Establishing a company in Myanmar
In cooperation with local lawyers Charltons advises foreign companies on the establishment of operations in Myanmar.
The Myanmar Companies Act 1914 (Companies Act) and the 2012 Foreign Investment Law (FIL) together with the implementing Foreign Investment Rules (Investment Rules) are the three key pieces of legislation governing the establishment of foreign invested entities in Myanmar. For clients establishing a company in Myanmar Charltons can provide experience of the Myanmar Companies Act, FIL and the Investment Rules.
Foreign investors establishing operations in Myanmar are free to choose to do so under either the Myanmar Companies Act or the FIL. However under the FIL, foreign investors can benefit from significant tax exemptions and other benefits. 100% foreign ownership is permitted for the majority of business activities, including power generation, infrastructure projects, agriculture, hospitality and non-food manufacturing. The Investment Rules list forty-two categories of economic activity must be conducted via joint ventures (JV’s) with a local partner. JV’s are generally required for the development of property, including buildings, condominiums, apartments, offices and commercial space. Similarly projects in the oil and gas and mining sectors should be conducted in cooperation with local partners.
All foreign companies, including wholly or non-wholly foreign owned companies, joint-ventures and foreign companies’ branch/ representative offices must obtain a permit (Permit to Trade) under section 27A of the Myanmar Companies Act before they can commence business activities. A Permit to Trade application is made to the Directorate of Investment and Company Administration (DICA).
Companies established under the FIL additionally need to apply for a permit from the Myanmar Investment Commission (MIC). As part of the application process the foreign investor is required to submit a business proposal (MIC Proposal) setting out information including the intended term of the proposed investment, the particulars of the proposed investment, the intended form of organisation and the total amount of foreign capital to be brought into Myanmar. Depending on the nature of the proposed investment the MIC may require an Environmental and Social Impact Assessment to be submitted along with the MIC Proposal.
Charltons can assist with all aspects of establishing a company in Myanmar and the Myanmar Companies Act 1914. For additional information on the formalities involved in the establishment of operations in Myanmar please refer to our presentation on “Doing Business in Myanmar”.
Establishing operations in Myanmar
Myanmar is becoming increasingly attractive to foreign companies looking to establish a company in Myanmar. Myanmar is undergoing transformational change. Reforms first initiated in 2010 have gained significant and seemingly irresistible momentum. The Government appears determined to put light between itself and almost five decades of military rule and isolationism. In the last two years it has permit economic liberalisation and gradual moves towards a multi-party system. By-elections held in 2012 – which reflected a groundswell in popular opinion for National League of Democracy (NDL) party led by popular opposition leader and Nobel Peace Prize winner Aung San Suu Kyi – were generally considered to be free and democratic albeit within a restricted constitutional structure that guarantees the military unelected representation in parliament.
Despite the democratic shortcomings in the existing framework, the Government has pursued the legal, social and economic reforms necessary to start Myanmar on the path to moderisation. Since embarking on its reform agenda, the Government has introduced numerous new laws and regulations aimed at bringing about improving governance, ensuring greater state transparency, providing for greater freedom of speech and assembly, achieving reconciliation with ethnic minorities and re-integration with the international community, preparing the way for both public and private second reform and attracting much needed international trade and investment.
Popular measures include the release of NLD leader Aung San Suu Kyi, increases in health and education spending, the cancellation of controversial infrastructure projects, the flotation of the Kyat, tax reforms, the establishment of special economic zones (SEZ’s) and the introduction of a new foreign investment law. These initiations have been welcomed by the investment community.
In November 2012, U.S. President Barack Obama became the first sitting U.S. President to visit Myanmar. The State visit was reciprocated in May 2013, when Myanmar President Thein Sein became the first leader of Myanmar to visit the White House. In the last twelve months, the E.U., Australia, Norway and Canada have revoked economic sanctions whereas the U.S. has suspended most of those it has imposed. In 2014, Myanmar assumed the Association of Southeast Asian Nations (ASEAN) chairmanship for the first time.
Establishing a company in Myanmar, establishing operations in Myanmar and starting a company in Myanmar are becoming more attractive. Charltons has experience in navigating the Myanmar Companies Act 1914.