Inflation is the problem, not the exchange rate!

November 24, 2017, 5:50 pm

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Inflation is the problem, not the exchange rate

Monday, February 20, 2017

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Obsessing with the exchange rate and imposing bureaucratic measures will only stall reforms.

By MIN THU MAUNG | FRONTIER

THE RECENT volatility of the kyat – particularly its rapid decline in value in late 2016 – has prompted many to call for measures to manage the situation. Despite the widespread concerns about the health of the currency, the situation is not as critical as one might believe.

The trajectory of the kyat relative to the US dollar over the past three years is similar to many foreign currencies. Consider the value of the Canadian dollar and Australian dollar over the same period against the US dollar.

kyat-aud-cad-exchange-rate.jpg

Although Australia and Canada possess advanced economies, the resemblance is remarkable. Their exchange rates vis-à-vis the dollar show very similar patterns to that of the kyat – the volatilities of the three rates are in fact almost identical.

The Australian and Canadian economies are both highly dependent on the export of commodities, and commodity prices have significantly declined over this period. Allowing their currencies to depreciate is a coping mechanism to maintain exports and retain employment.

Myanmar also relies heavily on exports, especially natural gas. With the declining revenue from exports and rising imports – not to mention the accompanying high inflation – depreciation (and the accompanying volatility) of the kyat is only natural.

Experience shows that currency values almost inevitably decline when faced with adverse macroeconomic conditions. In particular, current account and budget deficits almost always lead to currency depreciation/devaluation unless they are offset by other financial inflows.

For instance, Laos and Cambodia ran huge deficits for several years during the past decade but inflows from foreign direct investment and financial accounts provided them with the resources to relieve pressure on their local currencies.

The first line of defence against currency depreciation is to buy up the local currency with foreign exchange reserves. During the Asian Financial Crisis of 1997, Thailand reportedly spent US$5 billion to defend its currency. Then came the second mechanism: raising the interest rates. Thailand also increased its rate from 10 percent to 12.5 percent. Raising domestic currency interest rates motivates people to hold the currency and not convert it to dollars.

Nonetheless, the Thai baht still depreciated by more than 50 percent during the final six months of 1997. When a country has depleted its reserves, the next step is to gain International Monetary Fund financing. However, IMF financing usually comes with strings attached, such as requirements to reduce spending or increase interest rates, among others. And IMF financing generally only comes after a currency has already depreciated significantly.

Again, empirical evidence shows that countries usually do not succeed in defending their currencies. The only country in recent memory that has successfully defended its currency peg was Hong Kong – and that was almost two decades ago. Attempts to defend a currency generally lead to depletion of reserves, high interest rates and, in some stances, currency controls.

This is usually followed by hysterical accusations of “manipulation” and finger pointing. Despite rigorous efforts and tough talking from fiscal authorities and governments, almost all currencies that come under attack eventually depreciate.

So where does this leave Myanmar, given the recent depreciation of its currency, and how should it respond?

It does not appear to have the foreign currency reserves to intervene. Without reserves, it is hard to “manage” a managed float, because it requires the buying and selling of the dollar as needed. Myanmar’s managed float sees the Central Bank hold a daily auction, at which banks can bid to buy or sell dollars. On January 31, the banks sought to buy $1 million – but the Central Bank decided to sell just the token amount of $100.

Even if the Central Bank had reserves, should it spend these reserves to defend the currency? It depends. Even a country with sound fundamentals could see its local currency face pressure to depreciate due to temporary conditions, such as a surge in imports or spending, or unfounded speculative attacks. In this case, the answer is almost always yes.

On the other hand, pressure to depreciate may be rooted in more chronic issues. In this case, reserves should be used to smooth out unusual fluctuations and to buy the time needed to enact reforms. This is particularly the case in emerging markets, where sharp currency depreciations generally erode confidence and it’s arguably better to let a currency depreciate gradually.

Intervening in the currency markets can allow time for FDI flows to settle in, the government to reduce the budget deficit or inflation rate, or export revenue to grow. Reserves should not be used to artificially inflate the value of a currency, though.

At the same time, the country does not seem to have much appetite to raise interest rates.. Higher interest rates increase the cost of borrowing and dampen economic growth. Although Myanmar’s interest rates are seemingly already high, it should be noted that high interest rates are typical of economies combating inflation.

At one point in 1981, the interest rate in the United States stood at 20 percent and the US went into recession. Myanmar’s economy is perhaps too fragile to experience this kind of austerity. So, instead, we are hearing the usual talk of crackdowns and controls. Some recent measures include requiring citizens and companies to provide details of offshore accounts and plans to restrict the import of luxury goods.

It’s important to acknowledge that the hardship caused by the current exchange rate volatility is real. Unlike their counterparts in advanced countries, Myanmar importers – and exporters, for that matter – do not have access to the financial instruments to hedge this risk. Nonetheless, exchange rate risk is an integral part of an open economy and this risk will remain as long as Myanmar’s economy remains open to the world.

