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Private industry is set to benefit from proposed amendments in the mining law which is likely to be approved in the upcoming parliamentary sessions, officials say.
The amendments to the 1994 law passed the Amyotha Hluttaw in March after two years’ delay and now await a vote in the Pyithu Hluttaw, with proponents saying they’re aimed at boosting foreign investment and government revenue in the sector.
U Nay Win Tun, a prominent mining businessperson and chair of Amyotha Hluttaw Mining and Resources Committee, said the government would halve its standard production-sharing portion of 30pc of production to 15pc, while the private firm would increase its share from 70pc to 85pc with the changes.
Both foreign and local firms are able to invest in the sector under the amended law, with maximum different time limits for licences extended depending on the scale of the site.
“The law has been amended to the advantage of all different levels of communities benefiting from mineral resources,” said U Nay Win Tun.
“The mining sector will be the main economic activity in our country when the newly amended law is active.”
He said that a lack of specific knowledge of the sector among parliament members delayed the amendments.
U Nay Win Tun is the owner of Ruby Dragon Mining, which has at least five mining sites in Shan State.
Department of Mining director general U Win Htein said current foreign investment in the sector is primarily from ASEAN members.
“Now other countries are interesting in our mining sector, but [international investors] don’t want the investment if it is not responsible,” he said, pointing to the Letpadaung copper mine as a problematic investment.
The amended law is seen as a key piece of legal framework that could usher in sizable new investment in Myanmar’s natural resources sector, but has been slow to materialise as other laws like the Foreign Investment Law have made their way through Parliament relatively quickly.
The Ministry of Mines has been preparing to amend the 1994 mining law since 2012, initially targeting an early 2013 introduction.
The delays come despite international efforts to assist the Ministry of Mines. Mineral-rich Australia has been particularly active. In May 2013 a 17-member delegation from the ministry, including Minister U Myint Aung, took a two week tour hosted by AusAID to meet with Australian government officials and view mining operations in New South Wales and Queensland.
Foreign firms from countries including the US, the UK and Australia have visited the mining ministry expressing interest in long-term investment, but experts said the current regulatory regime under the 1994 law made it difficult for foreign firms to enter the sector.
“There is a lack of certainty that foreign investors usually want,” Sebastian Pawlita, a partner at Polastri Wint and Partners, a tax and legal advisory firm in Yangon, said of the 1994 law, which he described as “not attractive to investors”, in its current form.
He pointed to the need to approach the ministry for permission when moving from one stage in the mining process to the next, such as from exploration into the production phase.
“It adds to the uncertainty because you are never sure what the reply will be,” he said.
Mr Pawlita added that there needed to be more clarity surrounding the production-sharing contracts, not only to attract mining and exploration companies to Myanmar but also so that those firms could in turn attract investment.
Hluttaw members say they expect to see a number of benefits from a revamped mining law.
Amyotha Hluttaw bill committee member U Aung Kyi Nyunt said the main aims with the amendments are to generate more tax income and provide a process to legalise small-scale and illegal miners.
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