Burma’s economic reforms since 2011 have created opportunities for investment throughout the country. With a rich natural resource base, a young labor force, and prime geographic location, Burma has tremendous economic potential. Recent reforms, such as opening up retail and wholesale trade to FDI, liberalizing the insurance sector, and streamlining business registrations are designed to increase foreign direct investment.
Many challenges remain, however, with Myanmar ranking 165 out of 190 countries on the World Bank’s index for the ease of doing business. Electricity shortages, limited infrastructure, and weak institutions continue to hinder foreign investment. A continuing area of concern for foreigners involves investment in large-scale land projects. Property rights for large plots of land for investment commonly are disputed because ownership is not well established, particularly following a half-century of military expropriations. It is not uncommon for foreign firms to face complaints from local communities about inadequate consultation and compensation regarding land.
While still facing implementation challenges, Aung San Suu Kyi’s National League for Democracy (NLD)-led government has taken steps to counter government corruption and has called for greater transparency and foreign investment. In its 2019 Corruption Perceptions Index, Transparency International rated Burma 130 out of 175 countries. Investors might encounter corruption when seeking investment permits, during the taxation process, when applying for import and export licenses, or when negotiating land and real estate leases.
In January 2020, the Ministry of Investment and Foreign Economic Relations (MIFER) announced tax exemptions for investments made in five priority sectors in all 14 states and regions in Burma as well as the capital territory. The tax exemption period is three, five, or seven years depending on the location. For a list of priority sectors by state and regions, please see MIFER’s website at: http://www.mifer.gov.mm/region
In November 2019, the Central Bank of Myanmar (CBM) announced that foreign banks will be allowed to apply for licenses to operate subsidiaries or branches. Under new directives, any foreign bank applying for a subsidiary license would be allowed to provide wholesale banking services at the start of operation. From January 2021, foreign banks with a subsidiary license will be allowed to offer retail banking services. The CBM will allow existing foreign bank branches to convert to subsidiaries starting from June 2020. In January 2020, the CBM announced foreign banks would be permitted to hold more than 35 percent of the capital in joint ventures with domestic banks.
In July 2019, the Securities and Exchange Commission announced that foreign individuals and entities are permitted to hold up to 35 percent of the equity in Burmese companies listed on the Yangon Stock Exchange. As of March 2020, six companies are listed on the exchange.
In February 2020, the government passed a new Insolvency Law, which adopts the United Nations Commission on International Trade Law (UNCITRAL) Model Law on cross-border insolvency, providing greater legal certainty on transnational insolvency issues.
While Burma’s Parliament passed four intellectual property laws in 2019 – the Trademark Law, Industrial Design Law, Patent Law, and Copyright Law – these laws have not yet entered into force at the time of this writing. The Burmese government is in the process of drafting implementing regulations and setting up an IP Office to administer the laws. Once in effect, the laws will likely improve intellectual property protection, and enforcement measures against intellectual property rights infringement. In March 2020, the government formed an IP Central Committee, chaired by a Vice-President, to oversee the IP Department. Establishing the committee is widely viewed as an important step in further developing Burma’s IPR protection regime.
The 2020 national elections will be important for potential investors to watch as will continued work by the government to mitigate the economic impact of COVID-19.
|TI Corruption Perceptions Index||2019||130 of 175||http://www.transparency.org/
|World Bank’s Doing Business Report||2020||165 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2019||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, stock positions)||2019||98.34||https://www.dica.gov.mm/sites/dica.gov.mm/
|World Bank GNI per capita||2018||USD 1,310||http://data.worldbank.org/
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Toward Foreign Direct Investment
Burma recognizes the value of investment to boost economic growth and development, and it is open to foreign investors in some sectors. That said, implementation of liberal investment laws and policies are often slowed and sometimes blocked by local rent-seeking economic actors who benefit from the status quo. In 2016, Burma passed the Myanmar Investment Law (MIL) to attract more investment from both foreign and domestic businesses. The MIL simplified the rules and regulations for investment to bring Burma more in line with international standards. The MIL includes a “negative list” of prohibited, restricted, and special sectors. Burma also has three Special Economic Zones (SEZs) in Thilawa, Dawei, and Kyauk Phyu with preferential policies for businesses that locate there, including “one-stop-shop” service. Of the three SEZs, Thilawa is the only SEZ currently in operation.
The new Companies Law went into effect on August 1, 2018. Under the law, foreign investment of up to 35 percent is allowed in domestic companies— which also opens the stock exchange to limited foreign participation. It also updated and streamlined business regulations. The Companies Law makes it easier to start and operate small businesses and provides the government with tools to enforce corporate governance rules and regulations.
The Directorate for Investment and Company Administration (DICA), which is part of the Ministry of Investment and Foreign Economic Relations (MIFER) serves as Burma’s investment promotion agency. DICA encourages and facilitates foreign investment by providing information, fostering networks between investors. DICA has its head office in Yangon and has 14 branches throughout the country, including in Nay Pyi Taw, Mandalay, Taunggyi, Mawlamyine, Pathein, Monywa, Dawei, Hpa-an, Bago, Magway, Loikaw, Myitkyina, Sittwe, and Hakha. DICA uses seminars, workshops, investment fairs and other events to promote investment, as well as its website: .
The government maintains active dialogue with chambers of commerce (including the American Chamber of Commerce) and foreign companies on investment.