Depreciation of the kyat is a natural deterrent for imports and this market mechanism works better than selectively restricting imports or imposing controls. Import regulations and controls create bureaucracy, corruption, and cronyism: When controls are imposed, more often than not, only a selected few importers tend to benefit.

Currency depreciation, combined with appropriate import taxes, should work well to reduce excessive imports. From 2012 to 2015 the current account deficit more than doubled, from 4.0 percent in 2012 to 8.9 percent in 2015). The Asian Development Bank is forecasting the current account deficit to remain at 8.3 percent in 2016.

But how do we know that imports have been excessive? The depreciation of kyat is the best available indicator – but it’s also perhaps the best mechanism to counter this excessiveness. Cumbersome import controls, at this point, are unnecessary.

Clamping down on black markets and restrictions on overseas foreign currency accounts are temporary and superficial measures that will only treat the symptoms but not the disease itself. Black markets exist to fill voids left by official markets. In the case of the currency, as long as the official reference exchange rate does not accurately reflect the market rate, a black market will exist.

Another concern that has been raised by the central bank (and echoed by others in the industry as well) is the hoarding of the dollar, especially in offshore accounts, for speculative purposes. Offshore currency accounts reflect a lack of trust in the country’s system.

Keynes noted that people may hold cash (or, in Myanmar’s case, foreign currency cash or liquid accounts) for transaction needs, as a precaution, or for speculation. It is indeed difficult to show that those with offshore accounts speculate. Even if dollars are hoarded for speculative purposes, one should remember that this is the nature of free markets.

It is worth asking why anyone would be willing to forego a 10 percent interest rate in a kyat-denominated fixed deposit account at a Myanmar bank and hoard the money in, say, Singapore, where it will incur 1 percent interest or lower. If such a deep lack of confidence exists, perhaps it is time for some soul searching.

Admittedly, some may hoard foreign currencies offshore to evade taxes and to conceal illegal gains. However, those with such ill intentions generally do not open foreign currency accounts in places like Singapore.

There are many exotic places in the world where some of the wealthiest people could conceal their wealth without anyone ever finding out. Clamping down on ordinary citizens who might have some relatively minor amount of foreign currency in an overseas account is, at best, a wild goose chase.

At this stage of its economic growth, Myanmar does not benefit much from a strong kyat. Artificially supporting the value of kyat creates hardship for exporters at a time when the country desperately needs to increase exports. Exports, unlike imports, create jobs. A weaker kyat also makes investment in Myanmar more attractive.

You don’t have to look far to find examples of how this can work to Myanmar’s advantage. Decades of export-led growth have lifted at least 400 million Chinese out of poverty – possibly as many as 800 million. Export-led growth also led to the rise of so-called Asian Tigers: Singapore, Hong Kong, Taiwan and South Korea.

Currency depreciation will no doubt affect prices of some imported products. However, the exchange rate is merely a symptom; inflation is the actual disease. Obsessing with the exchange rate and imposing bureaucratic measures will only stall reforms.

Myanmar needs to deregulate and not regulate more. Controls and regulation just erode investor confidence. More exports, less imports, reduced deficits, lower inflation and higher investment will naturally create a stronger kyat.

Ref:https://frontiermyanmar.net/en/inflation-is-the-problem-not-the-exchange-rate

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OMG! Actual FDI hits $ 2.8 bln this FY 2017(Falls again More Than 50pc Compared to Last Year)

November 24, 2017, 6:50 pm

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Eleven on Thu, 11/09/2017 - 05:03

From April to September of this year, the inflow of actual foreign investments into the country reached US$ 2.8 billion though Myanmar Investment Commission granted foreign investments worth US$ 4137.013 million.

The MIC allowed foreign investments in agricultural, livestock and fishery, manufacturing, electricity, transportation and communication, hotels and tourism, real estate, industrial zone construction and other service sectors.

During this fiscal year, the country sees the influx of investments from Bangladesh, Brunei, China, France, Germany, Hong Kong, India, Indonesia, Japan, Macau, Malaysia, South Korea, Singapore, Sir Lanka, Thailand, the Netherlands, UK, US, Vietnam, Luxembourg, Samoa, Qatar, South Africa, Taiwan and New Zealand.

From 1988-1989 until September of this FY, China topped the list of foreign investors with an investment of more than US$ 74 billion, followed by Singapore. Take a look at the investment sector, oil and gas sector stands first and energy sector, second.

Under the second five-year National Comprehensive Development Plan (2016-2017 to 2020-2021), the government has prioritized export promotion by encouraging foreign investments, private sector promotion, the transformation of regional development projects into commercial cooperation and coordination with private investments for the benefits of people.

Ref:http://www.elevenmyanmar.com/business/12348

FDI could exceed MIC’s target in 2017-18, but still lower than previous years’

Htin Lynn Aung 20 Jul 2017

FDI amounted to US$3.1 billion for the first four months of the current fiscal year, which is half the MIC’s original target for the entire year. The Myanmar Times

The Myanmar Investment Commission (MIC) could achieve or even exceed its US$6 billion foreign direct investment target for 2017-18.

