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MYANMAR

Guide to Investment and Doing Business

Rich in natural resources, human resources and cultural and national heritage,
Myanmar represents excellent potential for business investment.
• The Government implemented market-oriented economic policy in 1988 in order to attract foreign investment and to increase local private sectors participation in the economy.
• Investment prospect was boosted after the promulgation of the Union of Myanmar Foreign Investment Law (FIL) in November 1988.
• Legislative provisions under the Foreign Investment Law are very simple and represent one of the most progressive and favorable Investment Laws.
• Foreign and Myanmar Companies can be formed in the Union of Myanmar under the Myanmar Companies Act, which has legal and common language known to all entrepreneurs in the competitive commercial world.
• Myanmar welcomes foreign investments in all forms. The Government is intent in maintaining good economic relationships with all foreign organizations and individuals, regardless of their political or social systems, and is attempting to build stronger economic relations with all countries.

FOREIGN INVESTMENT ENVIRONMENT

FACTS ON MYANMAR

LOCATION

South East Asia

AREA OF THE COUNTRY

Total Area                                261228 Sq. miles
International boundary                3640 miles
Coast Line                                1760 miles
Total Land Area                         197.19 mn acres
Capital                                     Nay Pyi Taw
Population                                 56.52 million
Working-age population               33.41 million

Language                                 Myanmar is the official language. English is widely
                                              used all over the country.
Religion                                    Majority are Buddhist and there are Islam,
                                              Christianity, Hinduism and others.
Major Economic Sectors              Agriculture, Manufacturing, Mining, Oil and Gas,
                                              Trade and Services.
Major Industries                         Agro-based industries, Wood-based industries,
                                              Textiles industries, Heavy industries, Steel mills,
                                              etc ...

1. Foreign Direct Investment Policy

Myanmar’s foreign direct investment policy is a component of the overall restructuring and development policy of the Government. The main components of the policy are:
(a) Adoption of market oriented system for the allocation of resources.
(b) Encouragement of private investment and entrepreneurial activity.
(c) Opening of the economy for foreign trade and investment.

The objectives of the Union of Myanmar Foreign Investment Law are:
(a) Promotion and expansion of exports,
(b) Exploitation of natural resources which require heavy investment,
(c) Acquisition of high technology,
(d) Supporting and assisting production and services involving large capital,
(e) Opening up of more employment opportunities,
(f) Development of works which would save energy consumption,
(g) Regional development.
In order to oversee and administer the FlL, the Myanmar Investment Commission (MIC) was formed and it acts as initial approving authority for investment proposals.

2. Forms of Investment
Foreign investors can set up their business either in the form of a wholly foreign-owned of a joint venture with any partner (an individual, a private company, a cooperative society or a state-owned enterprise). In all joint ventures, the minimum share of the foreign party is 35 percent of the total equity capital.

3. Minimum Capital Requirement
The minimum amount of foreign capital required to be eligible under the Foreign Investment Law is:
» For an industry US $ 500,000
» For a service organization US $ 300,000

4. Eligible Economic Activities
Economic activities allowed under the Foreign Investment Law cover almost all sectors of the economy. It has been notified by the Myanmar Investment Commission (MIC). Any economic activity not included in the notification can be considered individually.

Liberal Investment Incentives

Tax Incentives under the Foreign

Investment Law

A flat tax rate of 30 percent is applicable to an enterprise operating under the law.
Exemption from income tax for 3 consecutive years beginning with the year in which the operation commences and further tax exemption or relief for an appropriate period in case if its considered beneficial for the State.
The Commission may also grant-
- Exemption or relief from income tax on profit which is reinvested with one year.
- Relief from income tax up to 50 percent on the profit from exports.
- Right to pay income tax on behalf of the foreign employees and to deduct the
  same from the assessable income of the enterprise.
- Right to pay income tax of the foreign employees at the rate applicable to citizens
  of Myanmar.
- Right to deduct the research and development expenditure.
- Right to accelerate depreciation
- Right to carry forward and set off losses up to 3 consecutive years, from the year
  the loss is sustained.
- Exemption or relief from customs duty and other taxes on:-
(a) Imported machinery and equipment for use during the construction period.
(b) Imported raw materials for the first 3 years commercial production following the
     completion of construction.

