Legislative Framework for Special Economic Zones

The overarching legislation that is relevant to all Special Economic Zones (SEZs) in Myanmar is the 2014 Special Economic Zone Law, enacted on January 23, 2014.1 It established the entities responsible for creating and overseeing the implementation of SEZs: the Central Body, Central Working Body, and Management Committees.2 It also outlines the process for creating SEZs,3 the types of SEZs,4 and the benefits they provide investors.5 The law’s purposes include supporting the national economic development plan, boosting employment, and promoting domestic and foreign investment.6

Relevant Administrative Bodies

The 2014 SEZ Law created three administrative bodies that are responsible for creating and overseeing the implementation of SEZs: the Central Body, the Central Working Body, and Management Committees. They each have different responsibilities and powers. The largest and most powerful is the Central Body, which is in charge of making high-level decisions regarding SEZs. These decisions include whether and where to create SEZs, the type and amount of investment allowed, and determining policy for implementing SEZs.7 Management Committees report to the Central Working Body and are responsible for most administrative matters regarding their respective SEZs such as reviewing applications and issuing permits.8

 

The Central Body, created by the Union Government9, is tasked with many functions. These include creating policy for the implementation of SEZs, evaluating governmental departments’ opinions regarding the proposal and implementation of SEZs, and broad approval and oversight over SEZs in Myanmar.10 Notably, these functions are subject to change as the Union Government may reform the central body as necessary and determine the Central Body’s functions and duties.11

The Central Working Body is created by the Central Body and is made up of representatives from various government departments and organizations.12 It is responsible for making recommendations to the Central Body on functions that include many that are similar to those of the Central Body.13 In other words, the Central Working Body serves an advisory role, while the Central Body makes the final decisions.

Finally, each SEZ in Myanmar has a Management Committee which is created by the Central Body.14 Each Management Committee is comprised of representatives from relevant government departments and a representative from the relevant regional or state government.15 Management Committees work through the Central Working Body to obtain approval of development plans from the Central Body.16 They are also responsible for issuing permits and inspecting development within their respective SEZ.17 Significantly, they are also tasked with “establishing one-stop services centre the [sic] approval for investment, company registration, issue of the entry visa relating to the business, issue of the certificate of origin, collection of taxation, approval of employment permit and permission, giving permission for factory construction and other investment and economic business licenses and permits can be provided[.]”18 As such, those seeking to invest in an SEZ have regular interactions with the respective Management Committee. However, it has been noted that the exact role of the Management Committee is unclear; thus, the potential for human rights violations and lowered accountability is high.19

Creating Different Types of Zones

The Central Body needs the approval of Pyidaungsu Hluttaw (Assembly of the Union – Myanmar’s bicameral legislature) and agreement of the Union Government to establish a SEZ.20 The appropriate location for a SEZ is determined using a set list of eight criteria. However, the 2014 SEZ Law allows the Central Body to stray from the criteria “if it considers that the establishment of the [SEZ] would be beneficial for the State and its people.”21 The law does not require the Central Body to state whether they have strayed from the eight criteria, nor does it require the Central Body to show that the criteria have been met. The websites for the Dawei and Thilawa SEZs generally promote benefits of investing there, some of which correspond to the criteria. For example, the Dawei SEZ promotes its proximity to the Eastern Seaboard and the GMS Southern Economic Corridor22 which corresponds to criteria (a): “having international gateways such as [a] port, airport, or can transport [sic] easily to international border or domestic markets.”

Location criteria:

(a)Having international gateways such as port, airport, or can transport easily to international border or domestic markets.
(b)Being the area designated for regional development by the Union Government.
(c)Having the infrastructural pre-requisites or having the prospect for the implementation.
(d)Availability of the water resource and electric power.
(e)Having sufficient land area to establish the industries and the investment business.
(f)Availability of the skilled workers, semi-skilled workers and trainable workers.
(g)Able to arrange the training courses for the recruitment of required skilled workers.
(h)Being the strategic area or land in the condition of transportation or linkage to the market in the country.

There are two types of zones which are specifically acknowledged by the 2014 SEZ Law: Free Zones and Promotion Zones.23 However, Management Committees have the power to create other zones according to market demand.24 

Free Zones are defined as “the area which is deemed to be situated outside the country which is stipulated by the relevant Management Committee and the Customs Department to be entitled to the exemption of the customs duty[sic] and other taxes relating to the goods in the Special Economic Zone and the goods imported into this zone.”25 Essentially, a Free Zone eliminates customs and duty taxes for goods imported in a Myanmar SEZ, so long as imports come from the specified area.