Limits on Foreign Control and Right to Private Ownership and Establishment
Generally, foreign and domestic private entities have the right to establish and own business enterprises and engage in remunerative activity with some sectoral exceptions. Under Article 42 of the Myanmar Investment Law, the Burmese government restricts investment in certain sectors. Some sectors are only open to government or domestic investors. Other sectors require foreign investors to set up a joint-venture with a citizen of Burma or citizen-owned entity or obtain a recommendation from the relevant ministries.
The State-Owned Economic Enterprises Law, enacted in March 1989, stipulates that SOEs have the sole right to carry out a range of economic activities in certain sectors, including teak extraction, oil and gas, banking and insurance, and electricity generation. However, in practice many of these areas are now open to private sector investment. For instance, the 2016 Rail Transportation Enterprise Law allows foreign and local businesses to make certain investments in railways, including in the form of public-private partnerships.
More broadly, the Myanmar Investment Commission (MIC), “in the interest of the State,” can make exceptions to the State-Owned Enterprises Law. The MIC has routinely granted exceptions, including through joint ventures or special licenses in the areas of insurance, banking (for domestic investors only), mining, petroleum and natural gas extraction, telecommunications, radio and television broadcasting, and air transport services.
As one of their key functions, the Directorate of Investment and Company Administration (DICA) and the MIC are responsible for screening inbound foreign investment to ensure it does not pose a risk to national security, as well asto make a determination that such investment sufficiently furthers Burma’s growth and development.
Other Investment Policy Reviews
The World Bank’s Doing Business 2020 report includes an analysis of Burma’s investment sectors and business environment, and can be found at: https://www.doingbusiness.org/en/data/exploreeconomies/myanmar/
The government through the Directorate of Investment and Company Administration (DICA) provides limited business facilitation services.
The government instituted online company registration through “MyCo” ( ). Investors are able to submit forms, pay registration fees, and check availability of a company name through a searchable company registry on the “MyCo” website.
The Myanmar Investment Commission (MIC) is responsible for verifying and approving certain investment proposals and regularly issues notifications about sector-specific developments. The MIC is comprised of representatives and experts from government ministries, departments and governmental and non-governmental bodies. Companies can use the DICA website to retrieve information on requirements for MIC permit applications and submit a proposal to the MIC. If the proposal meets the criteria, it will be accepted within 15 days. If accepted, the MIC will review the proposal and reach a decision within 90 days. The MIC issued a March 2016 statement granting authority to state and regional investment committees to approve any investment with capital of under USD 5 million.
The Burmese government does not directly promote or incentivize outward investment. However, the Burmese business community has responded positively to U.S. investment messaging under SelectUSA promotional efforts. The Burmese delegations to the SelectUSA U.S. Investment Summits in Washington, D.C. numbered 15 delegates in 2018 and 36 delegates in 2019, highlighting growing interest. Tourism/hospitality, oil & gas, ICT, and food processing investment opportunities were of the most interest to the Burmese investors. Burma does not restrict domestic investors from investing abroad.
3. Legal Regime
Transparency of the Regulatory System
Regulatory and legal transparency continue to pose significant challenges for foreign investors in Burma. Most regulations relevant to foreign businesses are developed at the national level by the following ministries: Commerce; Planning, Finance, and Industry; Investment and Foreign Economic Relations; and Agriculture, Livestock, and Irrigation.
In the past, all regulations were subject to change with no advance or written notice, and without opportunity for public comment. Ministries are not legally obligated to share regulatory development plans with the public or conduct public consultations, though some ministries now hold limited public consultation before finalizing bills for parliamentary consideration or issuing new regulations. For instance, the government solicited public comments on the 2016 Investment Law, including the drafting of the rules and regulations, which went through three rounds of public consultations. In another example, the government conducted public consultations on the Gemstone Policy.
The Burmese government does publish new regulations and laws in government-run newspapers and “The State Gazette.” The Burmese government also publishes information online and has established websites through which businesses can access trade information and also sometimes posts new regulations on government ministry’s official Facebook page.
Foreign investors can appeal adverse regulatory decisions. The relevant ministry drafting the regulation has the mandate to appoint a regulatory body to manage a grievance system to resolve legal disputes and/or establish enforcement mechanisms. For instance, under the Myanmar Investment Law, the Myanmar Investment Commission (MIC) serves as the regulatory body and has the authority to impose penalties on any investor who violates or fails to comply with the law. Investors have the right to appeal any decision made by the MIC to the government within 60 days from the date of decision.
Public finance and debt obligations, exclusive of contingent liabilities are public and transparent. Budget reports are published on the Ministry of Planning, Finance, and Industry (MOPFI) website ( ). Burma has issued the annual Citizen Budget in the Burmese language since FY 2015-16. The Ministry of Planning, Finance, and Industry has published quarterly budget execution reports, six-month-overview-of-budget-execution reports, and annual budget execution reports on its website since FY 2015-16. However, details regarding the budget allocations for defense expenditures are not transparent. The Burmese government also publishes its debt obligation report on the Treasury Department’s Facebook page. (See: ).
International Regulatory Considerations
Burma has been a member of the Association of South East Asian Nations (ASEAN) since July 1997. As an ASEAN member state, Burma’s regulatory systems are expected to conform to harmonization principles established in the ASEAN Trade in Goods Agreement (ATIGA) to support regional economic integration. Such principles include the removal of unnecessary technical barriers to trade; addressing relevant non-tariff measures among ASEAN member states; facilitation of trade; and upgrading of regulation to ensure safety, consumer health, environmental protection, consumer protection and meeting other social objectives. In an example of ASEAN regulatory harmonization, Burma officially joined the ASEAN Single Window in March 2020 with the launch of the National Single Window Routing Platform, which streamlines the import process by adopting the ASEAN Certificate of Origin Form D.
