The Association of Southeast Asian Nations (ASEAN) published a set of guidelines for member nations (which include Myanmar, Vietnam, Cambodia, Thailand, and Lao PDR) to implement Special Economic Zones in 2016.1 The guidelines are divided into five chapters that contain eighteen different points in total.2 Generally, the guidelines seek to promote strategic clarity, clear and separate responsibilities, delegation and coordination, strong institutional capabilities, and cooperation between ASEAN members.3 These guidelines are not binding.4
Special economic zones in Myanmar are governed by the 2014 Myanmar Special Economic Zone Law. This law creates three administrative bodies that are responsible for creating and overseeing SEZs.5 It also specifies the criteria for establishing new SEZs, the types of zones that may be within a SEZ, and the types of investment and businesses allowed in the zones.6
Myanmar’s 2014 Special Economic Zone Law largely complies with the ASEAN guidelines. However, the law is sometimes silent, leaving a gap between Myanmar’s SEZs and ASEAN’s Guidelines. These areas include concrete measurement of objectives and cooperation with other nations.
Chapter one contains seven guidelines to promote clear development strategies.7 As a part of promoting clear strategies, countries are encouraged to outline the problems they are seeking to address8 and set measurable objectives to monitor progress.9 They must also seek to link their domestic economy to each SEZ in order to actualize long-term benefits.10
ASEAN Guidelines: Chapter One
1 Specify in detail the problems that the zone programme should address.
2 Set measurable and time-bound objectives that are easily monitored and evaluated.
3 Consider SEZs as a framework for testing and catalysing economic reforms in the economy as a whole.
4 Ensure coherence between SEZs and the overall investment policy framework of the country.
5 Plan concrete measures to promote linkages between SEZ tenants and the domestic economy.
6 Ensure coherence and cost-efficiency of incentives.
7 Engage anchor investors and other stakeholders in the design phase.
The Myanmar Context
The 2014 Myanmar Special Economic Zone Law outlines its objectives, but many of them are quite broad and may present measurement challenges. For example, the law seeks to “affect employment for the people, to promote their living standards, [and] to promote the export of goods[.]”11 Specific objectives would most likely be found in the policy or founding documents of individual SEZs, but it does not appear that the Thilawa, Dawei, or Kyauk Phyu management committees have published any specific objectives.12
The SEZ law does, however, ensure coherence between SEZs and Myanmar’s overall investment framework. Specifically, the law’s first objective is “to support the main objectives of the national economic development plan[.]”13 However, it is not clear what the national economic development plan entails. The plan no longer appears to be available on the government website. Rather, there are two recent documents that may be relevant: the 2018 Sustainable Development Plan14 and a 2016 Economic Policy document.15
|1||Yes||However, the SEZ law only broadly states the issues it is trying to address. It does not appear that each individual SEZ has a specific list of problems that it is designed to address.|
|2||Unclear||Some form of a measurable framework likely exists, but it does not appear to be publicly available. Information regarding the success of a SEZ outside of the number of investors and investment amounts does not appear to be published.|
|3||Unclear||The law itself does not mention country-wide reforms, but it is possible that Myanmar may be using SEZs as a testing ground.|
|4||Yes||The 2014 Special Economic Zone Law explicitly states that one of its objectives is to support the objectives of the National Economic Development Plan.|
|5||Yes||The law takes steps to incentivise investors to invest in the local economy. For example, it provides a tax deduction for training provided to locals, and management committees may determine a minimum number of citizen employees. However, it does not appear that there is any explicit cooperation between SEZs and local universities.|
|6||Unclear||There is not publicly available information about lost revenues in the form of tax incentives. As a result, it is not possible to determine whether the benefits of additional investment outweigh the costs of lost tax revenue. The law does explicitly comply in one key aspect of this guideline; the incentives offered for both free and promotion zones expire.|
Chapter two contains four guidelines that aim to set clear and separate institutional responsibilities. This ensures efficiency and minimizes potential conflicts of interest.16 The guidelines call for a minimum of five separate roles: owner, developer, operator, regulator, and tenant.17 Myanmar’s SEZ law sets out distinct roles, but their names and responsibilities differ slightly from those that the ASEAN Guidelines call for.
