Problemática asociada a las escombreras de carbón

by

Thida Myo Aung1

1. Introduction

Capital flows have become increasingly important to the developing nations for their economic growth. Governments of the developing nations are striving to promote capital flows, especially foreign direct investment (FDI) from the rest of the world. This is because not only does FDI involve transfers of tangible and intangible assets, but it also confers many spill-over benefits to the host countries, such as employment, development of human resources, transfer of superior technology, and so forth. FDI, therefore, is invaluable for its contribution to economic development and enhancement of the standard of living of the host country.

Recognising capital flows as an importance source of external financing for a long-term economic growth, the governments of many developing nations have been taking measures to put in place an institutional framework as well as provide a stable economic and financial environment that is conducive for investment to attract FDI inflows. The measures include were privatisation schemes, trade openness, attractive investment incentives, and so forth. Myanmar has been strategising to promote FDI by structuring incentives to attract foreign investors and entrepreneurs.

2. General Framework and Major Capital Flows Management Policies

2.1 Current Account and Capital Account Liberalisation

It is recognised that liberalisation of the various sectors, such as trade, investment, and so forth, can facilitate the implementation of a country’s development objectives. Following the adoption of a market-oriented economic system in late 1988, Myanmar has been carrying out various institutional and policy reforms, including financial liberalisation. The Myanmar government ________________

permitted the liberalisation of both current and capital accounts to ease the inflow of financial resources.

The export and import of goods and services, investments, debt-service payments, and private or public net remittances and transfers are classified under the current account. Whereas private foreign direct investment (mostly by multinational corporations), foreign loans by private international banks, and loans and grants from foreign governments (as in the form of foreign aid) and multilateral agencies, such as the IMF and the World Bank, are classified under the capital account (Todaro & Smith, 2009, p.668, 669).

2.2 Policies Implemented to Manage Capital Flow

In late 1988, Myanmar converted its economic system from a centrally planned economy to a market-oriented economy. The government subsequently promulgated the Union of Myanmar Foreign Investment Law (FIL) on 30th November, 1988. The policy objectives of this law are as follows:

(1) Promotion and expansion of exports;

(2) Exploitation of natural resources requiring heavy investment; (3) Acquisition of high technology;

(4) Supporting and assisting capital-intensive production and services; (5) Creation of employment opportunities;

(6) Development of energy conserving activities; and (7) Promotion of regional development.

To achieve the above objectives, the FIL provides for the following incentives: (1) Exemption from income tax for up to three years;

(2) A reduction of up to 50% on income tax due on the investor’s produce exported from Myanmar;

(3) Exemption from customs duty on capital goods imported as part of the investment operations;

(4) Guarantee against nationalisation;

(5) Right to repatriate profits and investment capital; and

(6) Exemption from customs duty on capital goods imported as part of the investment operations.

A foreign investor is allowed to invest in Myanmar with 100% foreign capital or a joint with any Myanmar partner from private sector or cooperative sector or state sector. He has the right to enjoy appropriate economic benefits as well as tax incentives. A foreign investor is, however, required to contribute a minimum foreign equity of 35% of the total. The minimum amount of foreign capital is US$ 500,000 for investment in manufacturing and US$ 300,000 in the services sector. Land lease is also granted to the investors up to 30 years, and the lease can be renewable after 30 years. Through the reduction of red-tape and simplification of procedures in the registration of companies, production, trade, finance, etc., the business environment has been significantly improved. The Foreign Direct Investment Law offers a slew of incentives to the foreign investor and it has managed to attract much foreign investment to Myanmar.

On the tax front, reforms have been implemented. Some of the major tax reform measures include broadening of the tax base, adjustment or relaxation of tax rates, granting of reasonable tax exemptions and relief, and simplification of tax procedures. A flat corporate tax of 30% per annum is imposed on the income of companies set up in Myanmar. Myanmar has signed bilateral tax treaties with ASEAN countries and the U.K. Such tax reforms give important support to the current account liberalisation drive. Myanmar’s commitment to the AFTA also helps promote liberalisation of the current account. Tariff barriers and non-tariff barriers have been eliminated as scheduled in accordance with the ASEAN agenda of Capital Account Liberalisation.

3. Trends in Macroeconomic Indicators and Capital Flows

The growth rate of the gross domestic product (GDP) shrank from -1.1% in 1986/87 to -11.4% in 1988/89. The deterioration of the economy affected political stability, which led to a change of government and a change of economic system. Myanmar switched from a socialist, centrally planned economic system to a market-oriented one in late 1988. The SLORC (State Law and Order Restoration Council) initiated economic reforms, the main objectives of which are to:

• Adopt a market-oriented system for the allocation of resources and the distribution of goods and services;

• Encourage private investment and entrepreneurial activity at home; and