The Export Import Licensing System of Myanmar

Since the new government had taken the responsibilities of the State in April 2011, the Republic of the Union of Myanmar has been marching towards a disciplined  democratic nation. A market economy has become an essential tool for the development of the nation. In almost two years, the government has reformed policies, including trade liberalization measures. The Ministry of Commerce, the licensing authority for export and import, plays a vital role in trade liberalization as it is responsible for the implementation of the economic and structural reforms towards a market economy. This article highlights the export/import licensing system of Myanmar for those who want to be familiar with the current practices.

The Export Import Licensing System of Myanmar

Introduction

 

In Myanmar, the export policy extends and explores foreign markets through effective use of its natural and human resources and promotes exports of traditional and value-added products. On the other hand, import policy gives priority to the importation of capital goods, which is a major requirement of the State, and raw materials and goods necessary to promote public health, export and national production so as not to rely on imports.

 

In the past five consecutive fiscal years, the volume of Myanmar’s external trade has surprisingly increased around 80 per cent. Myanmar is an exporter of agricultural products, marine products and manufacturing products and an importer of capital goods and intermediate goods. The major trading partners of Myanmar are China, Thailand, Singapore, India, Japan, Korea, Indonesia, Malaysia, the US and Germany. 

 

The Law Governing Myanmar’s Trade Sector

 

In the past, the Ministry of Commerce (“MoC”) prescribed rules and regulations under the Control of Imports and Exports (Temporary) Act (1947) and released orders, notifications and press-releases from time to time through newspapers, journals and websites1 in a transparent manner to enable traders and enterprises to become acquainted and comply with them. Recently, on 7 September 2012, the Control of Imports and Exports (Temporary) Act (1947) was abolished and the Export Import Law was adopted. The rules and regulations under the new Law are being developed at present. It is described in the newly enacted Law that the previously announced procedures, regulations, orders, notifications and press releases can continue to apply as long as these are compliant with the new Law.2 The MoC has the right to publish necessary regulations, rules and procedures by getting the approval of the Union Cabinet3 and can publish the notifications, orders, instructions and procedures.4

 

Registration for Trading

 

Foreign companies are not allowed to directly get involved in the trading business in Myanmar so as to to speculation of commodities. Only those who invest in production or manufacturing businesses in Myanmar under the authorisation of the Myanmar Investment Commission (“MIC”) are allowed to engage in international trade. There are two steps to being registered as a trading company. First, foreign companies have to register at the MIC. Similarly, Myanmar companies have to be registered at the Directorate of Investment and Company Registration (“DICA”) under the Ministry of National Planning and Economic Development (“NPED”). Second, companies have to be registered as exporters/importers at the Directorate of Trade under the Ministry of Commerce (“MOC”).

 

The validity of registration as an exporter/importer depends on registration at MIC or DICA, generally from minimum one year to maximum three years. Registration fees are 50,000 MMK (app 59 USD) for one year and 150,000 MMK (app 176 USD) for three years. It can be extended for the next three years with the same amount of start-up fees. Applying for an extension three months prior to the date of expiry is recommended. The registered exporters/importers are granted to carry out the export/import business on all  products and to distribute the imported commodities in the local market, except some products prohibited by the  State and some restricted items as per prescribed rules  and regulations. The registration shall be cancelled if no application for an extension is made and if the company fails to abide by the laws.

 

Means of Trade and Licensing Authorities

 

There are three types of trade in Myanmar: by sea, by air, and by land (cross-border). The first two categories fall into the overseas trade system – through Yangon International Airport, Yangon Port, Thilawa Port, Mawlamying Port, Pathein Port, Sittwe Port and Myeik Port. The latter, through the Border Check Points of Myanmar-China Border, Myanmar-Thailand Border, Myanmar-India Border and Myanmar-Bangladesh Border, can be categorised as overseas trade (if payment transaction is through designated banks) and cross-border trade (if payment is directly made among buyers and sellers). Under the Ministry of Commerce, the Directorate of Trade issues the export/import licences for overseas trade and the Department of Border Trade issues the licences for cross-border trade.

