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Introduction to doing business in Myanmar


Myanmar: Country Profile

  • Population:
Approximately 62.12 million*
  • Total area:
676,578 km2 (second largest country by area in Southeast Asia after Indonesia)
  • Exchange rate:
US$1 = 990 Kyats (July 2013)
  • GDP growth:
6.3% (Year end March 2013) 6.7% (estimated for 2014)*
  • Inflation:
5.1% (2013) 5.1% (2014)*
  • GDP
US$51.9 billion**
  • Principal trading partners:
Thailand, China, India, Japan, Singapore, Indonesia, Malaysia, Korea
  • Principal exports:
Oil and gas, dried/shelled legumes, timber/wood products
  • Principal imports:
Fabric, petroleum products, fertilizer, plastics, machinery, transport equipment; cement, construction materials

* Source: Asian Development Bank

** Source: International Monetary Fund

Myanmar: Recent Developments

  • Economic and political reform since 2010
  • Numerous new laws introduced and older laws updated
  • New loans approved by Asian Development Bank and World Bank
  • International support for reform – E.U. sanctions suspended / some U.S. sanctions eased
  • State visits by U.S. President Barack Obama and UK Prime Minister David Cameron / Overseas State visits by President U Thein Sein
  • Ascension to international treaties – New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) & UN Convention against Corruption
  • ASEAN Chair in 2014
  • Competitive tender processes for oil and gas and telecommunications licences
  • Growing number of private banks permitted to operate foreign currency accounts
  • Coca Cola, Pepsi, General Motor, General Electric, Ford, Visa, MasterCard and Western Union have entered local market

Myanmar: Strengths, Constraints, Opportunities and Risks


  • Strong commitment to reform
  • Large youthful population, providing a low-cost labour force attractive to foreign investment
  • Rich supply of natural resources — land, water, gas, minerals
  • Abundant agricultural resources to be exploited for productivity improvement
  • Tourism potential

  • Weak macroeconomic management and lack of experience with market mechanisms
  • Underdeveloped financial sector
  • Inadequate infrastructure, particularly in transport, electricity access, and telecommunications
  • Low education and health achievement
  • Limited economic diversification

  • Strategic location
  • Potential of renewable energy
  • Potential for investment in a range of sectors

  • Risks from economic reform and liberalisation
  • Risks from climate change
  • Pollution from economic activities
  • Tension from internal ethnic conflicts

Source: Asian Development Bank

Key Considerations

  • Intended business activity – restricted? Is a joint venture required?
  • Incorporation under Foreign Investment Law or Myanmar Companies Act?
  • Taxation and applicable incentives
  • Share capital requirements
  • Shareholding structure

Investment Opportunities

  • Although currently lagging behind the rest of South East Asia, Myanmar offers immense investment opportunities
  • Estimated that US$650 billion in investment is needed up to 2030*
  • Economy could quadruple in size by 2030*
  • Growing middle class with increased disposable income
  • Increased urbanisation likely as a result of a shift away from agriculture

* Source McKinsey & Company

Export Earnings by Sector


Source: Myanmar Ministry of Commerce

FDI by Sector


Source: Myanmar Investment Commission

FDI by Sector

Sectors No. of permitted enterprises Approved amount (US$m) Permitted enterprises (%)
Power 4 14,530 40.3%
Oil and gas 104 13,815 38.3%
Mining 64 2,794 7.8%
Manufacturing 159 1,752 4.9%
Hotel and tourism 45 1,065 2.9%
Real estate 19 1,056 2.9%
Liverstock and fisheries 25 324 0.9%
Transport and communication 16 313 0.9%
Industrial estate 3 193 0.5%
Agriculture 7 173 0.5%
Construction 2 38 0.1%
Other services 6 24 0.1%
Total 454 36,078 100

Source: Myanmar Investment Commission

Investment Opportunities

  • Agriculture – significant potential to develop agricultural and fisheries exports
  • Mining – significant exploration potential although lack of geological data
  • Power
  • Oil and gas – onshore / off-shore tendering processes already underway
  • Manufacturing/Industry (foodstuffs, textile, personal and household goods, leather products, transport equipment, building materials, pulp and paper, chemicals, chemical products and pharmaceuticals, iron and steel, plant and machinery)
  • Construction – transport, hotels and tourism, retail and industrial space
  • Communications