Between April 1 and July 11 of the current fiscal year, FDI into the country hit US$2.7 billion, almost half the MIC’s target. Meanwhile, a total of US$127 million in fresh funds was pumped into the Thilawa Speical Economic Zone, while US$221 million was injected into existing projects.

That’s US$3.1 billion in total for the first four months of the current fiscal year, which is half the MIC’s original target for the entire year.

“During first four months of the [fiscal] year, FDI has already reached US$3 billion so our target is likely to be achieved. We still have about eight months left to the end of the fiscal year, so things are looking very promising,” said U San Myint, deputy director general of Directorate of Investment and Company Administration.

Falling behind
However, the FDI target for the current year still lags behind previous years’. In 2016-17, the National League for Democracy government’s first year in power, FDI totaled US$6.6 billion, which was about US$3 billion less than in FY2015-16. During the last year of former president U Thein Sein’s administration, Myanmar enjoyed FDI of US$9.5 billion.

The highest year on record for FDI was 2010-11, when total FDI hit almost US$20 billion. Half of those funds were approved for the oil and natural gas extraction sector, while US$8.2 billion was channeled to the electricity sector. The remaining funds were ploughed into the mining and mineral extraction sector.

At the time, China was Myanmar’s largest foreign investor, pumping in investments worth US$8.3 billion. Hong Kong came in second with investments of up to US$5.8 billion. Meanwhile, South Korea, Thailand, and Singapore invested US$2.7 billion, US$2.1 billion and US$226 million respectively.

Since then, Singapore has emerged as one of the largest foreign investors in Myanmar, with investments totaling US$17.5 billion as at June 2017, up around 25 per cent from the previous year.

FDI could exceed MIC’s target in 2017-18, but still lower than previous years’

China still tops the list as the largest investor in Myanmar, with some US$19 billion invested in the economy, up about 27 pc from the previous year.
Thailand is the third largest investor, with US$10.9 billion invested in the local economy.

While the oil and natural gas extraction sector still attracts the most funds, interest in transport and communication as well as mining has risen in recent years, according to data provided by the Directorate of Investment and Company Administration (DICA).

New policies
The government has introduced new policies in a bid to boost FDI. A new investment law implemented in October 2016, when approved this month, will see new regional and state investment commissions approved, making it easier for potential investors to expand in the country.

“We will authorise investment permits to the regional and state investment commissions soon,” said deputy director general U San Myint. “This will speed up the investment process in Myanmar.”

Under the new law, regional and state investment commissions can approve investments of up to US$5million (K6 billion).They can authorise most investment works apart from some exceptions governed under section 36 of the new Myanmar Investment Law.

The law stipulates that capital investments and investments with potential environmental impact as well as those under scrutiny by the Union Government will need MIC approval to proceed.

The government will also seek to enhance the farming, service and agricultural based products, livestock breeding and fisheries, import substitute businesses, hydroelectric distribution, transport, education and health sectors, while construction of low-cost housing and industrial cities will be the State’s priority.

“We will focus on the sectors most in need of investment in the country. The first one is electricity, second is transport, then import substitution and improving exports. These are the most important sectors,” U San Myint said.

Meanwhile, 60 pc of the Myanmar population still live in villages. “So we will need more investments in the farming sector and livestock breeding sector. The education and health sectors are also important for the country,” he adds.

We also need the right infrastructure to develop our industrial sector. Low-cost housing is also needed for the people who have low salaries. We have invited investors to consider all these sectors,” he said.

Ref:https://www.mmtimes.com/business/26883-fdi-could-exceed-mic-s-target-in-2017-18-but-still-lower-than-previous-years.html

Foreign Investment Falls More Than 50pc Compared to Last Year

According to Myanmar Investment Commission, Singaporean investment in Myanmar from 2011-12 to 2015-16 stood at over $10 billion.

Foreign investment into Myanmar has fallen by more than 50% to $1.4 billion in the six months to the end of September, according to the Myanmar Investment Commission, which nonetheless remains optimistic about the rest of this fiscal year.

In the first half of the 2015-2016 fiscal year overseas investors pledged $3 billion, but that figure fell by $1.6 billion this year as companies awaited clarity from the new NLD government, according to U Aung Naing Oo, Secretary of the Myanmar Investment Commission.

“In the period of transition from the previous government to the new one, foreign investors were hesitant,” he said. “They have been watching and observing the government’s policies and priorities.” The lacklustre investment was normal for a period of transition, he added.

In June the NLD disbanded the Myanmar Investment Commission set up by the USDP government and formed a new one. The new MIC started work on June 27th, and has since approved $662 million of investments from 52 firms.

The $1.4 billion total since April includes extensions to businesses that were already approved by the USDP-led government and $143.526 million for the Thilawa Special Economic Zone, according to the MIC.