The Ministry of Commerce’s National Trade Portal and Repository contains all of Burma’s laws, processes, forms, and points of contact for trade. This portal increases transparency in Burma and also meets Burma’s requirements under Articles 12 and 13 of the ATIGA. The Trade Portal can be found at: .
While Burma is not currently in compliance with WTO notification requirements, the government has developed a WTO notification strategy that could increase the number and quality of notifications.
Legal System and Judicial Independence
Burma’s legal system is a unique combination of customary law, English common law, statutes introduced through the pre-independence India Code, and post-independence Burmese legislation. Where there is no statute regulating a particular matter, courts are to apply Burma’s general law, which is based on English common law as adopted and modified by Burmese case law. Every state and region has a High Court, with lower courts in each district and township. High Court judges are appointed by the President while district and township judges are appointed by the Chief Justice through the Office of the Supreme Court of the Union. The Union Attorney General’s Office law officers (prosecutors) operate sub-national offices in each state, region, district, and township.
The Attorney General enforces standards of due process in the criminal justice system and provides the government’s law officers with a mandate to act as an independent check in the criminal justice system. The Ministry of Home Affairs, led by a minister appointed by the Commander-in-Chief but reporting to the President, retains oversight of the Myanmar Police Force, which files cases directly with the courts. While foreign companies have the right to bring cases to and defend themselves in local courts, there are general concerns about the impartiality and lack of independence of the courts.
In order to address the concerns of foreign investors regarding dispute settlement, the government acceded in 2013 to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). In 2016, Burma’s parliament enacted the much-anticipated Arbitration Law, putting the New York Convention into effect and replacing arbitration legislation that was more than 70 years old. Since April 2016, foreign companies can pursue arbitration in a third country. However, the Arbitration Law does not eliminate all risks. There is still a limited track record of enforcing foreign awards in Burma and inherent jurisdictional risks remain in any recourse to the local legal system. The Arbitration Law, however, brings Burma’s legislation more in line with internationally accepted standards in arbitration.
Certain regulatory actions are appealable and are adjudicated with the respective ministry. For instance, according to the Myanmar Investment Law, investment disputes that cannot be settled amicably are “settled in the competent court or the arbitral tribunal in accord with the applicable laws.” An investor dissatisfied with any enforcement action made by the regulatory body has the right to appeal to the government within 60 days from the date of administrative decision. The government may amend, revoke, or approve any decision made by the regulatory body. This decision is considered final and conclusive.
Laws and Regulations on Foreign Direct Investment
The Myanmar Investment Commission (MIC) plays a leading role in the regulation of foreign investment and approves all investment projects receiving incentives outside of the special economic zones, which are handled by the SEZ’s Central Working Body. Regulation of joint ventures between foreign investors and SOEs is the responsibility of the relevant line ministries.
The Myanmar Investment Law outlines the procedures the Myanmar Investment Commission must take when considering foreign investments. The MIC evaluates foreign investment proposals and stipulates the terms and conditions of investment permits. The MIC does not record foreign investments that do not require MIC approval. Many smaller investments may go unrecorded. Foreign companies may register locally without an MIC license, in which case they are not entitled to receive the benefits and incentives provided for in the Myanmar Investment Law. More information on the MIC can be found at: .
There is no “one-stop-shop” for investors with the exemption of Special Economic Zones which can provide “one-stop-shop” service. However, in 2015 the General Administration Department established One Stop Shops (OSS) to facilitate tax payments and assist in obtaining other required permits. As of April 2019, the government has opened 316 One Stop Shops in 72 townships across the nation.
Competition and Anti-Trust Laws
A Competition Law was passed on February 24, 2015, and went into effect on February 24, 2017. The objective of the law is to protect public interest from monopolistic acts, limit unfair competition, and prevent abuse of dominant market position and economic concentration that weakens competition.
The Myanmar Competition Commission serves as the regulatory body to enforce the Competition Law and its rules. The Commission is chaired by the Minister of Commerce, with the Director General of the Department of Trade serving as Secretary. Members also include a mixture of representatives from relevant line ministries and professional bodies, such as lawyers and economists.
The law classifies four types of behavior as punishable violations: acts restricting competition (applicable to all persons); acts leading to monopolies (applicable only to entrepreneurs); unfair competitive acts (applicable only to entrepreneurs); and business combinations such as mergers. The law also restricts the production of goods, market penetration, technological development, and investment, although the government may exempt restrictive agreements “if they are aimed at reducing production costs and benefit consumers,” such as reshaping the organizational structure and business model of a business so as to improve its efficiency; enhancing technology and technological advances for the improvement of the quality of goods and service; and promoting competitiveness of small- and medium-sized enterprises.
Burma is not party to any bilateral or regional agreement on anti-trust cooperation.
Expropriation and Compensation
The 2016 Myanmar Investment Law prohibits nationalization and states that foreign investments approved by the MIC will not be nationalized during the term of their investment. In addition, the law stipulates that the Burmese government will not terminate an enterprise without reasonable cause, and upon expiration of the contract, the Burmese government guarantees an investor the withdrawal of foreign capital in the foreign currency in which the investment was made. Finally, the law states that “the Union government guarantees that it shall not terminate an investment enterprise operating under a Permit of the Commission before the expiry of the permitted term without any sufficient reason.”