Promotion Zones relax taxes and restrictions to a lesser extent. While Free Zones are oriented towards export-oriented markets, Promotion Zones are oriented toward domestic markets and smaller markets within a SEZ.26 

 

SEZs provide a wide range of benefits for both foreign and local investors. Depending on the type of zone, SEZs completely eliminate or relax customs requirements, duty taxes, or income taxes.27 Regardless of the type of zone, investors in SEZs may be 100% foreigner owned.28 Furthermore, SEZs streamline much of the legal paperwork that must be filed in order to do business, and they provide all of the necessary forms in one place.29

Investing in Myanmar SEZs

Companies seeking to invest in a SEZ must first register and ensure they are in compliance with the applicable investment law through the SEZs’ one stop service center. This center has a webpage that explains the application process and necessary documents required for each of their respective SEZs.30 

Investors may be required to fill out several applications including an Investment Application, Company Registration, Tax Registration, and Visa Applications.31 Forms for these applications are available on the one stop services center website page for both the Dawei and Thilawa SEZs.

Under Myanmar Investment Law, there are five categories of investments that require a permit through the Myanmar Investment Commission (MIC), the commission created by the Myanmar Investment Law.32 33 Furthermore, there are certain investment activities that may only be carried out by the government or Myanmar citizens such as defense industries and publishing of materials in ethnic languages.34 However, each SEZ has unique restrictions on each SEZ has unique restrictions on the types of business allowed to invest in it.35

Furthermore, investors are required to comply with various other Myanmar laws. These include, but are not limited to, labour laws, environmental laws, and land laws. Information regarding compliance with other  laws can also be found in the one stop services sections of the SEZ websites.36

The Importance of Management Committees

Investors seeking to invest in SEZs will interact most frequently with is the Management Committee. This is because Investors seeking to invest in SEZs will interact most frequently with is the Management Committee. This is because one of the largest tasks Management Committees are trusted with is providing one-stop services for the approval of investment, company registration, visas, and other activities.37

Ease of interaction with the Management Committee will differ based on the SEZ. For example, the Management Committees of the Management Committees of the Dawei and Thilawa zones have websites that are quite easy to navigate. Information is readily available in English, and there is a one stop service tab which contains all the necessary information. On the other hand, the Kyauk Phyu Special Economic Zone website provides limited information.38 The required one stop services appears to be contained within one Expression of Interest Form.39

The Kyauk Phyu SEZ meets one of the location criteria, proximity to an airport. Photo by @Lionslayer via Wikicommons, Licensed under CC BY-SA 4.0.

Special Economic Zone Law Today

The 2014 Special Economic Zone Law has been considered quite successful by many. It successfully streamlined the investment process by creating one stop services centers, and investors are now able to find the information they need in one convenient location. Furthermore, the Thilawa SEZ appears to be quite successful and has recently attracted large investments from both Nissin Electric and Toyota.40

Contrastingly, others have pointed out that the law contains some deficiencies. For example, the International Commission of Jurists (ICJ) has pointed out that the “current land acquisition process for the SEZ, initiated in 2016, lacks transparency and contravenes national law governing land acquisition.”41 Additionally, while the Thilawa SEZ has recently garnered positive attention, the Kyauk Phyu SEZ has been far more questionable due to renegotiations of its terms.42 Its implementation does not appear to conform to the 2014 SEZ Law in the same manner as the Thilawa and Dawei SEZs.43 Moreover, EarthRights International has pointed out that the Dawei SEZ poses serious human rights issues.44 They specifically state that only eight percent of the 43,000 affected residents consented to the project, and “less than one-third of those affected received any information from the government or developers.”45

References

Contact us

Contact us

Do you have questions on the content published by Open Development Myanmar? We will gladly help you.

Have you found a technical problem or issue on the Open Development Myanmar website?

Tell us how we're doing.

Do you have resources that could help expand the Open Development Myanmar website? We will review any map data, laws, articles, and documents that we do not yet have and see if we can implement them into our site. Please make sure the resources are in the public domain or fall under a Creative Commons license.

File was deleted
ERROR!

Disclaimer: Open Development Myanmar will thoroughly review all submitted resources for integrity and relevancy before the resources are hosted. All hosted resources will be in the public domain, or licensed under Creative Commons. We thank you for your support.

BRe6E
* The idea box couldn't be blank! Something's gone wrong, Please Resubmit the form! Please add the code correctly​ first.

Thank you for taking the time to get in contact!