Myanmese President Thein Sein signed a foreign investment bill after lawmakers removed protectionist clauses inserted in earlier drafts, clearing the way for multinationals to spend more in the formerly military-run nation.
Thein Sein approved the bill a day after Myanmar's parliament passed a new version that incorporated all except one of the president's 11 suggestions, Zaw Htay, the director of his office said. The government will draft by-laws mandated by the statute within 90 days, he said.
"The president knows the business community wanted the law to come out quickly," Zaw Htay said.
The outcome presents a victory for Thein Sein over groups concerned that local companies would lose out as Myanmar woos foreign investors after almost five decades of army rule. He's seeking to create jobs ahead of an election in 2015 that will include former political prisoner Aung San Suu Kyi's National League for Democracy party.
The final version of the law has yet to be published. Earlier drafts of the statute, which is designed to update a 1988 version, included provisions for a US$5 million minimum investment threshold and a 50 per cent ownership cap in certain sectors that were eventually scrapped.
Myanmar-language state newspapers said joint ventures between foreigners and Myanmese citizens or the government would be permitted with any stake ratio agreed between the partners.
Foreigners can still own 100 per cent of businesses without the need for a local partner, as in the previous law dating from 1988. But there could be restrictions in some areas.
The Myanmar Investment Commission will now have the authority to approve joint ventures if the companies agree on the ratio, according to Win Than, a lawmaker on the economic and trade development committee.
"The MIC will become powerful in the future," Win Than said, referring to the commission. "But if foreign and local companies agree on the investment ratio, it should pass because the MIC must obey the law."
Under the new law, foreign investors can lease land from the government or from authorised private owners for up to 50 years, depending on the type and size of the investment, and the deal can be extended twice, for 10 years each time.
Foreign firms may be entitled to a tax holiday for the first five years of operation and other forms of tax relief may be available depending on the investment, if deemed in the national interest. The old law allowed for a three-year holiday.
Foreign manufacturing companies may be entitled to tax relief of up to 50 per cent on profits made from exports. Tax exemption or relief can be granted providing it is reinvested in the business within one year.
The new law states that output can be used for "both export promotion and import substitution". The old law stressed export promotion.
Like the old law, the new legislation guarantees that an enterprise formed under this law will not be nationalised during the contract term or its extension.
A previous version had raised concern by also saying that, if a company were nationalised in the public interest, compensation would be offered. This clause has now been dropped.
However, one clause says an enterprise allowed under the law will not be stopped "without sufficient reason" before the contract expires.
Additional reporting by Reuters