ICSID Convention and New York Convention
Burma is not a party to the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID). In 2016, the Burmese parliament enacted the Arbitration Law, putting the 1958 New York Convention into effect (see international arbitration below).
Investor-State Dispute Settlement
To date, Burma has not been party to any investment dispute or dispute settlement proceeding at the WTO.
Under the 2016 Arbitration Law, local courts must recognize and enforce foreign arbitral awards against the government unless a valid ground for refusal to enforce exists. Valid grounds for refusal include: one or more parties’ inability to conclude an arbitration agreement; the invalidity of the arbitration agreement, lack of due process, the award falls outside the scope of the arbitration agreement; the arbitration was not in compliance with the applicable laws; or the award is not in force or has been set aside.
International Commercial Arbitration and Foreign Courts
The 2016 Arbitration Law is based on the UNCITRAL Model Law (Model Law), addressing arbitration in Burma as well as the enforcement of a foreign award in Burma. For example, the provisions relating to the definition of an arbitration agreement, the procedure of appointing arbitrator(s) and the grounds for setting aside an award are mirrored in the Arbitration Law and the Model Law; however there are some differences between these two laws. For instance, while parties are free to decide on the substantive law in an international commercial arbitration, the Arbitration Law provides that arbitrations seated in Burma must adopt Burmese law as the substantive law. According to the Arbitration Law, foreign arbitral awards can be enforced if they are the result of a commercial dispute and were made at a place covered by international conventions connected to Burma and as notified in the State Gazette by the President. If the Burmese court is satisfied with the award, it has to enforce it as if it were a decree of a Burmese court. While observers note that there are still issues to be resolved, the Arbitration Law brings Burma’s legislation much closer to international arbitration standards and legislation.
In February 2020, the government of Burma passed the new Insolvency Law, which replaces the Insolvency Act of 1910 and the Insolvency Act of 1920. The new law adopts the United Nations Commission on International Trade Law (UNCITRAL) Model Law on cross-border insolvency, providing greater legal certainty on transnational insolvency issues.
The legislation establishes an effective insolvency regime that addresses both corporate and personal insolvency, with a focus on protecting micro, small and medium-sized enterprises (MSMEs). With regards to personal insolvency, the new law encourages debtors to enter into a voluntary legally binding arrangement with their creditors. This agreement allows part or all of the debt to be written off over a fixed period of time. The law also provides equitable treatment for creditors by enabling an efficient liquidation process to ensure creditors receive maximum financial recovery from the property value of a non-viable business.
The new law establishes the Myanmar Insolvency Practitioners’ Regulatory Council to act as an independent regulatory body and assigns DICA the role of Registrar with the authority to fine individuals contravening the law. In addition, the court with legal jurisdiction can order an individual to make good on the default within a specified time.
4. Industrial Policies
In January 2020, the Ministry of Investment and Foreign Economic Relations (MIFER) announced tax exemptions for investments made in five priority sectors in all 14 states and regions in Burma as well as the capital territory. The tax exemption period is three, five, or seven years depending on the location. For a list of priority sectors by state and regions, please see MIFER’s website at:
Myanmar Investment Commission permit and endorsement holders are entitled to tax incentives and the right to use land. With a MIC permit, foreign companies can lease regional government-approved land for periods of up to 50 years with the possibility of two consecutive ten-year extensions.
The government has no established mechanism to provide joint-financing or any other type of fiscal support for infrastructure development.
Foreign Trade Zones/Free Ports/Trade Facilitation
Under the Myanmar Special Economic Zones Law, investors located in an SEZ may apply for income tax exemption for the first five years from the date of commencement of commercial operations, followed by a reduction of the income tax rate by 50 percent for the succeeding five-year period. Under the law, if profits during the third five-year period are re‐invested within one year, investors can apply for a 50 percent reduction of the income tax rate for profits derived from such re‐investment. In August 2015, the government issued new rules governing the SEZs, including the establishment of on-site One-Stop Service centers to ease the approval and permitting of investments in SEZs, incorporate companies, issue entry visas, issue the relevant certificates of origin, collect taxes and duties, and approve employment permits and/or permissions for factory construction and other investments.
Performance and Data Localization Requirements
Foreign investors must recruit at least 25 percent of their skilled employees from the local labor force in the first two years of their investment. The local employment ratio increases to 50 percent for the third and fourth years, and 75 percent for the fifth and sixth years. The investors are also required to submit a report to MIC with details of the practices and training methods that have been adopted to improve the skills of Burmese nationals.
Foreign investors may appoint expatriate senior management, technical experts, and consultants, but are required to submit a copy of the expatriate’s passport, proof of ability, and profile to the MIC for approval. Foreign investors have not cited onerous visa, residence, work permit, or similar requirements asa barrier to their mobility or that of their employees.
Foreign investors are not required to use domestic content in goods or technology. Burma is currently developing laws, rules and regulations on information technology (IT) and data protection standards, but does not currently have requirements for foreign IT providers to turn over source code and/or provide access to surveillance. Burma has no data localization laws.
5. Protection of Property Rights
The Myanmar Investment Law provides that any foreign investor may enter into long-term leases with private landlords or – in the case of state-owned land – the relevant government departments or government organizations, if the investor has obtained a permit or endorsement issued by the Myanmar Investment Commission (MIC). Upon issuance of a permit or an endorsement, a foreign investor may enter into leases with an initial term of up to 50 years (with the possibility to extend for two additional terms of ten years each). The MIC may allow longer periods of land utilization or land leases to promote the development of difficult-to-access regions with lower development.