Investing in Myanmar: A Changing Legal Framework

  • Myanmar is in the process of updating numerous laws and regulations including its foreign investment regime
  • Many old colonial laws still in force. (Burma Code 13 volumes 1841 – 1954)
  • Myanmar Companies Act (1914)(as amended) (MCA) remains in force
  • State-owned economic enterprises law (1988)
  • Special Economic Zone Law 2011
  • The Dawei Special Economic Zone Law 2011
  • New Foreign Investment Law (FIL) 2 November 2012
  • The Investment Rules 2013

Categories of Business Activities

  • Business activities are divided into three broad categories:-
    • Industrial (Manufacturing)
    • Services / Construction
    • Trading

Currently, trading activities are reserved to Myanmar nationals and companies wholly owned by Myanmar nationals

  • When investing in Myanmar, investors must decide whether to establish operations under either the MCA or the FIL

Foreign Investment Law 2012

  • FIL replaced foreign investment legislation enacted in 1988 (1988 FIL)
  • The government separately introduced implementing rules (Investment Rules) on 31 January 2013
  • Under the FIL foreign investors can benefit from significant tax exemptions and other benefits
  • Myanmar Investment Commission (MIC) established
  • Directorate of Investment and Company Administration (DICA) serves as the Secretariat of MIC
  • The FIL applies to three forms of foreign investment
    • 100% foreign owned companies
    • Joint ventures with a local investor or the state
    • Investments carried out through contractual relationships with local investors

FIL: Objectives

  • Infrastructure development (transport, telecommunications, electricity)
  • Development of natural resources
  • Regional development
  • Development of a modern banking and financial services sector
  • Employment creation
  • Environmental protection
  • Skills and technology transfer
  • Promote education
  • Promote exports
  • Development of domestic manufacturing

FIL: Incentives

  • Guarantee against expropriation/nationalisation
  • Guaranteed remittance of profits; remittance upon exiting the investment
  • Equity in an FIL company can be transferred with the approval of the MIC
  • Foreigners are permitted to lease land for up to 50 years as well as two continuous extensions of 10 years if approved by the MIC
  • MIC may allow for longer land lease periods for investments in remote and less developed areas of the country

FIL: Tax Incentives

  • 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

Investment Rules

  • Investment Rules implement the FIL
  • Investment Rules comprised of two Notifications:-
    • Notification 1/2013 sets out the permitted activities for foreign investors and the activities which require a joint venture
    • Notification 11/2013 sets out various regulations and procedural information in relation to investment licences
  • Notification 1/2013 divides economic activities into four These are:-
    • Prohibited economic activities
    • Activities permitted to be conducted as joint ventures between foreigners and Myanmar nationals
    • Restricted activities permitted under certain conditions or requiring approval
    • Activities only permitted following the completion of an Environmental Impact Assessment
  • Highlights:-
    • Investment Rules are not applicable to trading activities
    • The investor must submit a schedule of investment if the proposal provides that the investment will be made over a period of time
    • Investors are required to submit a progress report to the MIC every 90 days
    • If an extension is needed for the construction period, the investor must apply to the MIC at least 60 days before expiration of the construction period
    • Investor can sub-lease or mortgage a long lease on application to the MIC
    • Shares in an FIL-approved company, whether owned by a foreigner or a Myanmar national, may be transferred to a foreigner or a Myanmar national with MIC approval
    • Disputes must be settled by reference to Myanmar’s Arbitration Act 1944 and the Protocol and Conventions Act 1939
    • All economic organisations formed under an MIC permit shall effect insurance with any authorized local insurance enterprise in respect of the followings types of insurance:– (a) machinery insurance; (b) fire insurance; (c) marine insurance; (d) physical injury insurance; (e) natural disaster insurance; (f) life insurance

Investment Rules: Prohibited Economic Activities

  • Prohibited economic activities (reserved for Myanmar citizens) include:-
    • A number of small and medium production, agricultural, fishing and livestock activities, activities relating to traditional foods, medicines and cultural items
    • Small and medium sized mineral production activities
    • Drilling of shallow oil wells up to the depth of 1,000 feet
    • Generation of electricity under 10 megawatt
    • Construction of health care centres for the elderly
  • Activities only permitted following the completion of an Environmental Impact Assessment
    • Oil and gas exploration
    • Hydroelectric power
    • Mining
  • 100% foreign ownership is permitted for the vast majority of business activities

