ministery of mining

MINISTER OF MININGOrganization Chart

Minister

No.(1) Mining Enterprise



Myanmar Gems Enterprise

Myanmar Salt And Marine Chemical Enterprise

Myanmar Pearl Enterprise

Department of Geological Survey & Mineral Exploration

Department of Mines

Lead Zinc Silver Copper Iron Nickel Chromite Antimony

Gold Tin Tungsten Rare Earth Titanium Platinum

Coal Lime stone Industrial Minerals Manganese Decorative stone

Gems, Jade & Jewelry

Salt

Pearl Breeding Cultivating

Geological Survey Mineral Exploration Laboratory

Mineral Policy Formulation, Regulation Measures Royalty Collection Environmental

Ministry of Mining Page | 1

The Outline of the proposal for production sharing contract1. Purpose of the business 2. Proposed Area (a) Locality showing state/division, township, area (b) Size of the least area required (c) Location map and map reference 3. Work programme (a) Development Stage (Work Programme, duration) (b) Production stage (Work Programme, duration) 4. Marketing of products (a) Manner of Marketing (b) Price estimation 5. Production sharing ration (Split between No.3 Mining Enterprise and Counterpart Company) 6. Signatures Bonus 7. Management (a) Establishment of Joint co-ordination committee (b) Appointment for operation 8. Performance Bank Guarantee 9. Proposed total investment (a) Development stage (b) Production Stage 10.Payable fees as per Myanmar Mines Law (a) Royalty (b) Dead Rent for the proposed area


The Outline of the proposal for exploration and feasibility study1. Purpose of the business 2. Proposed Area (a)Locality showing state/division, township, area (b)Size of the least area required (c)Location map and map reference 3. Work Programme (a)Exploration Stage (Work Programme, duration) (b) Feasibility study stage (Work Programme, duration) 4. Signature Bonus 5. Management (a)Establishment of Joint co-ordination committee (b)Appointment for operation 6. Performance Bank Guarantee 7. Proposed total investment (a) Exploration stage (b) Feasibility study Stage 8. Payable fees as per Myanmar Mines Law (a) Dead Rent for the proposed area

Step by Step procedures for Exploration & MiningUnder Foreign Investment law of Myanmar 1. Official discussion 2. Proposal - MOM 3. Contract Drafting (Initial Signing) 4. To Approve Draft Contract (AG office) 5. Forest & other related Ministrys Clearance 6. Submission of Proposal To MIC 7. Trade Council Approval 8. Cabinet Decision 9. Issued Permission by MIC/MOM 10.Contract Signing & Start Operation


PERMITS UNDER MYANMAR MINES LAW Mineral Prospecting Permit Mineral Exploration Permit Mineral Production Permit

Current Tenure of PermitsMineral Prospecting Mineral Exploration Feasibility Study Mineral Production (Large Scale) Mineral Production (Small Scale) 1 year (+ 1 Year extension) 2 years (+1 Year extension) 1 year 10 to 25 years depending on the investment and production capacity Maximum 3 years (only allow for the area of 50 Acres )

Dead RentExploration (1st Year) = 32 USD/sq.km

Exploration (2nd Year) Exploration (if extended)

= =

64 USD/sq.km 128 USD/sq.km 256 USD/sq.km 256 USD/sq.km 300 USD/sq.km 350 USD/sq.km 400 USD/sq.km 500 USD/sq.km

Feasibility Study (1st Year) = Feasibility Study (if extended) = Mine Development (1st Year) = Mine Development (2nd Year) = Mine Development (3rd Year) = Production =


Royalty5% to 7% Gemstones, Jade and Gems 4% to 5% Gold, Silver, Platinum, Iridium, Osmium, Palladium, Ruthenium, Rhodium, Tatalum, Columbium, Niobium, Uranium and other precious metallic minerals. 3% to 4% Iron, Zinc, Copper, Tin Tungsten, Nickel, Antimony, Aluminum, Arsenic, Bismuth, Cadmium, Chromium, Cobalt, Manganese, and other precious metallic minerals. 1% to 3% Industrial Minerals, Stones

Myanmar Av: wage $50/month Managers $250/month

Cambodia Av: wage $100/month Managers $450/month

Labot MarketTHAI Av: wage $??? Managers $??? Vietnamese Av: wage $120/month Managers $650/month


Outline Myanmar in Brief Investment Laws of Myanmar Tax Incentives under the Foreign Investment Law Structural Reform Foreign Investment Incorporation of Company Economic performance Conclusion