ASEAN Guidelines: Chapter Two
|8||Ensure that legislation covers all relevant aspects including the establishment of necessary institutions and regulations|
|9||Identify institutions responsible for zone regulation and zone operation.|
|10||Ensure compliance of infrastructure investors in SEZs with each ASEAN member state's domestic regulations.|
|11||Ensure measurable and sustainable monitoring and evaluation of the zone programme.|
The 2014 Myanmar Special Economic Zone Law outlines the process for creating new zones and creates three levels of administrative bodies that are responsible for creating and overseeing SEZs.18 The Central Body is responsible for stipulating policy, scrutinizing development plans, and determining investment amounts.19 Notably, the Central Body is also allowed to select the developer for each SEZ.20 The Central Working Body serves more of an advisory function and makes suggestions to the Central Body.21 Finally, a management committee is created for each SEZ that is responsible for issuing permits, carrying out inspections, establishing one-stop services, and determining the minimum investment and hiring requirements.22 Although, the law leaves each body’s roles subject to change.23
Myanmar law does not explicitly conform to the ASEAN Guidelines with regard to the specified roles for SEZs, but it does delegate the responsibilities discussed in the guidelines. The roles for SEZs in Myanmar most closely fit to the roles in the ASEAN Guidelines as follows: Central Body with regulator, Management Committee with operator, developer with developer, and tenants with investors.
Notably, however, it does not appear that there is a publicly available, concrete framework to measure the success of SEZs in Myanmar. Generally, job creation is an important indicator of a SEZ’s performance as that is what they are intended to do,24 and Myanmar’s management committees consider the number of jobs created when determining who can invest.25 However, they do not provide specific numbers and instead categorize the investment’s benefit as “labor intensive.”26
|8||Yes||The 2014 SEZ law creates the Central Body, Central Working Body, and Management Committees, and it defines their responsibilities and allows for the creation of other necessary institutions and regulations.|
|9||Yes||The 2014 SEZ law creates institutions that loosely correspond to those proposed by the ASEAN Guidelines. However, their responsibilities differ slightly.|
|10||Yes||Will add note...|
|11||Unclear||Neither a concrete measurement framework nor the information necessary to utilize one appear to be publicly available, but it is possible that a framework exists internally.|
Chapter three deals with delegation of authority and creation of one-stop services that are reliable and efficient. The guidelines call for clear delegation of authority to bodies that have the power to recruit capable staff.27 In other words, the guidelines calls for responsibilities to be divided between capable institutions. Moreover, they call for efficient and convenient services for investors.