 

Foreign Currencies and Payment Method for Trading

 

At present, under the overseas trade system, the United States Dollar (“USD”), Euro, Japanese Yen and Singapore Dollar are allowed. Payment can be made through designated banks both in the form of a transfer (“TT”) as advance payment and Letter of Credit (“L/C”). Under the border trade system, local currencies of neighbouring countries are also permitted: Myanmar Kyat (“MMK”), Chinese Yuan and USD at the Myanmar-China border; MMK, Thai Baht and USD at the Myanmar-Thailand border; and MMK, India Rupee and USD at the Myanmar-India border. However, only USD is allowed at the Myanmar-Bangladesh Border. 

 

Restricted Items

 

All products can be traded except some items banned by the international agreements, international conventions and domestic laws. For example, being a signatory member of CITES, Myanmar has highly protected the exportation of fauna5and wildlife.6 At present, the exportation of some mineral and metal products (gold, diamond, petroleum), some animals and animal products (ivory, buffalo, cow, elephant, horse and  rare animals), marine products (shrimp  brine) and miscellaneous products (arms and ammunition, and antiques) are prohibited.

 

Documents Required for Licence Application

 

For the application of export licence, the following documents are required:

1.   Application form with the company’s letterhead;

 

2.   Online export application form (with six MMK revenue stamp);

 

3.   Pro forma invoice/sales contract;

 

4.   Necessary documents to be submitted for the exported commodity; and

 

5.   Recommendations from related ministries concerned7 (if necessary).

 

For the application of import licence, the following documents are required:

1.   Application letter with company’s letterhead;

 

2.   Online import application form (with six MMK revenue stamp);

 

3.   The original copy of pro forma invoice;

 

4.   Sales contract; and

 

5.   Endorsement documents of relevant government department or organisation concerned (If necessary).

 

Licence Fees and Commercial Tax

 

Licence fees and customs duty are exempted on export of any commodity. Commercial tax, which was collected on the exportation is now abandoned except on the exportation of petroleum, natural gas, gems, teak log and hardwood conversion. On the other hand, the imports are subjected to payment of licence fees, customs duty and commercial tax. Import licence fee is payable on CIF (cost, insurance and freight) value at a minimum of Ks 250 (approximately 0.3 USD) up to a maximum of Ks 50,000 (approximately 59 USD). Import licence fees are exempted for Joint Venture production industries for two years of construction period and three years starting from the commercial production period on the importation of capital goods, machinery and raw materials. Additionally, import licence fees are also exempted on the importation of 36 items of medicines and 31 items of pharmaceutical raw materials used in the production of drugs and medicines; fertilizer; farm implements; agriculture machinery; insecticides and commodities transported under the transit trade system.

 

Application and Permission for the Licences

 

The licence application form can be submitted at the Ministry of Commerce, Nay Pyi Taw or Yangon Region Office and also at the Department of Border Trade Offices of the respective border areas. An alternative means of application for an import licence is through the website portal http://www.myanmartradenet. com.mm. The membership fee for this website is 13000 MMK (approximately 15 USD) per year  and 11000 MMK (approximately 13 USD) for renewal yearly. 

 

In the past, only non-automatic licenceswere issued with the purposes of monitoringand balancingtrade, favouringinvestment related goods and protectingdomestic industries.  However, since June 2012, automatic licensingfor some commoditiescommenced with the purpose of gradually reducing licensing barriers in international trade. Licences are granted within 48 hoursof application for non-automatic and 24 hoursfor automatic ones.

 

Enjoy the Preferential Tariff Treatment Scheme

 

Exports from Myanmar can enjoy benefits from preferential tariff treatment schemes that reduce tariff on their exports. Exporters can apply for the Certificate of Origin (“CO”) at the MoC after obtaining their export licences. Depending on the country or region of exportation, different forms are used so Myanmar’s exports can enjoy different preferential tariff treatment: GSP Form-A (Generalized System of Preferences), CEPT Form-D (The Common Effective Preferential Tariff), AISP Form (ASEAN Integration System of Preferences), Form-E (China-ASEAN Free Trade Area - CAFTA), Form-SPT, Preferential Tariff For LDCs and Form-AK (ASEAN-Korea Free Trade Area - AKFTA).