The commission expects Myanmar’s new investment law, which was passed by the upper house earlier this month, to spur foreign investment for the rest of the fiscal year and help it catch up to last year’s figure.

“The new Myanmar Investment Law improves upon the two previous laws,” said U Aung Naing Oo. “According to the existing laws, investors have to submit all the information to the MIC, especially foreign investors. The MIC had full authority to approve the investment proposal. So, foreign investments took time and the process wasn’t smooth.”

He added: “We expect $6 billion of foreign investment [by the end of the fiscal year]. Current investment volumes are slow compared to last year but we have six months left in this year, I believe that investment will increase for the rest of the fiscal year,” U Aung Naing Oo, Secretary of MIC, said.

Correction: In last week’s issue our story ‘Foreign Investment Jumps as $280m in New Projects Approved’ incorrectly stated that the MIC had approved $662 million in investments since April 2016. The figure in fact only applies to the period from June 27th, when the newly reformed commission began work. We apologise for the error.

Ref:https://www.mmbiztoday.com/articles/foreign-investment-falls-more-50pc-compared-last-year

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Myanmar main beneficiary of Kyaukphyu: CITIC

November 24, 2017, 7:11 pm

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SU PHYO WIN THOMPSON CHAU 23 NOV 2017

Kyaukphyu, as pictured in 2012. The area has been earmarked for development of an SEZ, approvals for which are still pending. Photo: EPA

YUAN Shaobin, executive president of CITIC Myanmar, which is the developer of a proposed Special Economic Zone (SEZ) in Rakhine, disagrees with critics who have accused China of taking an unfairly large stake in the project.

He insisted that Kyaukphyu SEZ will spur much-needed developments in the region and that comparing Kyaukphyu’s ownership structure to that of the Japan-backed Thilawa SEZ in Yangon is “unfair” and “not correct.”

Mr Yuan referred specifically to comments by Simon Tay, chair of the Singapore Institute of International Affairs, who told The Myanmar Times in June that the difference in foreign ownership between Thilawa and Kyaukphyu is very “stark” and “noticeable”.

“The Japanese really made an effort to work with Myanmar by giving Myanmar 51 percent. It is an important [gesture] as a sign of friendship and equality,” Mr Tay stated, adding that if he were to advise the Chinese consortium he “would never ask for 85 percent”.

Under the shareholder structure permitted by the government under U Thein Sein, it was agreed that China would have an 85pc stake in the port, with Myanmar holding the remaining 15pc.

Since the current government took charge, the Myanmar consortium has made new demands to raise its stake to 30pc as well as receive dividends, but does not what to shoulder any financing responsibility. That has led to delays in approving the project, which is currently still pending.

SEZ will benefit Rakhine

Kyaukphyu in Rakhine State is the location for a proposed SEZ which will include an industrial park and a deep-sea port. In 2015, a CITIC-led consortium involving China Harbor Engineering, China Merchants, TEDA Investment, Yunnan Construction Engineering Group and Thailand’s Charoen Pokphand Group won the bid to develop both the port and the industrial park.

But the project drew flak from critics, who say the port holds more benefits for the Chinese than locals, as it serves as a gateway for China to the Middle East, reducing the country’s reliance on the Strait of Malacca.

However, Mr Yuan told The Myanmar Times that the mega-project will mainly benefit Myanmar’s economy and support the growth of Yangon, Mandalay and Nay Pyi Taw. Despite the project being a core part of China's Belt and Road Initiative, he argued that the benefits for China “won’t be much”.

For one, employment opportunities will be made available for the local population, with around 2-3 thousand jobs created during the construction period of the port.

“It [Kyaukphyu SEZ] will be beneficial to Myanmar and, of course, Rakhine. And when the deep-sea port becomes operational, we will be connected to Yangon, Nay Pyi Taw and Mandalay. It will help these three big cities do business and develop logistics networks,” he said.

“It is hard to say when this project could benefit China -- it could take years. However, the benefits won’t be much. Myanmar will take 70pc and China, 30pc of the benefits.”

Mr Yuan added that the distance between coastal China and the Kyaukphyu port is too great to render the logistics cost competitive compared to the Strait of Malacca.

Foreign investments

Warren Hua, legal advisor to CITIC Construction, argued that by investing in the development of the port and industrial park, the Chinese state-owned bank is in fact lending Rakhine a hand in improving its existing infrastructure.

“What is going to be done by CITIC in Myanmar is exactly what happened in China years ago, before the Chinese economy boomed. In the mid-90’s, China lacked the money and technology to develop its infrastructure facilities. We introduced a lot of foreign investors to come into China to help us build ports and highways – that’s why the economy developed,” he said.

For example, CITIC has plans to build a highway connecting Kyaukphyu port to Nay Pyi Taw. Through the capital city, the port would also be connected to Yangon and Mandalay, enabling it to connect with and serve nearly 60pc of Myanmar.