Right to Transfer Foreign Currency

- A person who has brought in foreign capital can transfer the following:-
- Foreign currency entitlement of him.
- Net profit after deducting all taxes and provisions.
- Foreign currency permitted for withdrawal by the Commission which may include
   the value of assets on the winding up of business.
- A foreign employee can transfer his salary and lawful income after deducting taxes
  and other living expenses incurred domestically.

Guarantee

Enterprises operating under the Foreign Investment Law shall have the State guarantee against nationalization and expropriation.

Application Procedures for Foreign Investment

A promoter for foreign investment must submit a proposal in prescribed form to the Myanmar Investment Commission. With the proposal the following must be attached.
(1) Documents supporting financial credibility. (audited final accounts of most
     recent year of the person or the firm that intends to make investment)
(2) Bank recommendation regarding the business standing.
(3) Detailed calculation relating to the economic justification of the proposed
     project indicating inter alia-
- Estimated annual net profit.
- Estimated annual foreign exchange earning or saving and foreign exchange

   requirement for the operation.
- Recoupment period
- Prospects of creating employment.
- Prospects of increase in national income.
- Local and foreign market conditions and the requirement, if any, for local

  consumption.

(4) If it is a hundred percent foreign investment, a draft contract to be executed

     with an organization determined by the Ministry concerned.
(5) If it is a joint venture, a draft contract to be entered into between the foreign

     investor and local counterpart.
(6) If it is joint venture in the form of a limited company, draft Memorandum and

     Articles of Association and also a draft contract between the foreign and local

     investors.
(7) The promoter may apply for the exemptions and reliefs from taxes stated in
     Chapter 10 Article 21 of the Union of Myanmar Foreign Investment Law.

BUSINESS ORGANIZATION

1. Registration of Business Organization
Operation in Myanmar can be carried out through one of the following business organization.
1. Partnership
2. Companies; limited by shares. i.e. joint venture companies; local companies;
    foreign companies.
3. Branch or Representative offices of a foreign company.
4. Associations not for profit

2. Partnerships
The partnership’s rights and obligations are based on the agreements between the partners and the Partnership Act of 1932. In accordance with the Act, the number of partners is limited to twenty. A partnership firm may be registered, but registration is not compulsory. All partnerships formed in Myanmar are of unlimited type. When no provision is made for the period of time, the partnership will be dissolved when all partners are willing to do so.

3. Companies Limited by Shares
A company limited by shares is required to register. For foreign enterprises the most normal method of doing business in Myanmar is through a limited company. Such a company could be a foreign company registered in Myanmar or a branch office or representative office of a company formed outside Myanmar. If one share is owned by a foreign partner, the company shall come under the definition of a foreign company, and shall apply and obtain a Permit before registration. There are two main types of company: a private and a public limited liability company.
- In a private limited company, the transfer of shares is restricted, the public

  cannot be called upon to subscribe for shares, and the number of members is

  limited to fifty.
- In a public limited liability company, the number of shareholders must be at least
  seven. The company, after registration, must apply for a Certificate of
  Commencement of Business to enable start the business operation.
- The governing law for the limited companies is the Myanmar Companies Act 1914.
   A company with share contribution of the State shall be registered under the
   Special Company Act 1950 and the Myanmar companies Act 1914.
- There are generally no minimum share capital requirements. However, minimum

   requirements do exist for banking and insurance companies and foreign companies
  and branches of all businesses. For foreign companies and branches, the minimum
  capital to be brought in are as follows;
Industrial company – foreign currency equivalent to kyat 1,000,000
Services company – foreign currency equivalent to kyat 300,000

For Export/ Import
Enterprise whose operations involve foreign trade have to apply for registration as an exporter or importer with the Export Import Registration Office under the Ministry of Commerce.

Labor Force
Fairly trained manpower and skilled labor are available. Myanmar people are industrious skilful and quick learning, thus representing a strong labor force.