The Republic of The Union Of MyanmarThe Land: The largest country on the mainland of South east Asia. Total land area:676,577 sq. km 50% mountains and forests (northern and eastern) Total coastline: 2,832 sq.km Total international borders of 5,858 km Human Resource: 60 million (2010) Growth Rate: 1.84% Literacy Rate: 90 % GDP: 19,000 in billion Kyat (2009-10) GDP per capita: 571 thousand Kyats (2009-10)


Investment Laws of MyanmarThe Union of Myanmar Foreign Investment Law (FIL) was enacted on 30 November 1988. The Union of Myanmar Special Economic Zone Law was enacted in January 2011 The Dawei Special Economic Zone Law was also enacted in January 2011 subsequently. Myanmar Company Act

Form of InvestmentForeign investor can set up their business either in the form of: wholly foreign-owned (100% foreign) Joint Venture In all joint ventures, the minimum share of the foreign party is 35% of the total equity capital. US$ 500000 => Manufacturing US$ 300000 => Services


APPLICATION PROCEDURES FOR FOREIGN INVESTMENT

Submit proposal to the Myanmar Investment Commission (MIC)

Latest audited financial accounts

Preliminary appraisal of proposal together with the comments from the relevant Ministries

Bank reference and recommendation of investors business standing

Economic justification of the proposal project Approval from the MIC, Trade Council and the Cabinet

Draft Contract to be executed with the State organization for the wholly foreign owned

MIC grants and approves issuance of a Permit to carry out business

Draft contract between the partners for the joint-venture

Apply for Permit from Ministry of National Planning and Economic Development

Draft land lease agreement

Register the enterprise with the Registrar of Companies

Draft Memorandum and Articles of Association

An application for exemptions and relief defined under Section 21 of the FIL


Duties and Power of MIC MIC was formed on 3th August, 1994 Duties and Power of MICto scrutinize the proposal to check the proposal is financial credibility, economic justification of the business enterprises and appropriateness of technology to ensure that the proposed project is environmentally friendly to grant approval by the issuance of a Permit with stated terms and conditions to monitor and evaluate foreign investment after approval has been given to relax and amend the terms and conditions previously defined if necessary to give suggestions and recommendations ,where necessary to facilitate and promote foreign investment to take necessary and prompt action in respect of issues regarding promotion of foreign investments

Investment Incentives1. Relief from Income tax 6. (re-invested profits) 2. Exemption or relief from income 7. tax (re-invested) 3. Accelerated depreciation rates 8 4. 5. 50% relief from income tax Right to pay income tax Right to deduct Right to pay income tax (foreign employees) Right to deduct R&D expenditure

Right to carry forward and set off losses Exemption or relief from customs 9. duty or other internal tax (machinery) Exemption or relief from customs 10 duty or other internal tax (raw . materials)


Guarantees The FIL provides an irrevocable state guarantee that an enterprise permitted by MIC under the FIL shall not be nationalized during the permitted period or the extended period (if any). It also provides repatriation of profit (after all deduction of all taxes and the prescribed funds) as well as legitimate balance of salary and lawful income of foreign personnel (after payment of living expenses and taxes). In the case of termination or dissolution of the business, repatriation of foreign capital can also be allowed.

Structural Reform PoliciesPolicy Reduce time to start businesses 1. 2. 3. Forecast Outcome Better environment for Investors. Lower costs Less unemployment

Simplify FDI Procedures

1. 2. 3.

More Investment Reduces Unemployment Increases GDP

Reduce cost of Registering Property

1.

Lower costs

Financial Sector Reforms

1.

Stronger financial sector


Structural Reform PoliciesPolicy Speed Anti corruption Efforts 1. 2. Outcome Better environment for doing business Lower government costs

Improve commercial law

1. 2. 3.

Reduce time to resolve claims Cut costs Boost investment

Relief economic sanction

1. 2. 3.