“Without these facilities, who would be willing to come and invest here?”

Now, the ball is in Nay Pyi Taw’s court. CITIC said that they have asked Nay Pyi Taw to approve an Environmental Impact Assessment (EIA) application since the beginning of this year but there has been no response from the government.

“We will do an EIA. We note that any kind of investment or development will influence the environment – both negative and positive,” Mr Yuan said in relation to the environmental concerns.

Mr Chua said it will take about 1.5 years to complete the EIA process. For now, “we are still waiting for the Myanmar government to issue the EIA,” he continued.

Ref:https://www.mmtimes.com/news/myanmar-main-beneficiary-kyaukphyu-citic.html

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The Myanmar FDI nvestment Law 2016 And Rules 2017.

November 24, 2017, 7:58 pm

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The Myanmar Investment Law 2016 And Rules 2017.

10 July, 2017

New investment laws, rules and procedures in Myanmar have sparked widespread interest as they introduce reforms to boost investor confidence, increase efficiency, ease the doing of business and attract more foreign investments into the country.

The Myanmar Investment Law 2016 (“MIL”) came into effect on 18 October 2016 and consolidates and replaces the previous Foreign Investment Law 2012 and the Citizens Investment Law 2013. The MIL, which provides the overall legal framework, was followed by the more detailed Myanmar Investment Rules 2017 (“Rules”) which came into effect on 30 March 2017 as well as two notifications: Notification 13/2017 dated 1 April 2017 (Classification of Promoted Sector) (“Notification 13”) and Notification 15/2017 dated 10 April 2017 (List of Restricted Investment Activities) (“Notification 15”). Together, these represent the body of the current Myanmar foreign investment laws.

Here are some of the key highlights introduced under the MIL, Rules and notifications:

1. Scope of law and treatment of investors

The MIL, from its start date, applies to existing or new investments in Myanmar except for matters coming under the old Foreign Investment Law 2012 such as investment disputes or prior permit investments previously suspended from business operations before the start date or investment projects suspended by governmental measures under general and national security exemptions.

With the merging and consolidation of the Foreign Investment Law 2012 and the Citizens Investment Law 2013 into the new MIL, the Government will now treat foreign and local investment projects equally in terms of expansion, management, operation and sale of direct investments.

2. New or streamlined procedures for investment approval

There are now two types of processes to obtain approval from the Myanmar Investment Commission (“MIC”), that is, the permit application process and the endorsement application process.

Proposal submission for permits

A proposed investor must submit a proposal to MIC for a permit which relates to the following types of businesses:

Endorsement applications

The endorsement process speeds up the approval process for investments in non-restricted business activities (that is, activities that do not require a permit). Endorsements entitle investors to enjoy land use rights and other exemptions and reliefs such as customs free duty and income tax exemptions.

According to Notification 13, if the business is in one of the “Promoted Sectors”, it may be possible to be a 100% foreign-owned business qualifying for endorsement by MIC or the relevant state or regional committee. Investors can better understand what activities qualify for 100% foreign-owned treatment by reading Notification 13 together with Notification 15 (discussed below). Endorsement applications can be submitted to either the MIC or the relevant state or regional committee.

3. Prohibited investment activities

Prohibited investment activities include those which may (a) bring or cause hazardous or poisonous wastes into Myanmar, (b) bring technologies, medicines, flora and fauna and instruments which are still being tested abroad, except for investments made for research and development, (c) affect Myanmar’s ethnic groups’ traditional culture and customs, (d) adversely affect the public, (e) cause an enormous impact on the natural environment and ecosystem, and (f) manufacture goods or provide services that are prohibited by law.

4. Restricted investment activities

According to the MIL, Rules and Notification 15, the list of restricted investment activities are divided into the following categories:

investment businesses allowed to be carried out only by the Republic of the Union of Myanmar
investment businesses not allowed to be carried out by foreign investors
investment businesses only allowed in the form of a joint venture with a Myanmar citizen or citizen owned entity (a Myanmar local minimum direct shareholding interest of at least 20% however is required with approval from the relevant Ministries).
investment businesses requiring approval of the relevant ministries.

5. Investment screening application and guidance from MIC

For investors who are uncertain as to what type of investment they can engage in, MIC can pre-screen their investment applications for a nominal fee. The project’s nature and all material information will need to be fully disclosed to allow MIC to assess what type of application needs to be made. MIC can offer non-binding guidance within 10 working days from the date of application.

6. Tax incentives

Tax exemptions or incentives may apply depending on a number of factors, including the following:

The zone in which the investment takes place: MIC may with the approval of the Government grant income tax exemptions in Zone (1) (less developed regions) for 7 years; in Zone (2) (moderate developed regions) for 5 years; in Zone (3) (adequate developed regions) for 3 years.

