’s investment proposal template now seem to receive even more attention.”

Social issues are now playing a bigger role too, Edwin said. “There has been some turbulence in local media about the MIC supporting projects that had adverse social consequences. With five private sector members out of 11 MIC members, it is likely that social issues will be given more weight,” he added.

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