In September 2018, the Burmese government amended the Vacant, Fallow, and Virgin Lands Management Law and required occupants of these landsto register at the nearest land records office within a six-month period. The six-month deadline was intended to offer clear title to lands for investment and infrastructure construction. However, controversy exists over which lands have been designated as vacant, fallow or virgin, and whether the notification or registration period was sufficient.
A continuing area of concern for foreigners involves investment in large-scale land projects. Property rights for large plots of land for investment commonly are disputed because ownership is not well established, particularly following a half-century of military expropriations. It is not uncommon for foreign firms to face complaints from local communities about inadequate consultation and compensation regarding land.
Burma passed the Condominium Law in 2016, which allows for up to 40 percent of condominium units of “saleable floor area” to be sold to foreign buyers. Condominium owners shall also have the shared ownership of both the land and apartment. In 2017 the Ministry of Construction passed the Condominium Rules, implementing and clarifying provisions of the Condominium Law. One clarification per the rules is that state-owned land may be registered as condominium land (Rules 20 and 21).
In accordance with the Transfer of Immovable Property Restriction Law of 1987, mortgages of immovable property are prohibited if the mortgage holder is a foreigner, foreign company or foreign bank.
Intellectual Property Rights
Burma is a member of the World Trade Organization (WTO) and is obligated to provide intellectual property protection and enforcement consistent with the “Trade-Related Aspects of Intellectual Property (IPs) Agreement.” The WTO, however, has delayed required implementation of TRIPS for Least Developed Nations – including Burma – until 2021.
Burma’s current intellectual property (IP) protection and enforcement system does not meet international standards. While Burma’s Parliament passed four intellectual property laws in 2019 – the Trademark Law, Industrial Design Law, Patent Law, and Copyright Law – these laws have not yet entered into force at the time of this writing. The Burmese government is in the process of drafting implementing regulations and setting up an IP Office to administer the laws. Once in effect, the laws will likely improve intellectual property protection, and enforcement measures against intellectual property rights infringement. In March 2020, the government formed an IP Central Committee, chaired by a Vice-President, to oversee the IP Department. Establishing the committee is widely viewed as an important step in further developing Burma’s IPR protection regime.
The new Trademark Law introduces a “first-to-file” system from the previous “first-to-use” system. Trademark holders who previously used or registered their trademarks under the old system will need to re-register their trademarks under the new law. The new law also includes protections for “well-known” trademarks. Geographical indicators will also be protected through registration under the new law. The new IP Office anticipates receiving thousands of trademark applications from owners of existing trademarks during a six-month soft-opening period. With the anticipated workload and other issues, implementation of the other three IP laws will likely be delayed.
The Myanmar Police Force’s Criminal Investigative Department (CID) investigates and seizes counterfeit goods, including brands, documents, gold, products, and money, but not medicines. The CID provides evidence before presenting the case to the courts. The CID currently does not record the value of the amount seized. Industry has also identified Bangladesh, Myanmar, and Sri Lanka as emerging sources of counterfeit oncology drugs.
Burma is not listed in the USTR’s Special 301 report or the notorious market report.
Resources for Rights Holders
For Intellectual Property Rights issues in Burma, please contact:
Kitisri Sukhapinda, Regional IP Attaché
U.S. Patent and Trademark Office
American Embassy Bangkok, Thailand
Tel: (662) 205-5913
6. Financial Sector
Capital Markets and Portfolio Investment
The Burmese government has gradually opened up to foreign portfolio investment but both the stock and bond markets are small and lack sufficient liquidity to enter and exit sizeable positions. In July 2019, the Securities and Exchange Commission announced that foreign individuals and entities are permitted to hold up to 35 percent of the equity in Burmese companies listed on the Yangon Stock Exchange. As of March 2020, six companies are listed on the exchange. The Securities Exchange Law came into effect in 2013, establishing a securities and exchange commission and helping clarify licensing for securities businesses (such as dealing, brokerage, underwriting, investment advisory and company representation).
Burma has a very small publicly-traded debt market. Banks have been the primary buyers of government bonds issued by Burma’s Central Bank, which has established a nascent bond market auction system. The Central Bank issues government treasury bonds with maturities of two, three, and five years.
Burma enacted the Foreign Exchange Management Law in 2012 in order to improve foreign exchange management and to broaden international economic relations and cooperation. Domestic businesses and investors are able to obtain loans from local and foreign banks. According to the Myanmar Investment Law and Foreign Exchange Management Law, foreign investors need the approval of the Central Bank of Myanmar (CBM) to take a bank loan. The Central Bank allows loans with a maximum maturity of three years. The CBM also allows overdraft lending. Instead of using traditional loans, borrowers can take out overdrafts with collateral which can be rolled over every year without a maturity date. As per CBM regulations, banks are required to clear overdraft facilities within three years; otherwise such overdrafts will be classified as non-performing loans (NPLs).
Money and Banking System
There is limited penetration of banking services in the country but the usage of mobile payment systems is growing rapidly. An estimated 25 percent of the population has access to a savings account through a traditional bank. As of April 2020, Burma’s banking sector consisted of four state-owned banks, 27 domestic private banks, 17 foreign bank branches, and three foreign bank subsidiaries. The banking system is fragile with a high volume of non-performing loans. Financial analysts estimate that NPLs at some local banks account for 40 to 50 percent of outstanding credit.