Whether the business is in a promoted sector: Notification 13 sets out a list of promoted sectors

Other factors such as the value of investment (must exceed USD300,000); whether the investment creates new employment opportunities in Myanmar and develops a skilled labour force, brings new or enhanced technology or business skills, leads to market competition, greater efficiency or productivity, or provision of enhanced infrastructure or services in Myanmar.

Applications for tax incentives may be submitted together with or subsequent to a proposal for a permit or application for endorsement, and must specify the precise tax incentives applied for.

7. Land use rights

Investors who obtain permits or endorsements are entitled to obtain long-term lease rights (on land or building) for up to an initial 50 year period and two consecutive 10-year extensions. Such investors may apply to the MIC for a land rights authorization, which will be assessed by the MIC or relevant state or regional committee.

8. Transfers of funds

Foreign investors may transfer abroad funds relating to investments made under the MIL. Any transfers of funds shall be allowed only after paying all tax obligations imposed on such amount in accordance with the relevant tax laws. Foreign experts with legal work permits may make remittances abroad without any further deduction from the amount paid under income tax law.

Transfers of loan proceeds or taking a loan is subject to the approval of the Central Bank of Myanmar.

The approval of MIC is also required in relation to the transfer of proceeds from a total or partial sale or liquidation, payments resulting from any settlement of investment disputes, compensation under investment or expropriation, or where the investor has any outstanding tax obligations, or any contingent or disputed obligations within Myanmar.

9. Insurance

Investors holding a permit or endorsement are required to take out relevant insurance based on the following types of insurance: property and business interruption insurance; engineering insurance; professional liability insurance; professional accident insurance; marine insurance; and workmen compensation insurance.

10. Transitional and miscellaneous provisions

Under the Rules, any permit issued to an investor under the previous investment law shall remain effective until the permit expires. If the investor wishes to take advantage of any additional or discretionary incentives available under the new law, the investor may apply to enjoy the new benefits. An investor who has commenced operation prior to the Rules coming into effect and who intends to change its original investment activities will have to apply for a permit if such change requires a proposal to be submitted. However, for ownership structural changes (Myanmar local investment to foreign investment or vice versa) a proposal or endorsement application is not required to be submitted to MIC.

Ref:http://www.conventuslaw.com/report/the-myanmar-investment-law-2016-and-rules-2017/

Myanmar Investment Law Official Translation 3-1-2017 by Than Han on Scribd

Foreign Investment Law in Myanmar~ 2012

An Introduction to the 2012 Myanmar Foreign Investment Law

In 2012 the Government of Myanmar introduced a new Foreign Investment Law (FIL). The FIL replaced the 1988 Foreign Investment Law (1988 FIL). The FIL provides a framework for investing in Myanmar. The Government separately introduced implementing rules (Investment Rules) on 31 January 2013. The Investment Rules provided significant additional detail in relation to the operation of the FIL and the business activities in which foreigners are permitted to engage, the restrictions that apply, application procedures, the use of land, the transfer of shares, foreign currency remittance, and the taking of security on land and buildings and labour relations. The FIL and the Investment Rules are key pieces of legislation underpinning the Government’s efforts to attract foreign investment and kick-start Myanmar’s economy.

Pursuant to the FIL, when doing business in Myanmar, foreign investors can benefit from significant tax exemptions and other benefits. To be eligible, the foreign company will need to apply for a permit from the Myanmar Investment Commission (MIC Permit). Foreign investors operating in certain sectors are obliged to incorporate a business under the FIL.

Foreign Investment Law – Forms of Investment

Pursuant to Article 9 of the FIL, investments may be made in the form of:-

a 100% foreign-owned enterprise (other than for restricted activities),
a joint venture with Myanmar citizens or enterprises; or
a permitted form of business contract.

Foreign investors must form a Myanmar company in order to be entitled to the benefits of the new FIL. If a joint-venture is formed, the ratio of foreign to local capital can be mutually agreed by both parties.

Tax Exemptions and Reliefs

Pursuant to Article 27 of the FIL, foreign investors are granted a number of tax emptions and relief. These include:-

a 5-year tax holiday that may be extended
tax exemption for re-invested profits
accelerated depreciation on capital assets
tax relief on income tax up to 50% on profits from exports
tax deductions for research and development
exemptions from customs duties on capital assets to be used in the business imported during construction period
exemption from customs duties on raw materials imported during first 3 years of production
a deduction for expat salaries at normal rates
relief on customs duties on imports for expansion of the business
exemption from commercial tax for exports

Foreign companies wishing to benefit from incentives under the FIL must apply for an MIC permit.

Duties and Rights of Investors

Article 17 of the FIL sets out the duties owed by investors investing in Myanmar. Investors must, among other things, operate within and generally respect the laws of Myanmar, utilise land only as permitted by the MIC, obtain MIC approval before transferring land or buildings, avoid polluting or degrading the environment, register share transfers and comply with rules regarding knowledge transfer.

