Tuesday, January 20, 2015

Day Two: Directorate of Investment and Company Administration (DICA) and Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI)

Day Two

Directorate of Investment and Company Administration  (DICA) 

Today our group traveled to the Directorate of Investment and Company Administration (DICA), a government entity which oversees investments and joint ventures by foreign companies in Myanmar. The Deputy Director took an hour to sit down with us and explain the investment landscape of Myanmar, the goals of the Myanmar government in terms of attracting investment and protecting local Myanmar peoples’ interests, and the challenges an organization such as DICA faces in an emerging country's early stages of development. She was candid and truthful about the positive changes and current obstacles she and her department encounter daily.

The most important change to foreign investment in Myanmar is the recent change of the Foreign Investment Law, which has made an initiative in attracting further foreign investment and encouraging greater corporate social responsibility by those companies. The new incentives include a longer grace period in the tax exemption law and the ability to create joint ventures with local companies. In addition, the new law uses a new negative approach to identify actions foreign investors cannot take, rather than the previous method indicating actions foreign investors can take. The assumption therefore is that anything not specifically restricted is fair game for foreign investors. In regards to further protecting the local population, the tax exemption law excludes companies associated with poor health and detrimental environmental practices (e.g. tobacco, alcohol, and mining). Finally, the law includes important customs duty exemption for construction of new commercial operations. This tax holiday has a five-year period. Overall, the Foreign Investment Law revisions have created a more attractive environment for foreign investors.

In terms of better labor practices, DICA is enforcing better corporate social responsibility practices that will employ local Myanmar citizens in projects. This includes an incrementally increasing proportion of Myanmar skilled labor over three two-year periods. In addition, investments in technology will lead to training local Myanmar citizens; the government has an increased focus on vocational training. However, many of these requirements are only in effect for companies with contracts after the introduction of the new Foreign Investment Law revisions. Companies operating in Myanmar before these revisions can be grandfathered-in.  These new labor laws encourage skills-transfer, which will have a greater long-term impact on the well being of the Myanmar economy than simple investment in projects.

The growth in foreign investment can easily be seen by the Deputy Director General and all those working within DICA. Before 2011, DICA oversaw less than thirty new permits a year; while today DICA processes about twenty per week. DICA seeks technological assistance from OECD and UNTP. As FDI continues to grow, DICA struggles to continue operations with its limited staff for support. 

~Matthew Florian

Republic of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI)

Today, our group met with officials from the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) to discuss international investment in Myanmar and the role of the UMFCCI in facilitating business opportunities. UMFCCI is Myanmar’s largest not-for-profit business federation, and it was founded in 1919. UMFCCI acts as a bridge and voice between the government and private sector, and provides various services to its members.

The UMFCCI has the following objectives:
·         To participate in the implementation of the Four Economic Objectives of the State
·         To accelerate the pace of economic development
·         To safeguard the economy for the State and National people
·         To cooperate with the State in economic and social activities
·         To lead and cooperate with the business associations
·         To act as a bridge between the State and private sector
·         To support for more competitiveness of SMEs and SMIs
·         To lead Myanmar business community into globalized economy
·         To develop commerce, production and services to global standards
·         To act as independent NGO
·         To disseminate information and knowledge in regards to global standards in commerce

UMFCCI is working together with 71 affiliated associations, such as regional and state chambers of commerce and industry. The organization aims to diversify and intensify its activities towards achieving the state’s goal of simultaneously developing a modern industrial sector along with the agricultural sector, in order to achieve rapid development, poverty alleviation, and establish a modern, prosperous, developed nation.

Officials from UMFCCI told our group that Myanmar has a long ways to catch up, given their recent bloody history and subsequent international sanctions. Australia and the European Union have totally lifted sanctions, whereas the United States has suspended sanctions.

The UMFCCI officials are emphasized that education will play a key role in bridging the economic gap between Myanmar and its ASEAN neighbors. In particular, there are plans to ramp up vocational training in Myanmar.

~Margaux Fimbres 

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