Better environment for FDI Less unemployment Increases GDP

Revising of Foreign Investment LawIn order to be adaptable to the advancing era and develop the whole economic infrastructure, FIL is being revised . No description on rights & -Description on rights & obligation obligation Existing Law No specific definition on investment No specific definition on grantee of land lease or grantee of land used Not mentioned on restricted activities Export Promotion No description on rights and obligation of investor 3 years tax holidays No description on land use Official exchange rate No description on administrative penalty No description on dispute settlement Revised Law Specific definition on investment Specific definition on grantee of land lease or grantee of land used Mentioned on restricted activities Export promotion and import substitution Description on rights & obligation of investor 5 years tax holidays Description on land use Market exchange rate Description on administrative penalty Description on dispute settlementMinistry of Mining Page | 12

Incorporation of Company in MyanmarUnder section 27 A of the Myanmar Companies Act, a foreign company, whether a hundred percent owned or a joint-venture and branch/representative office, is required to obtain a Permit and Registration. However, a joint-venture with the state equity formed under Special Company Act 1950 is exempted from obtaining a Registration.

Incorporation of Company in Myanmar(Requirements)1. 2. 3. 4. Company Name and Address in your country Intended activities to be performed At least two people of their passport endorsed by Myanmar Embassy Each Peoples Bank confirmation letter mentioned the balance of amount showing at least USD 50,000 (for services Company) and at least USD 170, 000 ( for Industrial Company) from their bank endorsed by Myanmar Embassy

Branch/representative office (Requirements)1. Instead of the companies Memorandum and Articles of Association, a copy of the Head Office's Memorandum and Articles of Association or of the Charter, Statute or other instruments constituting or defining the constitution of the company, duly notarized and consularized by the Myanmar Embassy concerned in the country where the company is incorporated. 2. The Annual Report for the last two financial years(or) if it is the copies of the Head Office Balance Sheet and Profit and Loss accounts for the last two financial years, it is to be notarized and consularized by the Myanmar Embassy concerned in the country where the company is incorporated. 3. Where the original Memorandum and Article of Association and other relevant documents are not in English language, authentication of the translation into English.


Investments in Myanmar


Gas Exports

Conclusion Suggested Deal Structure JV with a local with access to Grant Land Extendable (negotiated) / Transferable at market price Benefit from land appreciation


Grant Land Lease from Citizen vs Lease Land from GovernmentType Lease Grant Citizen Foreigner Extendable Transferable Land Appreciation

Extendable Transferable

= =

extend the lease/grant period beyond the initial contract without adjusting initial rate transferable to another party at the prevailing market rate fair value gain on invested land

Land Appreciation =


GDP per capital In fiscal year 2010


Dawei SEZ Project Location


Thilawa SEZ

In the SEZ plan, SEZ and industrial zones will be as follows; Special Industrial Zone (for FDI)-2300 acres Local Industrial Zone-430 acres Singapore Myanmar Development (SINMARDEV) Industrial Zone -247 acres Sea ports and container yard Thilawa Special Industrial Zone 3,170 acres


Thilawa SEZ Project Location


Business Opportunity Relating to India Government Loan

1. Tamanthi Hydropower project by NHPC (India) 1000MW. 2. Thahtaychaung Hydro Power Project (100 MW). Material Supply to DHP MOEP(1) 3. Setting up University for Capacity Building at Maymyo (International Technology = University Standard) 4. Construction of Paddy Silos at Irrawaddy Division, Care Centre, Rice Bio park construction also. 5. Communication network along India Border near Chin State (Micro wave line). GSM/UMTS at Sagaing Region. 6. Road Construction from Tamu to Kalewa, Kalay to Monywa including Yargyi Road for the whole season road. 7. Transmission Line Construction Project from MOEP(2) - 230 KV Ann Mann - 230 KV Taung up Kyauk Phyu - 330 KV Ann Myauk U - 66 KV Myauk U Ponagyun Sittway - 66 KV Myauk U Kyauk Taw 8. MOGE Gas pipe laying 16, 20 ERW 9. Purchasing of Signal equipment for Ygn Mdy Railway road. ( Amount US$ 56.358 million ) 10.Purchasing of Railway Machine and relative equipment. (Amount U$ 600 million )


Government Patrice in Myanmar Mining Industry (Joint Venture)

A. Investment Opportunity (Joint Venture) 1998 Union of Myanmar Foreign Investment Law 1994 Union of Myanmar Mines Law 1996 Rule relating to Mines Law To invite participation in terms of technical know how and investment from sources within the country and abroad.