Article 18 set out investors’ rights. In addition to tax exemptions and reliefs investors have the right to sell and exchange or transfer assets in accordance with the laws of Myanmar, the right to transfer and sell all shares in the investment company, the right to promote the proposed investment, the right to additional benefits for developing new technologies promoting the quality of goods, improving production capacity and reducing pollution or for investing in underdeveloped regions of the country.

Foreign Ownership Restrictions

Certain restrictions apply when investing in Myanmar. Restricted activities are set out in Article 4 of the FIL. Restricted activities are broadly identified as being those contrary to the interests of Myanmar and its people or activities reserved exclusively for Myanmar citizens. Investment in restricted activities can only be undertaken if approved by the Government, and must be undertaken via joint ventures with local citizens or enterprises.

Land usage and Ownership

Pursuant to the FIL, foreign investors are permitted to lease land for an initial term of up to 50 years. Depending on the nature of the investment, two 10-year extensions can be applied for.

The MIC can grant longer leases to investors investing in Myanmar in less developed or more inaccessible parts of the country.

The MIC shall set the leasing price of Government owned properties after consultations with the Government.

Leases are not granted for:-

religious land;
land restricted for state security;
land under litigation; and
land restricted by the state.

Guarantee Against Nationalisation

The FIL provides an explicit guarantee that an economic enterprise granted an MIC permit cannot be nationalised during the term of the contract or during any extended term. Article 28 states that businesses approved by the MIC shall not be nationalised during the term of the contract or during an extended term whereas Article 29 states that businesses approved by the MIC shall not be forced to cease operations. Investors are also provided with a guarantee that they will be able to repatriate capital at the expiry of the term of contract (Article 30).

Transfer of Shares

The FIL provides that the foreign investors investing in Myanmar has the right to sell all or some of its shares to any foreigners/citizen/foreign company/citizen company. Transfers of shares must be registered in accordance with the laws of Myanmar and with the prior permission of the MIC.

Foreign Currency Issues

The FIL provides guarantees for the remittance in foreign currency of imported foreign capital and profits. Such remittance may be made through any bank authorised to perform international banking, at the prescribed exchange rate.

Dispute Resolution

The FIL contains provisions allowing for the incorporation of dispute-resolution mechanisms into investment contracts. Disputes that cannot be settled amicably are to be resolved in accordance with the contracts’ dispute resolution provisions. If there no such provisions are provided then Myanmar laws regarding dispute resolution shall apply.

Insurance

Pursuant to Article 23 of the FIL foreign investors are required to obtain insurance from state approved insurance companies.

Appointment of Employees

The FIL contains provisions intended to increase the use and skills of local Myanmar employees. All unskilled positions should be filed by Myanmar citizens.

In relation to skilled positions, Myanmar nationals must account for the following percentages of an FIL incorporated company’s workforce:-

At least 25% during the first two years
At least 50% during the second two years
At least 75% during the third two years

Ref:https://www.charltonsmyanmar.com/investing-in-myanmar/foreign-investment-law/

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What is Bitcoin Mining?

November 26, 2017, 9:29 pm

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How Bitcoin Mining Works

Where do bitcoins come from? With paper money, a government decides when to print and distribute money. Bitcoin doesn't have a central government.

With Bitcoin, miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine.

Bitcoin is Secure

Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.

Bitcoin Mining Hardware Comparison

Currently, based on (1) price per hash and (2) electrical efficiency the best Bitcoin miner options are:

AntMiner S7

4.73 Th/s
0.25 W/Gh
8.8 pounds
Yes
$479.95
0.1645

AntMiner S9

13.5 Th/s
0.098 W/Gh
8.1 pounds
Yes
$1,987.95
0.3603

Avalon6

3.5 Th/s
0.29 W/Gh
9.5 pounds
No
$499.95
0.1232

Bitcoin mining is the process of adding transaction records to Bitcoin's public ledger of past transactions or blockchain. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.

Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

What is Bitcoin Mining?

Visualize and Download High-Resolution Infographic

What is the Blockchain?

Bitcoin mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function.

The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a "subsidy" of newly created coins.

This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system.

Bitcoin mining is so called because it resembles the mining of other commodities: it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground.

What is Proof of Work?

A proof of work is a piece of data which was difficult (costly, time-consuming) to produce so as to satisfy certain requirements. It must be trivial to check whether data satisfies said requirements.

Producing a proof of work can be a random process with low probability, so that a lot of trial and error is required on average before a valid proof of work is generated. Bitcoin uses the Hashcash proof of work.

What is Bitcoin Mining Difficulty?

The Computationally-Difficult Problem

Bitcoin mining a block is difficult because the SHA-256 hash of a block's header must be lower than or equal to the target in order for the block to be accepted by the network.

This problem can be simplified for explanation purposes: The hash of a block must start with a certain number of zeros. The probability of calculating a hash that starts with many zeros is very low, therefore many attempts must be made. In order to generate a new hash each round, a nonce is incremented. See Proof of work for more information.