 

Pre-shipment Inspection

 

In order to avoid unnecessary disputes between the seller and the buyer concerning the specification on exportable products and to ensure the quality of exportable products, export commodities to be shipped have to comply with a pre-shipment inspection by an inspection organisation nominated by the buyer. Also, shipment will proceed for export of agricultural and forestry products only after inspection of the goods (prior to shipment) is carried out and the goods are up to par in quality and  have passed laboratory testing and fumigation requirements.  

 

Application of import licence is not allowed after the imported goods arrive. The imported goods shall be inspected prior to the shipment per the terms and conditions of the import licence. The shipment shall only be effected upon availability of prescribed endorsement. If there is prior shipment before the import permit, it shall be seized and kept as public property.8

 

Validity Period of an Export/Import Licence

 

The validity of an export/export licence is three months from the date of issue. It can be extended with sound reasons.

 

Regulations to be Abided by Exporters and Importers

 

An Export/import licence shall not be transferred or handed over to another party without getting permission.

 

Legal Action

 

Legal action will be taken against everyone who exports/ imports restricted items or who exports/imports goods without permission or who breaks the conditions in the approval documents.9 Every person who contravenes the provision of Art IV of the Export Import Law has committed a punishable offence liable to a fine or to imprisonment for a term not exceeding three years, or to both by adding thereto a Court order of seized goods as public property.10

 

Arbitration

 

Entrepreneurs involved in a trade dispute with foreign companies shall resolve the said dispute in accordance with the existing law of the Arbitration Act 1944.

 

Getting Information in Myanmar

 

As the MoC is responsible for the licensing system, notifications and announcements are published as required in a timely manner through the Ministry’s website http://www.commerce.gov.mm. Contact details are as follows:

 

Director General, Directorate of Trade, Ministry of Commerce

Office No. 3, Nay Pyi Taw, Myanmar

Phone: +9567408009 Fax: +9567-408243

 

Director General, Department of Border Trade, Ministry of Commerce

Office No. 3, Nay Pyi Taw, Myanmar

Phone: +9567430201 Fax: +9567408258

 

Director, Directorate of Trade, Ministry of Commerce (Yangon Region Office)

228-240, Strand Road, Yangon

Phone: +951 241241 Fax: +951253028

 

►  Su Hnin Wai*

 

* The writer is based in Myanmar and is writing under a pseudonym.

 

Notes 

1       http://www.commerce.gov.mm.

2       Article VI, para 14 of the Export Import Law.

3       Article VI, para 13 (a) of the Export Import Law.

4       Article VI, para 13 (b) of the Export Import Law.

5       The Notification No 583/94.

6       The Notification No 583/94.

7       The exportation and importation of some products need a recommendation letter or endorsement by relevant Ministries. For example, under the Ministry of Health, FDA is responsible for food and drugs; the Department of Health is working on Narcotic drugs and psychotropic substances (239 items); Ministry of Environmental Conservation and Forestry issues recommendation letters for forest products (wood, bamboo, cane);  Ministry of Agriculture and Irrigation issues phytosanitary certificates for fresh fruits, dried fruits and seeds, and recommendation letters for the exportation and importation of fertilizer and pesticides; under the Ministry of Livestock and Fisheries, the Department of Fisheries is responsible for live fish, small fries, fish and prawn feeds and the Livestock Breeding and Veterinary Department is responsible for marine produce, fishing vessels; under the Ministry of Mines, the Mining Department is responsible for metals and the Myanmar Pearl Enterprise handles pearls; under the Ministry of Information, the Printing & Publishing Enterprise is responsible for books, cassettes, video tapes and magazines and the Motion Picture Enterprise is responsible for movies; The Ministry of Home Affairs is responsible for 25 items of chemical precursors used in the production of narcotic drugs and psychotropic substances; the Ministry of Science and Technology is responsible for radio isotope; the Myanmar Investment Commission (“MIC”) is responsible for investment products.

8       Press release no 13/97 (9-12-1997) by Directorate of Trade.

9       Artile IV, para 5, 6 and 7, The Export Import Law.

10       Article V, para 8, 9 and 10, Penalties and Punishments, The Export Import Law.

Ref:http://www.lawgazette.com.sg/2013-02/676.htm