Thilawa Special Economic Zone

As the emerging market in South East Asia, Myanmar has a well-recognised potential for growth and development in the future. By taking proactive steps towards business and approaching investments with insider knowledge in the country, foreign investors can successfully reap profits out of the stakes in the companies that are registered in the country. The Thilawa SEZ which was initiated in 2013, at Yangon has highlighted the success of foreign investments in SEZ companies focusing on the rapid business and economic growth.

Thilawa Special Economic Zone

The Thilawa Special Economic Zone offers extensive economic benefits to investors; the zone is kick-starting a wave of foreign investments due to its success in delivering state-of-the-art infrastructure to the companies, businesses and industries. In recent times, the growth in the SEZ is promoting foreign direct investment, boosting local employment and accelerates economic growth in the Yangon region.

The strategic location in the suburbs of Myanmar's largest city Yangon allows companies to access the skilled & unskilled employees, infrastructure and support systems such as ports, logistics infrastructure. The logistics infrastructure of the zone is well-designed with wide access roads, arterial roads and highways to accommodate the foreseen traffic of goods, materials and people to the zone. In addition to this, the International logistics centre located in the Thilawa SEZ makes it easier for companies to exports the finished goods and effectively import raw materials, machine parts and goods to operate the industries.

Unlike other industrial zones in Myanmar, Thilawa SEZ has all necessary infrastructures for investors once the investment permit is issued by TSMC electricity, telecommunications including internet access, purified water supply and other essential facilities such as solid waste management, industrial waste management are provided to the companies. Moreover, zones possess numerous financial, legal, shipping, logistics and insurance firms that are ready to support the newly formed companies in the SEZ.

The significant advantage of the Thilawa SEZ is the availability and proximity to the port facilities that operate 24/7/365 with five berths with impressive supporting infrastructure, efficient logistics through road and rail. The vicinity of the port to SEZ offers unique advantages to companies operating focused on export-oriented market making it easier to export the goods produced in the zone. This facility gives an added benefit to manufacturing units to import raw materials, pre-fabricated products for assembly and production.

Industries in Thilawa SEZ

Thilawa SEZ has made significant progress in attracting international players to set up their operations in the zone. The Japanese and Singaporean companies are the pioneers in setting up their operations in the SEZ as the government of Japan has invested into the zone through JICA, and the Singapore companies have started their business due to the low cost of operations, proximity to port facilities and availability of human resources.

In addition to Japan and Singapore, companies from other vibrant economies have set their operations in Myanmar’s Thilawa SEZ. The companies in Thilawa SEZ are from Japan, Singapore, Thailand, China, USA, Malaysia, Hong Kong, Australia, India, Dubai, Sweden, Korea and Germany. However, more than eighty per cent of the companies are from Japan and Singapore with nearly forty per cent of the industries are export-oriented and labour intensive which is advantageous to Myanmar.

Tax Benefits offered to Companies in Thilawa SEZ

• Tax holidays for the first five years
• Fifty per cent income tax relief on revenue from products sold overseas for the next five years (years 5-10)
• Fifty per cent income tax relief on reinvestment obtained from export sales for the following five years
• Exemption on customs duty for certain goods (i.e., machinery and vehicles) for five years. Furthermore, this exemption applies for the next ten years where the companies remain as a Myanmar tax resident
• Income tax exemption for the first seven years
• After seven years, fifty per cent of relief of current legal income tax rates for five years
• After twelve years, fifty per cent relief of current legal income tax profits that are reinvested within one year as a reserve fund for the next five years
• Exemption from commercial tax or value-added tax
• Exemptions from customs duties and other relevant taxation on imports of raw materials for production machinery instrument and necessary spare parts for production; construction material for building such as factories, warehouses and own offices and motor vehicles

Business Sectors allowed in Thilawa SEZ

• General trading
• Real estate development including housing, hotels, shopping malls
• Engineering and design
• Construction and related activities
• Telecom and Internet Service providers
• Research and development services
• Computer hardware services
• Financial services
• The information enabled services such as back-office operations, call centres, content development or data processing, human resource services, insurance claim processing, legal databases, medical transcription, payroll, remote maintenance, revenue accounting support centres and website services, animation or graphics information system services
• Warehousing and logistics
• Infrastructure management
• Urban solutions and environmental protection services
• Hospital and other human health services
• Recreational and entertainment
• Cultural and sporting services
• Transport services and services auxiliary to all mode transport
• Educational services
• Consultancy
• Small scale manufacturing
• Textile and garments production

Business Sectors Not Permitted in Thilawa SEZ

• Production, processing of munitions including arms, weapons, explosives for military use, etc. and services rendering for military-related purposes
• Production, processing or services hazardous to the environment and ecology
• Recycling industries that will deliver the waste management services to the industries outside Myanmar
• Production, processing and handling of psychoactive substances and narcotic substances
• Importation or production, processing of poisonous chemicals, agriculture pesticide, insecticide and other goods by using chemical substances, prohibited by international regulations or by the World Health Organization, that affect the public health and environment
• Business utilising industrial waste imported from abroad
• Production, processing of banned substances which may destroy the ozone layer
• Manufacturing, processing and sale of the good made of asbestos
• Production, processing and handling of polluted materials hazardous to the human health and environment

Project Outline of Thilawa Special Economic Zone

Zone A

Zone A is developed to be an Industrial area with a size of 370 ha. Construction started in December 2013 the zone was quickly sought after by investors and commenced operations in September 2015. Zone A also includes fully-operational supporting infrastructure consisting of a residential and commercial area with a size of around 35 ha.

Zone B

Zone B was developed due to pressures from international investors to expand the SEZ allowing more companies to operate in the zone. Hence the TSMC which is the SEZ authority has taken steps to create more sophisticated zones that are designed cater businesses, companies and industries with a specialised infrastructure consisting of industrial areas, commercial spaces, logistics zones, residential zones and other purpose-built spaces for large scale businesses.

Phase-1 (Zone B)

Size: 101 ha

Start of Construction: February 2017 Start of Operation: August 2018

Phase-2 (Zone B)

Size: 77 ha

Start of Construction: December 2017 Start of Operation: August 2019

Phase-3 (Zone B)

Size: 46 ha

Start of Construction: February 2019 Start of Operation: April 2021

Rental Factory

Block A (Rental Factory)

Unit: A1, A2, A3, A4, A5, A6
Floor area: 1,500 sq. meters (30mx50m) per unit
Status: Under Operation

Block B (Rental Factory)

Unit: B1, B2, B3, B4, B5, B6
Floor area: 1,500 sq. meters (30mx50m) per unit
Status: Under Operation

Block C (Rental Factory)

Unit: C1, C2, C3
Floor area: 1,500 sq. meters (30mx50m) per unit
Status: Under Construction

Rental Offices

Rental Offices 1^st Floor

Room: 101 to 107
Floor Area: 25sq.m to 85 sq. meters per unit

Rental Offices 2^nd Floor

Room: 201 to 204
Floor area: 50 sq. meters to 85.sq.m per unit

Setting up in Thilawa Special Economic Zone

To register yourself as an investor in SEZ your company needs to export at least 75% of the production in value to be registered as a Free Zone investor and is eligible to enjoy seven-year tax holidays. The companies such as logistics that support export-oriented manufactures can also be free zone companies. Domestic-oriented manufacturing companies are regarded as promotion zone companies, and they are eligible to enjoy five-year tax holidays.

If you’re interested in knowing more about setting up your business in Myanmar contact us. Our team in Myanmar can assist you in your business venture in the country with a dedicated team of experts.