ASEAN Guidelines – Chapter Three
|12||Provide clear delegation of authority.|
|13||Provide efficient and professional administrative services.|
|14||Set up properly designed one-stop shops.|
The 2014 Myanmar Special Economic Zone Law delegates power between the Central Body, Central Working Body, and Management Committees and divides among them responsibility for managing and creating SEZs.28 For example, the Central Body has the power to scrutinize and approve development plans, determine the amount of investment in each zone, determine the taxes levied under the SEZ law, and even give extensions on tax breaks.29 Furthermore, the Central Body has the ability to hire qualified staff and get relevant opinions from a wide array of government agencies.30 On the other hand, Management Committees are responsible for issuing permits, carrying out inspections, and establishing one-stop services.31
In step with ASEAN’s Guidelines, Myanmar’s SEZs provide simplified, one-stop administrative services. Companies seeking to invest in one of Myanmar’s SEZs need simply to go to the website of the SEZ they are seeking to invest in to find everything they need. Both the Thilawa and Dawei SEZs provide a one-stop services center that contains everything from investment applications, employment and tax documents, and information regarding environmental laws.32
|12||Unclear||While there is clear delegation of authority and the Central Body has the ability to recruit qualified staff, it is not clear that they are subject to explicit, independently monitored targets. They must report to the government, but it is not clear that there are any concrete targets that they must meet.|
|13||Yes||One-stop shops are administered by Management Committees, as opposed to the regulator. Through the one-stop portal, each SEZ provides efficient administrative services for potential investors. Furthermore, the Central Body is connected to the concerns of tenants and other relevant officials through the Central Working Body.|
|14||Yes||Myanmar's one-stop shops provide a single, clear location for investors to find everything they need. It provides information on all of the various laws investors must comply with and streamlines the application process.|
Chapter four contains two guidelines regarding governance and the regulator’s hiring abilities. The regulator must have autonomy and have the ability to hire capable staff, including individuals from the private sector.33 Moreover, the institutions responsible for developing SEZs should have substantial institutional capacity to make decisions, recruit, and monitor progress.34
ASEAN Guidelines: Chapter Four
|15||Ensure professional human resource management and accessibility of SEZ.|
|16||Promote good governance.|
The Central Body operates with a large amount of autonomy. While it is possible for the government to “reform the Central Body … as necessary” and determine the Central Body’s functions, it does not appear that they have ever done so or changed the Central Body’s functions.35 Rather, the Central Body appears to operate with little or no interference from the government. They are simply required to submit reports regarding implementation of SEZs “from time to time[.]”36 These reports do not appear to be publicly available.
The Central Body and other institutions responsible for creating and implementing SEZs also have large capacity to act. For instance, the Central Body may create a SEZ based on a set list of criteria, but they may also stray from that list “if it considers that the establishment … would be beneficial for the State and its people.”37 Additionally, Management Committees may form supporting bodies, issue rules and regulations, and allow exemptions to investors and developers.38
|15||Unclear||This is unclear because the monitoring framework is vague. It may exist, but it is not published. The Special Economic Zone Law merely requires the Central Body to report to the government “from time to time.”|
|16||Yes||Under the 2014 Special Economic Zone Law, Myanmar has not opted to set up an independent unit in the pilot phase as referenced by the ASEAN Guidelines.|
Chapter five contains two guidelines designed to increase cooperation between ASEAN members with regard to SEZs. The guidelines call for members to interact with one another, share their experiences, and explore cooperation.39 SEZs located along border regions can be used in parallel with trade agreements to help improve trade corridors in the region.40
ASEAN Guidelines: Chapter Five
|17||Support SEZ cooperation and promotion across ASEAN through policy interaction experience sharing.|
|18||Explore ASEAN co-operation on zone connectivity, in particular for zones in border regions engaged in strong sub-regional trade.|
Myanmar law is silent on interactions with other nations regarding SEZs. However, Myanmar has worked closely with other nations while implementing zones. For example, Myanmar worked closely with Japan to implement the Thilawa SEZ, closely with Thailand for the Dawei SEZ, and closely with China for the Kyauk Phyu SEZ. It is not clear, however, that Myanmar has ever collaborated outside of the mentioned zones with other nations regarding SEZ policy.
|17||Unclear||Unclear because there is no evidence to suggest that Myanmar has participated in any experience dialogue or sharing outside of their cooperation regarding specific zones.|
|18||Yes||Myanmar has cooperated with ASEAN member Thailand in creating the Dawei SEZ.|
- 1. There is no date on the document itself or the ASEAN web page on which it is found. However, the Center for International Law at the National University of Singapore published the report as the “2016 ASEAN Guidelines for Special Economic Zones Development and Collaboration” at https://cil.nus.edu.sg/databasecil/2016-asean-guidelines-for-special-economic-zones-development-and-collaboration/.
- 2. Association of Southeast Asian Nations, ASEAN Guidelines for Special Economic Zones (SEZs) Development and Collaboration, Accessed July 12, 2019.
