Myanmar has embarked on a road to establishing special economic zones and a new special economic zones (SEZ) law is expected to be formally enacted by the end of this year, according to this week's issue of the local news journal Voice.
The new SEZ law, besides aiming to mainly absorb inflow of more foreign investments into the country to promote its economic development, also contains provisions which protect the country's national entrepreneurs, the journal quoted the Myanmar Industrial Producers' Association as saying.
About 20 Myanmar national giant entrepreneurs were consulted and their remarks and proposals were also sought with regard to the drafting of the law, the journal said.
Granting of special privileges to foreign investors setting up SEZs is reportedly to be contained in the law which mainly directs at the emergence of the exceptional Thilawa SEZ in Yangon's Thanlyin township, the prospective first full foreign investment SEZ in Myanmar.
A master plan for the establishment of Thilawa SEZ has been designed for Myanmar by Chinese experts for feasibility study with the cooperation of the Myanmar side.
Under the expected new special economic zone law, Myanmar will designate six main commercial cities as free trade zones, local media quoted official sources as saying, adding that the six free trade zones will be Thilawa Port in Yangon, Mawlamyine in Mon state, Myawaddy and Hpa-an in Kayin state, Kyaukphyu in Rakhine state and Pyin Oo Lwin in Mandalay division.
Foreign investors making direct investment in the free trade zones will be categorically exempted from taxation ranging from a minimum of one year to a maximum of eight years, it said, adding that five prospective sectors, outlined by the government, are production; high-tech; agriculture, livestock breeding and forestry; transport and communications; and banking services.
Specifically, income derived from such investment in the production and communication sectors for the first five years will be totally exempted from taxation, while that in the sector of high-tech for the first eight years, in the sector of agriculture, livestock breeding and forestry for the first two years, and in the sector of banking services for the first one year will also be so handled.
It is predicted that once the new SEZ law is promulgated, 200, 000 job opportunities will be created.
Meanwhile, establishment of three other Thai-proposed special industrial zones, located in Myawaddy and Hpa-an in southeastern Kayin state and Mawlamyine in southern Mon state is also underway. The project constitutes part of an economic cooperation strategy ( ECS) program agreed upon at a summit of Cambodia, Laos, Myanmar and Thailand held in Myanmar's Bagan in November 2003.
Under the Ayeyawaddy-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) agreed by the four countries, the three Thai- proposed industrial zone projects with Myawaddy zone covering 173 hectares, Mawlamyine zone 124 hectares and Pha-an zone 178 hectares, are also estimated to start later this year.
Dealing with the three industrial zone projects to be jointly implemented by Myanmar and Thailand, Myanmar is to lease land to foreigners residing inside and outside Myanmar as well as Myanmar citizens residing abroad, according to the Ministry of Industry-1.
The period of lease is designated as being a minimum of 75 years and levying of profit tax will be relaxed for re-investment with the profit earned annually.
Moreover, Myanmar is likely to establish one more special industrial zone in Rakhine state, western part of the country, and invite foreign investment mainly from Bangladesh for the development, more local journals reported.
The planned Rakhine special industrial zone was proposed by Bangladesh at a time when Bangladeshi businessmen were deliberating to invest in Myanmar in crops plantation under contract farming system.
If approved, the Rakhine special zone will become the fifth of its kind after Thilawa in Yangon's Thanlyin-Kyauktan, Myawaddy and Pha-an in Kayin state and Mawlayine in Mon state.
There have already been 19 local industrial zones established in the early stage across Myanmar. The zones comprise a total of 9, 574 industrial enterprises in operation which include small, medium and heavy industries respectively taking 57.48 percent, 25. 24 percent and 17.28 percent, according to the Myanmar Industrial Development Committee.
Of the industrial zones in Yangon, the 453-hectare Hlaingtharya zone is leading as the most developed one.
According to official statistics, Myanmar's industrial sector contributed 17.5 percent to the gross domestic product of the nation in the fiscal year 2005-06 and a 19-percent contribution is expected for 2006-07 ending March.
Private sector's contribution to the industrial sector stands at 92.36 percent, statistics also show.
More statistics indicate that contracted foreign investment in Myanmar has reached 13.917 billion U.S. dollars in 402 projects up to now since the country opened to such investment in late 1988.
Observers here said that the anticipating promulgation of Myanmar's new SEZ law would not only open up a new page in the country's seek for new foreign investment but also constitute an initial step towards industrialization.