The 2013 Central Bank of Myanmar Law made the Central Bank an independent institution headed by a Minister-level governor. The Central Bank of Myanmar (CBM) is responsible for the country’s monetary and exchange rate policies as well as regulating and supervising the banking sector.
The government has gradually opened the banking sector to foreign investors. The government began awarding limited banking licenses to foreign banks in October 2014. In November 2018, the CBM published new guidelines that permit foreign banks with local licenses to offer “any financing services and other banking services” to local corporations. Previously, foreign banks were only allowed to offer export financing and related banking services to foreign corporations.
In November 2019, the CBM announced that foreign banks will be allowed to apply for licenses to operate subsidiaries or branches. Under new directives, any foreign bank applying for a subsidiary license would be allowed to provide wholesale banking services at the start of operation. From January 2021, foreign banks with a subsidiary license will be allowed to offer retail banking services. The CBM will allow existing foreign bank branches to convert to subsidiaries starting from June 2020. In January 2020, the CBM announced foreign banks would be permitted to hold more than 35 percent of the capital in joint ventures with domestic banks.
No U.S. banks have correspondent relationships with Burmese banks.
Foreigners are allowed to open a bank account in Burma in either U.S. dollars or Burmese kyat. To open a bank account, foreigners must provide proof of a valid visa along with proof of income or a letter from their employer.
Foreign Exchange and Remittances
According to Chapter 15 of the Myanmar Investment Law, foreign investors are able to convert, transfer, and repatriate profits, dividends, royalties, patent fees, license fees, technical assistance and management fees, shares and other current income resulting from any investment made under this law. Nevertheless, in practice, the transfer of money in or out of Burma has been difficult, as many international banks have internal prohibitions on conducting business in Burma given the long history of sanctions and significant money-laundering risks. The majority of foreign currency transactions are conducted through banks in Singapore.
Under the Foreign Exchange Management Law, transfer of funds can be made only through licensed foreign exchange dealers, using freely usable currencies. The Central Bank of Myanmar (CBM) grants final approval on any new loans or loan transfers by foreign investors. According to a new regulation in the Foreign Exchange Management Law, foreign investors applying for an offshore loan must get approval from the CBM. Applications are submitted through the Myanmar Investment Commission by providing a company profile, audited financial statements, draft loan agreement, and a recent bank credit statement.
Since February 5, 2019, the Central Bank calculates a market-based reference exchange rate from the volume-weighted average exchange rate of interbank and bank-customer deals during the day.
According to the Myanmar Investment Law, foreign investors can remit foreign currency through authorized banks. Nevertheless, in practice, the transfer of money in or out of Burma has been difficult, as many international banks have internal prohibitions on conducting business in Burma given the long history of sanctions and significant money-laundering risks. The majority of foreign currency transactions are conducted through banks in Singapore.
The difficulties presented by the formal banking system are reflected in the continued use of informal remittance services (such as the “hundi system”) by both the public and businesses. In November 15, 2019, the Central Bank of Myanmar adopted the Remittance Business Regulation in order to bring these informal networks into the official financial system. The regulations require remittance business licenses to conduct inward and outward remittance businesses from the Central Bank of Myanmar.
Sovereign Wealth Funds
Burma does not have a sovereign wealth fund.
7. State-Owned Enterprises
State-owned enterprises (SOEs) in Burma are active in various sectors, including natural resource extraction, print news, energy production and distribution, banking, mobile telecommunications, and transportation. SOEs employ approximately 145,000 people, according to a 2018 report by the Natural Resource Governance Institute. The 1989 State-Owned Economic Enterprises Law does not establish a system of monitoring enterprise operations, hence detailed information on Burmese SOEs are difficult to obtain. However, according to commercial statements, the total net income of all SOEs during fiscal year 2018-19 was approximately USD 1.1 billion. The top profit-making SOEs are found in the natural resource sector, namely the Myanma Oil and Gas Enterprise, Myanma Gems Enterprise, and Myanma Timber Enterprise. Within Burma, there are 32 SOEs that are managed directly by six ministries without independent boards.
State-Owned Enterprises enjoy several advantages including serving in some cases as the market regulator, preferential land access, and access to low-interest credit. According to the State-Owned Economic Enterprises Law, SOEs wield regulatory powers that provide SOEs a significant market advantage, including through an ability to recommend specific tax exemptions to the Myanmar Investment Commission on behalf of private sector joint-venture partners and to monitor private sector companies’ compliance with contracts. In addition, the law stipulates that SOE managers have sole discretion in awarding contracts and licenses to private sector partners with limited oversight. SOEs can secure loans at low interest rates from state-owned banks, with approval from the cabinet. Private enterprises, unlike SOEs, are forced to provide land or other real estate as collateral in order to be considered for a loan. SOEs have historically had an advantage over private entities in land access because under the Constitution the State owns all the land.
In May 2016, the government formed a privatization committee on SOEs, which is headed by a Vice-President, to examine measures such as public-private partnerships (PPP) to develop and operate infrastructure as well as to sell-off inefficient state-owned factories. The Minister for Planning, Finance, and Industry serves as secretary of the commission. Privatization can take the form of system-sharing, public-private partnership, private-private partnership, franchise, joint-venture, and sales of assets in line with international standards. In October 2017, the government sought to privatize state-owned factories in the ceramic, garment, plastic, and stainless-steel sectors, according to state media. According to government data and media reports, 55 state-owned factories have been restructured under various PPPs as of November 2019. The privatization committee does not have a website describing its current activities but general information in the Burmese language about the committee can be found at: .