Investment Rules: Restricted Economic Activities

  • The list of economic activities in which foreigners can engage under certain restrictions is wide-ranging and is sub-divided according to the Ministry responsible for the relevant restricted activity. Restrictions include:-
    • Restriction on level of foreign ownership, including:-
      • A limitation of between 25% and 49% placed on foreign ownership of entities engaged in various activities related to forestry and timber
      • A limitation of 70% placed on foreign ownership of entities engaged in the production and distribution of paint and certain chemicals
    • A cap on the duration of permits for:-
      • Large scale mining projects (15 years, with possible renewals for 4 x 5 years)
      • Pearl production (15 years, with possible renewals for 2 x 5 years)
      • Production and distribution of certain chemicals
    • Certain activities can now only be conducted in cooperation with the government. These include:-
      • Jewellery production and sales
      • Production and distribution of explosive chemicals, specified substances and vaccines
      • Marine training, maritime employment agencies for foreign-owned ships, operation of shipyards, domestic water transport and specified construction work related to transportation

Investment Rules: Joint Ventures

  • Pursuant to the Investment Rules, foreign participation in 42 categories of economic activity must be conducted via joint ventures (JVs) with a local partner. These include:-
    • Large scale exploitation and production of minerals
    • Production / distribution of seeds, certain foodstuffs
    • Paper manufacturing
    • Pharmaceuticals manufacturing
    • Plastics manufacturing
    • Packaging manufacturing
    • Certain construction and real estate development projects
    • Tourism services
  • Foreign capital should not exceed 80% of the total capital of JV companies engaged in economic activities which are prohibited or restricted
  • The foreign to domestic ownership ratio for joint ventures in activities that are not restricted or prohibited is subject to agreement between the parties
  • The MIC has the power under the FIL to prescribe minimum foreign ownership requirements on a case-by-case basis

Myanmar Investment Commission (MIC)

  • The MIC is the approving authority for foreign investment activity. The MIC:-
    • evaluates foreign investment proposals
    • stipulates the terms and conditions of investment permits
    • evaluates proposals for completeness and accept/reject proposals within 15 days of submission of application
    • issues (or denies) an investment permit within 90 days
  • If the proposed investment is in the natural resources sector, the relevant ministry (i.e. Mines or Energy) submits the application to the MIC on behalf of the foreign investor

Applying for an MIC Permit

  • MIC permit application process:-
    • Application to MIC
    • Application considered by MIC officials
    • Meeting of Proposal Assessment Team
    • Government comments
    • MIC meeting
    • MIC instructs Companies Registration Office (CRO) to issue credit advice in relation to remittance of capital
    • MIC permit issued
  • The information required by the MIC includes the following:-
    • the name of promoter or investor, proof of citizenship, address, place of business, effective place of headquarters, place of incorporation, type of business
    • if investment is to be made through a JV, particulars relating to the JV partner (plus supporting evidence such as copies of company incorporation documents) / if partnership then a draft partnership agreement should be provided
    • particulars relating to production or services activities in which investment is to be made
    • the intended term of investment, the period of construction, volume of goods to be produced
    • location of investment
    • information on technical aspects of the investment including plant and machinery
    • type and amount of energy required
    • type of land required

FIL (MIC) Investment Process


MCA Investment Process: Permit to Trade

  • Foreign companies must obtain a “Permit to Trade” (PTT) under the Section 27A of the MCA before it can carry on or continue its business in Myanmar
  • PTT issued by DICA
  • The application for a PTT must be accompanied by the following documents:-
    • Required particulars entered in Form A of the Myanmar Companies Regulation, 1957
    • Drafts of the company’s memorandum and articles of association or equivalent constitutional documents
    • Duly completed questionnaire form prescribed by the Capital Structure Committee of the Ministry of National Planning and Economic Development
    • List of economic activities intended to be performed in Myanmar (and permission from the relevant Ministry if any)
    • Estimated expenditures to be incurred in Myanmar for the first year of the operation
  • In the case of a foreign branch the following must also be furnished:-
    • Instead of drafts of the memorandum and articles of association, a copy of the foreign company’s memorandum and articles of association or other constitutional documents notarised by the Myanmar Embassy concerned in the country where the company is incorporated
    • Copies of the foreign company’s balance sheet and profit and loss accounts for the last two financial years
    • Where the memorandum and articles of association and equivalent documents are not in English in the original, authentication of the translation into English
  • DICA will issue the PTT after considering the recommendation of the Capital Structure Committee

