More than 110 enterprises, including four domestic businesses, invested US$208 billion in the Special Economic Zones (SEZs), under the Special Economic Zone Law, as of 10 July in the current fiscal year, according to figures released by the Directorate of Investment and Company Administration.
Singapore topped the list of foreign investors, accounting for more than 37 per cent of the overall investment, followed by Japan and Thailand. FDI also flowed into the SEZs from the Republic of Korea, Hong Kong, the UK, the UAE, Malaysia, Austria, China (Taipei), Panama, China, Brunei, Viet Nam, Australia, France, Switzerland, and the Netherlands.
Currently, 74 businesses are operational in the Thilawa SEZ and 18 businesses are beginning to export goods. The SEZ is employing over 20,000 workers, including permanent and construction workers, according to the management committee.
The Myanmar Thilawa SEZ Holdings Public Limited’s annual report for 2017-2018 stated that 97 per cent of Thilawa Zone A and 61 per cent of Zone B have been sold. Over 60 per cent of businesses in Thilawa are domestic-oriented manufacturing enterprises, while 40 per cent are export-oriented manufacturers, according to a press statement issued by the company in June this year.
A company exporting at least 75 per cent of the production in value is registered as a Free Zone investor, and is exempt from paying corporate tax for 7 years from the time it starts commercial operations. Companies such as logistics which support export-oriented manufacturing can also be free zone companies. Domestic-oriented manufacturing companies are regarded as promotion zone companies and they are eligible for a five-year holiday on corporate tax.
There are other tax incentives for free zone and promotion zone investors on import of capital goods, raw materials, and merchandise, and consigned goods and vehicles. Further details about the tax system are available on http://www.myanmarthilawa.gov.mm.
While the manufacturing sector has absorbed the largest share of foreign investments, FDI has also flowed into the trading, services, transportation and logistics, real estate, and hotel sectors in the past years.
Myanmar is currently implementing three Special Economic Zones — Thilawa, Kyaukpyu, and Dawei. Out of the three, Thilawa is leading with better infrastructure and successful businesses.—Ko Htet
(Translated by EMM)