The Bitcoin Network Difficulty Metric

The Bitcoin mining network difficulty is the measure of how difficult it is to find a new block compared to the easiest it can ever be. It is recalculated every 2016 blocks to a value such that the previous 2016 blocks would have been generated in exactly two weeks had everyone been mining at this difficulty. This will yield, on average, one block every ten minutes.

As more miners join, the rate of block creation will go up. As the rate of block generation goes up, the difficulty rises to compensate which will push the rate of block creation back down. Any blocks released by malicious miners that do not meet the required difficulty target will simply be rejected by everyone on the network and thus will be worthless.

The Block Reward

When a block is discovered, the discoverer may award themselves a certain number of bitcoins, which is agreed-upon by everyone in the network. Currently this bounty is 25 bitcoins; this value will halve every 210,000 blocks. See Controlled Currency Supply.

Additionally, the miner is awarded the fees paid by users sending transactions. The fee is an incentive for the miner to include the transaction in their block. In the future, as the number of new bitcoins miners are allowed to create in each block dwindles, the fees will make up a much more important percentage of mining income.

Bitcoin Mining Guide - Getting started with Bitcoin mining

You will learn (1) how bitcoin mining works, (2) how to start mining bitcoins, (3) what the best bitcoin mining software is, (4) what the best bitcoin mining hardware is, (5) where to find the best bitcoin mining pools and (6) how to optimize your bitcoin earnings. Bitcoin mining is difficult to do profitably but if you try then this Bitcoin miner is probably a good shot.

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How Bitcoin Mining Works?

Before you start mining Bitcoin, it's useful to understand what Bitcoin mining really means. Bitcoin mining is legal and is accomplished by running SHA256 double round hash verification processes in order to validate Bitcoin transactions and provide the requisite security for the public ledger of the Bitcoin network. The speed at which you mine Bitcoins is measured in hashes per second.

The Bitcoin network compensates Bitcoin miners for their effort by releasing bitcoin to those who contribute the needed computational power. This comes in the form of both newly issued bitcoins and from the transaction fees included in the transactions validated when mining bitcoins. The more computing power you contribute then the greater your share of the reward.

Step 1 - Get The Best Bitcoin Mining Hardware

Purchasing Bitcoins - In some cases, you may need to purchase mining hardware with bitcoins. Today, you can purchase most hardware on Amazon. You also may want to check the bitcoin charts.

How To Start Bitcoin Mining

To begin mining bitcoins, you'll need to acquire bitcoin mining hardware. In the early days of bitcoin, it was possible to mine with your computer CPU or high speed video processor card. Today that's no longer possible. Custom Bitcoin ASIC chips offer performance up to 100x the capability of older systems have come to dominate the Bitcoin mining industry.

Bitcoin mining with anything less will consume more in electricity than you are likely to earn. It's essential to mine bitcoins with the best bitcoin mining hardware built specifically for that purpose. Several companies such as Avalon offer excellent systems built specifically for bitcoin mining.

Best Bitcoin Cloud Mining Services

Another option is to purchase in Bitcoin cloud mining contracts. This greatly simplifies the process but increases risk because you do not control the actual physical hardware.

Being listed in this section is NOT an endorsement of these services. There have been a tremendous amount of Bitcoin cloud mining scams.

Hashflare Review: Hashflare offers SHA-256 mining contracts and more profitable SHA-256 coins can be mined while automatic payouts are still in BTC. Customers must purchase at least 10 GH/s.

Genesis Mining Review: Genesis Mining is the largest Bitcoin and scrypt cloud mining provider. Genesis Mining offers three Bitcoin cloud mining plans that are reasonably priced. Zcash mining contracts are also available.

Hashing 24 Review: Hashing24 has been involved with Bitcoin mining since 2012. They have facilities in Iceland and Georgia. They use modern ASIC chips from BitFury deliver the maximum performance and efficiency possible.

Minex Review: Minex is an innovative aggregator of blockchain projects presented in an economic simulation game format. Users purchase Cloudpacks which can then be used to build an index from pre-picked sets of cloud mining farms, lotteries, casinos, real-world markets and much more.

Minergate Review: Offers both pool and merged mining and cloud mining services for Bitcoin.

Hashnest Review: Hashnest is operated by Bitmain, the producer of the Antminer line of Bitcoin miners. HashNest currently has over 600 Antminer S7s for rent. You can view the most up-to-date pricing and availability on Hashnest's website. At the time of writing one Antminer S7's hash rate can be rented for $1,200.

Bitcoin Cloud Mining Review: Currently all Bitcoin Cloud Mining contracts are sold out.

NiceHash Review: NiceHash is unique in that it uses an orderbook to match mining contract buyers and sellers. Check its website for up-to-date prices.

Eobot Review: Start cloud mining Bitcoin with as little as $10. Eobot claims customers can break even in 14 months.

MineOnCloud Review: MineOnCloud currently has about 35 TH/s of mining equipment for rent in the cloud. Some miners available for rent include AntMiner S4s and S5s.