Myanmar adopted the market oriented economic system in the year 1988
after adopting the centralised planning economic system for more than
two decades. Substantial stabilization and reform measures had been
undertaken to be in line with the new economic system. The initial step
taken towards a more liberalized economy is to allow foreign direct
investment and to encourage the private sector development. In the area
of legal framework one of the first laws on investment promulgated by
the State Law and Qrder Restoration Council is the Union of Myanmar
Foreign Investment Law (FIL), promulgated on 30th November 1988 to
induce foreign investment and to boost investment particularly in the
II. FOREIGN INVESTMENT
Foreign Direct Investment
Myanmar 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
(e) opening up of more employment opportunities,
(f) development of works which would save energy consumption and
(g) regional development.
In order to oversee and administer the FIL, the Myanmar Investment
Commission (MIC) was formed and it acts as initial approving authority
for investment proposals. The Directorate of Investment and Company
Administration (DICA) serves as the Secretariat of MIC.
Forms of Investment
Foreign investors can set up their business either in the form of a
wholly foreign-owned or 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 services 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
5. Restricted Activities
The State-owned Economic Enterprises Law defines 12 economic activities
in which private investment is restricted and are reserved to be carried
out solely by the State. However, according to Section 4 of the said
law, the Government may in the interest of the State, permit by
notification to carry out such activities.
Incentives under the Foreign Investment Law
i. Exemption from income tax for 3 consecutive years beginnipg with the
year in which the operation commences and a further tax exemption or
relief for considered banefiaal for the State.
ii. The Commission may also grant:-
- exemptioa or relief from income tax on profit which is reinvested
within 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 the 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 orreliqf from customs duty and other taxes on:-
(a) imported machinery and equipment for use during the construction
(b) imported raw materials for the first 3 years commercial production
following the completion of construction.
Procedures for Foreign Investment
A promoter for foreign investment must submit a proposal in prescribed
form to the Myanmar Investment Commission for consideration of issuing a
permit. With the Proposal the following must be attached.
i. Documents supporting financial credibility. (audited final accounts
of a most recent year of the person or the firm that intends to make
ii. Bank recommendation regarding the business standing.
iii. Detailed calculation relating to the economic justification of the
proposed project indicating inter aila:-
- estimated annual net profit.
- estimated annual foreign exchange earnings or savings 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 ariy, for
iv. If it is a hundred percent foreign investment, a draft contract to
be executed with an organization determined by the Ministry concerned.
v. If it is a joint venture, a draA contract to be entered into between
the foreign investor and local counterpart.
vi. If it is a 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.
vii. Other related draft contracts are also to be submitted together
with the proposal.
viii. The promoter may apply for the exemptions and reliefs from taxes
stated in Chapter 10 Section 21 of the Union of Myanmar Foreign
Right to Transfer Foreign Currency
i. A persvn who has brought in foreign capital can transfer the
- 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.
ii. A foreign employee can transfer his salary and lawful income after
deducting taxes and other living expenses incurred domestically.
Enterprises operating under the Foreign Investment Law shall have the
State guarantee against nationalization and expropriation.
9. Importing and Exporting
An enterprise permitted under the FIL has to be registered as
exporter/importer upon business requirement with the Export Import
Registration Office under the Directorate of Trade, Ministry of
The following persons or enterprises can be registered as
(a) A citizen or an associate citizen or a nationalized citizen of the
Union of Myanmar if the applicant is a sole proprietor.
(b) Partnership firms
(c) Limited companies, inclusive of foreign companies and branches or
joint ventures formed under the Meaner Companies Act 1914 and Special
Company Act 1950.
(d) Co-operative societies, registered under the Co-operative Society
Myanmar products can be exported with the exception of some selected
items or restricted items under the export licencse. All goods which are
not prohibited by the respective Gover’nment departments can be imported
under the import licencse. Permitted foreign investment enterprises can
import the following without import licencses.
(a) Capital investment items imported as foreign capital during the
construction and initial investment period.
(b) Raw materials required for the first three years’ commercial
Import under Open General Licence (OGL) is also allowed to those
organizations permitted under the Foreign Investment Law.
1. Labour Force
Myanmar has an active labour force of 17.96 million. Fairly well trained
manpower and skilled labour are available.
The labour cost in Myanmar is quite low compared to other neighbouring
countries. In the private sector it is usually fixed on mutual agreement
between the employer and employee.
3. Working Hours
Companies, trading centres, factories 48 hrs a week
Oil field and mines 44 hrs a week
Underground mines 40 hrs a week
Social Security Benefit
Private enterprises employing at least 5 persons are covered by the
Social Security Act 1954. The contribution to the scheme is
approximately 4 percent of the insured wage and the ratio of
contribution is employer 2.5: employee 1.5. The workers insured under
the Act are entitled to free medical care, cash benefit for sickman,
maternity and disability, funeral grants and survivors’ pension.
Required manpower can be recruited through Township Labour Offices.
6. Employment of Foreign
The Union of Myanmar Foreign Investment Law permits the employment of
foreign experts and technicians.
IV. BUSINESS ORGANIZATION
1. Registration of
Operation in Myanmar can be carried out through one of the following
1. Sole proprietorship
3. Companies limited by shares. i.e. joint venture companies; local
companies; foreign companies.