Labor Cost
The labor cost in Myanmar is quite low compared to other neighboring countries. In the private sector it is usually fixed on mutual agreement between the employer and employee.

Labor Contracts
A labor contract may contain essential information which includes job description, working venue, salary and wages, duration of contracts, terms of trial period and terms of termination. The Department of Labor can help the foreign enterprises in scrutinizing work rules and employment contracts so that they may be in conformity with the provisions of the existing Myanmar Labor Law.

1. Tax Rates
A flat rate of 30% is applicable to enterprises operating under the Union of Myanmar Foreign Investment Law and those formed under the Myanmar Companies Act.
For a non-resident foreign (including a branch company), income tax is payable at 35% or at progressive rates from 5% to 40% whichever is greater.
The income from “salaries” other than income of non-resident foreigner the tax is computed at progressive rates of 3% to 30%.

2. Withholding Tax
Payments on come such an interest, royalty and on contracts are subject to withholding tax as shown below.

Policy regarding ownership of Land
Foreign organizations and persons are not allowed to own land is Myanmar. However, Land may be acquired from respective Ministries on long renewable lease up to 30 years.

ADDRESS OF MAIN OFFICES FOR INVESTMENT

MYANMAR INVESTMENT COMMISSION OFFICE,

DIRECTORATE OF INVESTMENT AND COMPANY ADMINISTRATION.
MINISTRY OF NATIONAL PLANNING AND ECONOMIC DEVELOPMENT.
Building No.32, Nay Pyi Taw, MYANMAR.
Tel    : 95-67-406334, 406139, 406075
Fax   : 95-67-406333
Email : DICA.NPED@mptmail.net.mm

FOR COMPANY REGISTRATION

COMPANY TEGISTRATION OFFICE

DIRECTORATE OF INVESTMENT AND COMPANY ADMINISTRATION
MINISTRY OF NATIONAL PLANNING AND ECONOMIC DEVELOPMENT
Building No.3, Nay Pyi Taw
MYANMAR
Tel : 95-67-406342, 406124
Fax : 95-67-406074

FOR EXPORT & IMORT

EXPORT IMPORT REGISTRATION OFFICE

DIRECTORATE OF TRADE
MINISTRY OF COMMERCE
Building No.3, Nay Pyi Taw,
MYANMAR
Tel : 95-67-408009, 408003
Fax : 951-253028
 

BUSINESS ENVIRONMENT

With her forests, rivers systems, mountain ranges, minerals, gems, cultivable acreage, a long coastline and literate population, Myanmar could be classified as a country rich in natural and human resources.

Agriculture
Myanmar has a vast potential of land resources for further expansion of cultivable land. Prevalence of different agro-ecological tracts has made it possible to grow a multitude of over 60 crops ranging from tropical ones to moderate temperature varieties.

Livestock and Fishery
Myanmar has a long coast line and continental shelf-Fishing ground which is relatively less exploited. Fresh water fisheries are made possible through vast river systems and heavy rain falls.

Forestry
Myanmar is indeed very rich in forest resources, as the forest cover about 50 percent of total land area. Teak forest of Myanmar are considered to be one of the largest in the world. Moreover, there are many hardwood and softwood species which can be exploited for processing value-added products commercially.

Mining
Myanmar is well endowed with mineral resources and has many famous mines. There are many possibilities to work under foreign investment in various fields of mining. Moreover, quality gems are also mined extensively. Prospects for development of jewellery manufacturing and jade curving is quite evident, and foreign investment in this area of business is a promising one.

Energy
Myanmar is a country with substantial energy resources including crude oil, natural gas, hydro power and coal. The country has potential to easily meet present and future energy needs at relatively low cost. Transforming the energy sector into foreign exchange earning could well be a promising one in the future.

Tourism
Myanmar is rich not only in natural resources but also in traditional and cultural heritage, like the city as Bagan, Mandalay, Sagaing, Myauk-Oo and etc., Myanmar also has a variety of natural places such as snowcapped mountain in the north, unspoiled beaches in the west and south and scenes of exotic beauty all over the country. Tourism related business could be a promising one.