MCA Investment Process


Branch and Representative Offices

  • Branch
    • Applications to DICA
    • Local office of a foreign company
    • No local ownership
    • No limited liability
    • Often used as starter entity to commence operations
    • Can lease an office and hire local employees
  • Representative Office
    • Banks and insurance companies only
    • Applications to DICA
    • Liaison activities only
    • Joint ventures to be permitted in the near future

Comparison of Filing and Tax Obligations

Company Branch Office Rep Office
Filing Fees US$2,500 US$2,500 US$2,500
Annual tax return? Yes Yes Yes
Annual corporate filings? Yes No No
Tax (after FIL tax holiday) 25% 25% (Under FIL)
35% (under MCA)
Not income earning
Tax status Resident foreigner Non-resident foreigner Non-resident foreigner

Share Capital Requirements

Under FIL* Under MCA
Services company US$300,000 US$50,000
Industrial /Manufacturing company
* 50% to be remitted prior to issuance of the PTT and 50% within 12 months
US$500,000 US$150,000


  • No VAT system in Myanmar
  • Commercial Tax is imposed on a wide range of goods, imported into or produced in Myanmar, trading sales, and services
  • The rates of Commercial Tax are set out in various schedules to the Commercial Tax Law introduced on 31 March 1990
  • Imports – Commercial Tax is collected by the Myanmar Customs Department at the point of importation in the same manner that customs duties are collected
  • The Government has indicated that it intends to replace the current Commercial Tax regime with a VAT or GST based model. It is anticipated the new model will be introduced by 2018 – 2019
  • Myanmar has double taxation agreements with the U.K., Singapore, India, Malaysia, Vietnam, Laos, Indonesia and South Korea
  • Royalties
    • Royalties paid for the use of licences, trademarks, patent rights, etc. are taxed at a rate of 15% for residents (Myanmar citizens and resident foreigners) and at 20% for non-resident foreigners
  • Dividends
    • There is no withholding tax or income tax on dividends in Myanmar
  • Losses
    • Losses from any source may be set off against income accruing from any other sources in that year, except for capital losses or a share of loss from an association of persons. Unutilised losses may be carried forward and offset against income in the following three years. Capital losses and a share of loss from an association of persons may not be set off against income from other sources or carried forward. Such losses may be set off only against capital gains derived in the same year
Company/Income Rate(s)
Companies incorporated under MCA 25%
Companies operating under FIL 25%
Foreign organisations engaged under special permission in State-sponsored projects, enterprises or undertakings 25%
Branch companies 35%

Capital gains

– Resident companies

– Non-resident companies

– Oil and gas companies

10 %

40 %

40% – 50%*

*The rate of capital gains tax on the transfer of shares in oil and gas companies increases with the amount of net profit earned on the transfer. The rates are:-

40% (net profit is less than US$100m)

45% (net profit is between US$100m – US$150m)

50% (where net profit exceeds US$150m)

Tax returns on capital assets must be filed within 1 month from the date of disposition or transfer.


  • Foreigners not permitted to own property in Myanmar
  • MIC must consent to foreigners leasing land
  • MIC has the right to require the lease to be terminated in certain circumstances i.e. failure to pay rent or environmental damage
  • Foreigners cannot enter into leases for land that are in excess of 50 years. MIC can agree to an extension of the term by two periods of 10 years, i.e. to a total of 70 years.
  • Leases of immovable property require registration if they last over one year or have yearly rent
  • Leases are not granted for religious land; land restricted for state security; land under litigation; and land restricted by the state
  • At present demand for modern commercial and residential property in Yangon is strong whereas supply is limited
  • Mortgage market yet to develop
  • Yangon’s housing stock comprised primarily of apartments / condominiums
  • Design and build quality of many condominiums/apartments remains poor
  • Complimentary infrastructure/amenities also remain underdeveloped
  • Opportunities exist to develop modern serviced apartments and commercial centers and tourist/hospitality orientated real estate projects

Special Economic Zones (SEZs)

  • Legal framework: Myanmar Special Economic Zone Law and Dawei Special Economic Zone Law 2011. (Revised law expected. Many incentives offered in the 2011 laws were incorporated into the FIL. It is anticipated that the revised SEZ law will include additional incentives)
  • Currently three SEZs under development in Myanmar:-

    Dawei SEZ

    • Southern Taninthayi region
    • Proposed multi-billion dollar port
    • Significant Japanese and Thai investment
    • Longer tenure for large scale industry (up to 75 years)