- 3. Ibid.
- 4. Association of Southeast Asian Nations, ASEAN Guidelines for Special Economic Zones (SEZs) Development and Collaboration, pg. 6, Accessed July 12, 2019.
- 5. Pyidaungsu Hluttaw, Myanmar Special Economic Zone Law, 2014, pg. 5, 8, 10, Accessed July 12, 2019.
- 6. Ibid.
- 7. Association of Southeast Asian Nations, ASEAN Guidelines for Special Economic Zones (SEZs) Development and Collaboration, Ch. 1, Accessed July 12, 2019.
- 8. Ibid at ch. 1(1).
- 9. Ibid at ch. 1(2).
- 10. Ibid at ch. 1(5).
- 11. Pyidaungsu Hluttaw, Myanmar Special Economic Zone Law, 2014, pg. 5, Accessed July 12, 2019.
- 12. See Dawei SEZ Management Committee, Welcome to Dawei Special Economic Zone, Accessed June 14, 2019; Thilawa SEZ Management Committee, Welcome to TSEZMC, Accessed June 14, 2019; Kyauk Phyu Special Economic Zone, Home, Accessed June 14, 2019.
- 13. Pyidaungsu Hluttaw, Myanmar Special Economic Zone Law, 2014, pg. 4, Accessed July 12, 2019.
- 14. See The Government of the Republic of the Union of Myanmar, Myanmar Sustainable Development Plan (2018 – 2030), Accessed July 12, 2019.
- 15. See The Government of the Republic of the Union of Myanmar, Investment Policy, Accessed July 12, 2019.
- 16. Association of Southeast Asian Nations, ASEAN Guidelines for Special Economic Zones (SEZs) Development and Collaboration, pg. 13, Accessed July 12, 2019.
- 17. Ibid.
- 18. Pyidaungsu Hluttaw, Myanmar Special Economic Zone Law, 2014, Accessed July 12, 2019.
- 19. Ibid at pg. 6-8.
- 20. Ibid at pg. 15.
- 21. Ibid at pg. 9-10.
- 22. Ibid at pg. 11-14.
- 23. Ibid at pg. 8-11.
- 24. World Bank, Special Economic Zones China’s Experience and Lessons Learned, Accessed August 27, 2019.
- 25. Thilawa SEZ Management Committee, Investment Approval Criteria, Accessed August 27, 2019; Dawei SEZ Management Committee, Investment Approval, Accessed August 27, 2019.
- 26. Thilawa SEZ Management Committee, List of Approved Investors, Accessed August 27, 2019.
- 27. Association of Southeast Asian Nations, ASEAN Guidelines for Special Economic Zones (SEZs) Development and Collaboration, pg. 17, Accessed July 12, 2019.
- 28. Pyidaungsu Hluttaw, Myanmar Special Economic Zone Law, 2014, Accessed July 12, 2019.
- 29. Ibid at pg. 7.
- 30. Ibid.
- 31. Ibid at pg. 11-14.
- 32. See Dawei SEZ Management Committee, One Stop Services, Accessed June 13, 2019; Thilawa SEZ Management Committee, One Stop Services, Accessed June 13, 2019.
- 33. Association of Southeast Asian Nations, ASEAN Guidelines for Special Economic Zones (SEZs) Development and Collaboration, pg. 19, Accessed July 12, 2019.
- 34. Ibid.
- 35. Pyidaungsu Hluttaw, Myanmar Special Economic Zone Law, 2014, pg. 6, Accessed July 12, 2019.
- 36. Ibid at pg. 8.
- 37. Ibid at pg. 15.
- 38. Ibid at pg. 13-14.
- 39. Association of Southeast Asian Nations, ASEAN Guidelines for Special Economic Zones (SEZs) Development and Collaboration, pg. 20, Accessed July 12, 2019.
- 40. Ibid.