B. Objectives of the Myanmar Mines Law (1994) (a) To implement the Mineral Resources Policy of the Government; (b) To fulfill the domestic requirements and to increase export by producing more mineral products; (c) To promote development of local and foreign investment in respect of mineral resources; (d) To supervise, scrutinize and approve applications submitted by person or organization desirous of conducting mineral prospecting, exploration or production; (e) To carry out for the development of conservation, utilization and research work of mineral resources; (f) To protect the environmental conservation works that may have detrimental effect due to mining operation. (g) The Ministry of Mines is the government authority responsible for implementation of the policy, legislation and enforcement of law, Rules and Regulations in the mining Sector. (h) The policy of the Ministry of Mines is not to make new investment on its own, but to encourage foreign and local investors to invest in the mining Sector. (i) At present the Ministry of Mines has licensed to the existing mines and large deposits to the local investors for production. (j) Foreign companies or Investors shall have to start from the grass root exploration at the interest potential areas if they desire.


C. Tax Regime in the Mineral Sector in MyanmarDead Rent Royalty Royalty for metallic minerals is 3 to 4% and 4 to 5% for precious metallic minerals as prescribed in chapter 6 of the Myanmar Mine Law. Royalty is levied on value of mineral sold. It is a sale based royalty and not a production based royalty. (Refer section 115 of the Myanmar Mines Rules) Royalty may be exempted or relief may be given by the Ministry of Mines.

D. Production Sharing Contract (P.S.C) System Myanmar practice the production sharing contract (P.S.C) system In the production sharing types of agreement the investor shall have to contribute 100% of investment in which case the government would expect a share of the production and a production sharing will be signed with sharing ratio to be agreed upon between the parties. At present, a Chinese Companies, namely Myanmar-china Non-ferrous Metal & Mining Co., Ltd is operation in cooperation with No.(3) ME on Production Sharing Contract (P.S.C) basis for Nickel Mining at Tagaung Taung, Mandalay Region. One Thai Mining company, namely, Myanmar-Pongpipat Co., Ltd is operation in cooperation with No(2) Mining Enterprise on production sharing contract (P.S.C) basis for tin mining at Heinda mine, Tanintharyi Region.


E. Brief Procedures for the Foreign Investment in Mining Sector in Myanmar Foreign company has to send request letter for a courtesy call to the Union Minister for the Ministry of Mines through the respective Embassy in Myanmar to the Ministry of Foreign Affairs to the Ministry of Mines officially. The Union Minister of responsible personnel from the Ministry will meet the company. At the meeting the investor can discuss the opportunities of investment in Mining sector at Myanmar and mention the interest mineral and area to be implemented. Field visit will be arranged if requested by the investor or company and technical discussion will be made for the assistant of site visit. After the field visit, the investor can submit the exploration proposal to the Ministry of Mines. After the approval of the Ministry, the Company and DGSE will make the Draft Agreement , submit to the Myanmar Investment Commission.

F. Brief Procedures for the Foreign Investment in Mining Sector in Myanmar Foreign company has to submit the proposal to Myanmar Investment Commission and the MIC will see the investor and explain the procedures for Foreign Direct Investment (FDI) in Myanmar. The MIC will deal with the respective Ministry and when concerning Ministry has agreed for investment, MIC will transfer the proposal to the Ministry. And the Ministry will see the Investor and the procedures will follow as the previous procedure.


DEAD RENT REATE ( US$ /Sq. Km)Sr. 1. Mineral Commodity Industrial (Coal, Lst, etc ) Metal (Fe, Cu, Pb, Zn, Ni, Cr, Mn, etc) Precious metal (Au, Ag, Pt, Ta, Nb etc) Prospecting 1 Year 2nd Year 60 120st st

1 Year 120

Exploration 2 Year 3rd Year 4th Year 5th Year 240 480 720 960nd

2.

120

240

240

480

950

1440

1920

3.

240

480

480

960

1920

2890

3850

DEAD RENT REATE ( US$/Sq. Km)Sr. 1. 2. Mineral Commodity Industrial (Coal, Lst, etc. ) Metal (Fe, Cu, Pb, Zn, Ni, Cr, Mn, etc.) Precious metal (Au, Ag, Pt, Ta, Nb Etc.) 1st Year 960 1920 Feasibility Study 2nd Year 1440 1920

3.

3850

3850

Categories of Mining Permits 1. 2. 3. 4. 5. 6. Prospecting Permits Exploration Permits Feasibility Study Development Small Scale Mining Permit Large Scale Mining Permit 1 yr 1 yr ( Extendable ) 1 yr 1 yr 5 yr 25 yr

- Funds required to conduct the prospecting, exploration and feasibility study was borne by the investor 100% at his own risk.






Geological Structure Map of Myanmar


Region and Division of Myanmar


Seismotectonic Map of Myanmar






Major Geotectonic units of Myanmar


ministery of mining

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