    Thilawa SEZ

    • Southern Yangon
    • Initially funded by low interest loans from Japan

    Kyuakpyu SEZ

    • Ramree Island (western coast of Myanmar)
    • Will be hole to an oil and gas terminal financed by the China National Petroleum Corporation
    • First phase expected to be completed in 2016

Foreign Exchange Controls

  • Gradual liberalisation of foreign exchange controls:-
    • April 2012: “Managed floating exchange rate” introduced (old “official rate” of 6 Kyat per 1US$)
    • August 2012 Foreign Exchange Management Law Introduced
    • FIL allows for remittance of foreign currency through authorised banks
    • March 2013: Kyat becomes directly exchangeable against Renminbi and Bhat. Foreign Exchange Certificate system abolished
    • August 2013: “Free float exchange rate” to be introduced
    • Further anti money laundering measures to meet international standards
    • In practice, the remittance of foreign currency into Myanmar remains problematic as transactions continue to be affected by the remaining sanctions against Myanmar and an underdeveloped financial services sector

Procedure for Repatriation of Profits

  • Notification no. 40/2011 and the Investment Rules regulate the use of foreign currencies in investments under the FIL.
  • Remittance of profits and capital repatriation are subject to prior approval of MIC and are also subject to Foreign Exchange Regulations
  • The required supporting documentation includes:-
    • Central Bank of Myanmar (CBM) application form
    • Audited financial statements
    • Bank balance certificate
    • Tax clearance certificate
    • Directors’ resolution authorising payment of dividend
    • Auditor’s certificate certifying capital/loan principal
    • Auditor’s certificate certifying interest details
    • Documentation evidencing remittance of capital or loan into Myanmar
    • CBM approval

Employment Issues

  • No consolidated employment law – numerous acts containing provisions relating to employment and workers’ rights
  • Local staff must have contracts approved in form by the Ministry of Labour, Employment and Social Security
  • Minimum wage set by sector by minimum wage committee
  • 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

Corporate Matters

  • Directors
    • The minimum number of directors of a private company and a public company in Myanmar is two and seven respectively.
    • The MCA requires a return of particulars of directors, managers and managing agents and any changes of such particulars to be lodged with the DICA no later than 14 days after the relevant appointment or changes
    • Directors can be foreign or local
  • Allotment of shares
    • Every company allotting shares is required to file a return of the allotments within one month of the date of allotment, stating the number of nominal amount of the shares comprised in the allotment, the information of the allottees and the amount (if any) paid or due and payable on each share
  • Annual General Meeting (AGM) and filing of annual return
    • Every Myanmar incorporated company must hold an AGM once in every calendar year laying its audited documents before its shareholders
    • A newly incorporated company is required to hold its first AGM within 18 months of incorporation. Subsequent AGMs must be held once in every calendar year and not more than 15 months after the last general meeting
    • Within 21 days after an AGM has taken place, all companies are required to file an annual return together with annual audited accounts
    • Every Myanmar incorporated company is required to lodge a copy of every extraordinary and special resolution certified by an officer of the company with the DICA no later than 15 days from the date of passing of the resolution
    • The MCA requires every Myanmar incorporated company to maintain proper books of accounts which have to be kept at the registered office of the company

Accounting Standards

  • Accounting standards in Myanmar are set by the Myanmar Accountancy Council which is headed by the Union Auditor General of the Republic of the Union of Myanmar
  • On 5 June 2010, Myanmar Financial Reporting Standards were introduced. These are identical to the International Financial Reporting Standards (IFRS) that existed on that date
  • Commitment made to formally adopt IFRS standards
  • Accounting and audit services are restricted activities, which can only be provided legally by 100% Myanmar owned firms.
  • Fiscal year in Myanmar is 1 April to 31 March

Myanmar Deal Highlights*

  • Assisted LSE/TSX listed oil and gas company tender for onshore blocks, including assisting in negotiations with local partners, data review and laising with government
  • Assisting Myanmar orientated fund with a focus on ethical investment
  • Assisting Myanmar gold mining company seeking foreign investment / joint venture partners
  • Assisting foreign owned mining company in dispute with local director
  • Advised on share subscription in Mandalay business park development company

* Charltons only advises on the law of Hong Kong. When advising on the law of Myanmar Charltons works in cooperation with trusted local partner Myanmar Legal Steps

Myanmar Investment Commission

Foreign Investment Law 2012

Directorate of Investment and Company Administration

MIC Permit

Myanmar Special Economic Zone

Myanmar Companies Act

Myanmar’s Arbitration Act 1944

The Dawei Special Economic Zone

DICA Myanmar