8. Responsible Business Conduct
There is growing awareness of standards for responsible business conduct in Burma. Responsible business principles are cited in the Myanmar Investment Law and the Myanmar Sustainable Development Plan. Many privately-owned companies, particularly those seeking foreign investment, are increasing transparency and are striving to meet international standards of responsible business conduct. There remains, however, significant variance among companies and sectors. The Myanmar Centre for Responsible Business advises foreign investors to closely engage local partners to ensure they (as well as their contractors and supply chains) meet international standards for responsible business conduct.
Companies operating in Burma’s conflict zones or partnering with military-owned firms face significant reputational risk. Both foreign and domestic companies have been cited by international organizations and NGOs for supporting or enabling human rights abuses in Burma, including in reports by the United Nations Fact-Finding Mission on Myanmar.
Burma became a candidate country in the Extractive Industries Transparency Initiative in 2014.
The Burmese government has continued to prioritize fighting corruption, and resources have been allocated to facilitate the growth of the Anti-Corruption Commission (ACC) into an institution vested with the authority to lead that fight. In 2018, the government amended its anti-corruption law to give the ACC authority to scrutinize government procurements. The ACC has used that authority to initiate criminal cases even in the absence of victim complaints, leading to cases against several high-ranking and some mid-ranking officials for financial impropriety and abuse of office. Family members of politicians can also be prosecuted under the anti-corruption law, though office holders face higher penalties. The ACC opened branch offices in Yangon and Mandalay in 2019, as it continues to increase its investigative capacity.
Some companies are legally required to have compliance programs to detect and prevent bribery of government officials. Under Burma’s Anti-Money Laundering Law, law firms, banks, and companies operating in the insurance and gemstone sectors are required to appoint compliance officers and conduct heightened due diligence on certain customers.
There have also been non-legislative actions to counter corruption. Burma does not have laws to counter conflicts-of-interest in awarding contracts or government procurement. However, the President’s office has issued orders to prevent conflicts-of-interest for construction contracts and several ministries have put in place internal rules to avoid conflicts-of-interest in awarding tenders. In the private sector, some of Burma’s largest companies have developed anti-corruption policies, which they have published on-line.
Enforcement of Burma’s anti-corruption laws remains a challenge. While there have been efforts to reduce some opportunities for higher-level corruption, the lack of transparency regarding military budgets and expenditures remains a substantial impediment to reforms. In addition, a large swath of the economy is engaged in illegal activities beyond the control of the government. These include the production, transportation and distribution of narcotics, and the smuggling of jade, gemstones, timber, wildlife, and wildlife products. NGOs are working with the government to assist in fighting corruption in these areas, but lack any formal role in conducting investigations. There are efforts to promote accountability for government officials, but the lack of resources for key government functions, including law enforcement and civil service salaries, remains a driver for low-level corruption. In its 2019 Corruption Perceptions Index, Transparency International rated Burma 130 out of 175 countries. Investors might encounter corruption when seeking investment permits, during the taxation process, when applying for import and export licenses, and when negotiating land and real estate leases.
Burma signed the UN Anticorruption Convention in 2005, and ratified it on December 20, 2012.
Burma is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Resources to Report Corruption
* A new Anti Corruption Commission head office is currently under construction. However, the above address is still used for all official communications until the new office becomes operational.
10. Political and Security Environment
The government is sensitive to the threat of terrorism and is engaged with international partners on this issue. There is no evidence to suggest that international terrorist organizations have operational capacity in Burma or are actively targeting Western interests. Additionally, crime in Burma is low compared to other countries within the region. While violence or demonstrations rarely target U.S. or other Western interests in Burma, several ethnic armed groups are engaged in ongoing civil conflict with the Burmese government, which occurs almost exclusively in the ethnic states. On October 15, 2015, the Burmese government and eight ethnic armed groups (EAGs) signed a Nationwide Ceasefire Agreement (NCA). Two additional armed ethnic groups joined the NCA in February 2018. However, several ethnic armed groups, including the most powerful ones, have not signed the NCA and some signatories continue to fight with the military and other EAGs.
While most of the major cities are considered safe, several areas of the country, particularly within some of the ethnic states, routinely see conflict between the government and EAGs, as well as inter-ethnic violence between EAGs. Combatants use landmines, improvised explosive devices, small arms, and other weapons. These incidents generally target government security forces, but there have been collateral casualties among the civilian population. The continued use of landmines by the Burmese military and EAGs in the north, northeast, and southeast continue to routinely result in civilian casualties. Civilians have also been killed as a result of clashes between the military and the EAGs, as well as inter-ethnic conflicts.
On August 25, 2017, a Rohingya insurgent group attacked about 30 security outposts in northern Rakhine State. The government characterized this event as a terrorist attack, and Burmese security forces launched clearance operations throughout northern Rakhine State. Hundreds of Rohingya villages were burned, and there were widespread, credible allegations of abuses by security forces. An estimated 730,000 Rohingya fled to Bangladesh, and tens of thousands of non-Rohingya are displaced inside Rakhine State. In November 2017, the U.S. Secretary of State determined that the situation constituted ethnic cleansing. Violence has not spread to other areas of Burma as a result of the crisis in Rakhine State although, as noted above, certain states in Burma continue to experience ethnic or religious violence. Burma has a minority Muslim population, and violence between Buddhists and Muslims did occur in other parts of the country in 2013 and 2014 following intercommunal violence in Rakhine State in 2012. Since late 2018, there has been a marked increase in violence as a result of the ongoing conflict between the Burmese security forces and fighters from the Arakan Army (AA), an ethnic Rakhine, largely Buddhist, EAG. A number of townships in northern Rakhine and southern Chin States are currently off limits for U.S. government travel due to the violence from this conflict.
Burma plans to hold national elections in late 2020. Following decades of military rule, Burma elections were considered to be generally free and fair in November 2015, which the Aung San Suu Kyi-led National League for Democracy won. The military still retains considerable political power under provisions of the 2008 constitution, including 25 percent of all seats in parliament at both the national and region/state level.
11. Labor Policies and Practices
Burma’s labor costs are low, even when compared to most of its Southeast Asian neighbors. Skilled labor and managerial staff are in high demand and short supply, leading to high turnover. According to the government, 70 percent of Burma’s population is employed in agriculture. The military’s nationalization of schools in 1964, its discouragement of English language classes in favor of Burmese, the lack of investment in education by the previous governments of Burma, and the repeated closing of Burmese universities from 1988 to the mid-2000’s have taken a toll on the country’s work force. Most people in the 15- to 39-year-old demographic lack technical skills and English proficiency. In order to address this gap, Burma’s Employment and Skill Development Law went into effect in December 2013 and is being revised. The law provides for compulsory contributions on the part of employers to a “skill development fund,” although this provision has not been implemented.
The military’s nationalization of schools in 1964, its discouragement of English language classes in favor of Burmese, the lack of investment in education by the previous governments of Burma, and the repeated closing of Burmese universities from 1988 to the mid-2000’s have taken a toll on the country’s work force. Most people in the 15- to 39-year-old demographic lack technical skills and English proficiency. In order to address this gap, Burma’s Employment and Skill Development Law went into effect in December 2013 and is being revised. The law provides for compulsory contributions on the part of employers to a “skill development fund,” although this provision has not been implemented.
From the World Bank’s 2014 “Ending Poverty and Boosting Prosperity in a Time of Transition” report on Burma, 73 percent of the total labor force in Burma was employed in the informal sector in 2010, or 57 percent if one excludes agricultural workers. Casual laborers represented another 18 percent, mainly from the rural areas. Unpaid family workers represent another 15 percent.
In October 2011, the Burmese government passed the Labor Organization Law, which legalized the formation of trade unions and allows workers to strike. As of April 2019, roughly 2,900 enterprise-level unions have been formed in a variety of industries ranging from garments and textiles to agriculture to heavy industry. The passage of the Labor Organization Law engendered a labor movement in Burma, and there is a low, yet increasing, level of awareness of labor issues among workers, employers, and even government officials. Still, at present, the use of collective bargaining remains limited. Strikes are increasingly common, though they are not currently a significant deterrent to foreign investment.
The Burmese government continues to bring the legal system into compliance with international labor standards. In recent years, the government has passed a number of labor reforms and amended a range of labor-related laws, such as the Shops and Establishment Law, the Payment of Wages Law, and the Occupational Safety and Health Law. In 2019, Parliament also passed the Settlement of Labor Disputes Law. Under this law, parties to labor disputes can seek mediation through arbitration councils. All stakeholders have a say in the selection of arbitration mediators. If arbitration fails, disputes enter the court system. Parliament approved Burma’s ratification of an international treaty to abolish child labor in the country (Minimum Age Convention 138) in December 2019. The ratification process is ongoing. A mechanism to submit forced labor complaints became operational in February 2020.
In November 2014, the governments of the United States, Burma, Japan, Denmark, and the International Labor Organization (ILO) formally launched the Initiative to Promote Fundamental Labor Rights and Practices in Myanmar (Initiative) and held the fourth Stakeholder’s Forum in February 2020. The overarching goal of the Initiative is to promote a culture of compliance with fundamental labor rights. The Initiative is intended to cultivate relationships between business, labor, and civil society stakeholders and the Burmese government.
In November 2016, the U.S. government reinstated Burma’s Generalized System of Preferences (GSP) trade benefit in recognition of the progress that the government had made in protecting workers’ rights. The U.S. government reauthorized the GSP program globally in March 2018 through December 31, 2020.
Employers may face some restrictions in firing or laying off workers. Under Burmese law, certain employers must provide notice to the Ministry of Labor, Immigration, and Population when laying off workers. Employers also must provide warnings before firing a worker for breach of an employment contract. Fired or laid-off workers can collect unemployment insurance if they and their employer made contributions before termination.
Burma does not waive labor laws to attract foreign investment, though there is some ambiguity as to which labor laws apply in Special Economic Zones. This issue has yet to be definitively adjudicated.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
There is high potential in Burma for additional DFC investment particularly in the ICT, retail, and agricultural sectors. The DFC’s predecessor organization, OPIC (Overseas Private Investment Corporation), focused its portfolio investments in Burma on the telecommunication and microfinance sectors. In May 2013, OPIC signed an Investment Incentive Agreement with Burma.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
** Accurate statistical data is limited in Burma, although this capacity is also being developed.
|Direct Investment from/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment (2018)*||Outward Direct Investment|
|“0” reflects amounts rounded to +/- USD 500,000.|
Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
Geoffrey D. Chin, Economics Professional Associate
U.S. Embassy/110 University Avenue/Kamayut Township 11041/Rangoon, Burma
Telephone: 95 (0)1 7536 509
Email Address: firstname.lastname@example.org