4. Branch or Representative offices of a foreign company
5. Associations not for profit
A sole proprietorship is a business owned by an individual which usually
operates under the name of the owner. Establishment and operation is
simple. It is not required to register. Capital formation and withdrawal
can be performed at one’s will. However, the proprietor’s liability is
A group of individuals may enter into partnerships in order to carry on
a business. 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.
4. 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 by means of a branch office or representative
office 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 companies: a private limited liability
company 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 fifity. 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 business. For foreign companies
and branches, the minimum capital to be brought in are as follows:
- Industrial company - foreign currency equivalent to K. 1,000,000.
- Trading company - foreign currency equivalent to K. 500,000.
- Services company - foreign currency equivalent to K. 300,000.
5. Documents required for
Under section 27A of the Myanmar Companies Act, a foreign company
whether a hundred percent owned or a joint-venture and a
branch/representative office is required to obtain a PERMIT before
registration. However, a joint-venture with the State equity joined
under Special Company Act 1950 is exempted from obtaining a PERMIT.
The application for PERMIT is to be accompanied by the following
(1) Form A of the Myanmar Companies Regulation 1957
(2) Draft Memorandum and Articles of Association
(3) Duly completed questionnaire form
(4) Intended activities to be performed
(5) Estimated expenditures to be incurred in Meaner for the first year
(6) Financial credibility of the company / individual
(7) Board of Directors’ resolution, if the subscriber is a company.
In the case of a foreign branch/representative office, the following
shall be furnished in addition to the above mentioned documents.
(1) Instead of the companys draft Memorandum and Articles of
Association, a copy of the Head Offifce’s Memorandum and Articles of
Association or of the Charter, Statute or other instruments constituting
or defining the constitution of the company, duly notarized and
consularized by the Myanmar Embassy concern in the country where the
company is incorporated.
(2) Copies of the Head Office Balance Sheet and Profit and Loss accounts
for the last two financial years.
(3) Where the original Memorandum and Articles of Association and other
relevant documents are not in English language, authentication of the
translation into English.
The application for registration is to be accompanied by the following
(I) Two sets of Memorandum and Articles of Association duly stamped and
printed both in Myanmar and English
(2) Declaration of registration
(3) Declaration of legal and official version of the documents
(4) Declaration of the situation of registered office
(5) Translation certificate by a competent translator
(6) List of Directors
(7) List of person(s) authorized to accept services of process and
notice in Myanmar on behalf of the company (i.e. for a branch office of
a foreign company.)
For a Public company, the following additional documents shall be
submitted before commencing the business
(I) List of person to act as directors
(2) List of Persons who have consented to act as director
(3) Agreement to take qualification shares.
requirements for Companies
The legal requirements for the companies to comply under the Myanmar
Companies Act 1914 are as follows:-
The name of the company shall be painted or affixed on the outside of
its registered office and every place of business. It must also be
ingraved in legible characters on its seal and mentioned in all
letterheads, notices, advertisements and other official publications,
Every company must have a registered office in Myanmar to which all
communications and notices may be addressed. A notice of situation of
the initial registered office must be furnished to the CRO when filing
the incorporation documents. If the address is subsequently changed,
notice must be given to the CRO within 28 days of the change.
Every private company is required to have at least 2 directors. A public
company must have a minimum of 3 directors. An undischarged insolvent is
not eligible to be a director. A rectun of particulars of Directors,
Managers and Managing Agents and of any changes therein must be lodged
with the CRO within 14 days of the appointment or changes.
Allotment of Shares:
Every company will have to give notice to the CRO of any allotment of
shares within one month of the date of allotment.
Annual General Meeting:
Every company must hold an annual general meeting once in every calendar
year to lay its audited accounts before its shareholders. A newly
incorporated company is required to hold its first annual general
meeting within 18 months of incorporation. Subsequent annual general
meetings must be hold once in every calendar year and not more than 15
months after the last general meeting. The interval between the date of
the financial year on which the audited accounts are made up and the
date of the annual general meeting must be not more than 9 months.
Every company must file and Annual Return within 21 days after its
annual general meeting. The annual audited accounts are required to be
filed with the Annual Return.
Extraordinary and Special Resolutions:
Every company is required to lodge a copy of every extraordinary and
special resolution with the CRO within 15 days from the date of passing
Statements, Books and Accounts:
Every company must maintain proper books of accounts which are required
to be kept at the registered office of the company.
Consequenses of Non-compliance:
There are offices for any non- compliance with the law.
Types of Bank
Central Bank of Myanmar (CBM) operates as a central bank and is the
authority to oversee and regulate the financial institutions both
State and private owned.
Four major specialized banks; the Myanma Economic Bank (provides
countrywide domestic banking and saving services), the Myanma Investment
and Commercial Bank (handles both domestic and foreign exchange
transactions), the Myanma Foreign Trade Bank (deals in foreign exchange
transactions) and the Myanma Agricultural and Rural Development Bank
(provides seasonal and term loans for agriculture and livestock
breeding) are the state owned financial institutions.
Twenty domestic private banks are now operating banking services and
forty six foreign banks have opened representative o%offeces in Yangon.
Apart from the above institutions, Myanma Insurance is the sole
insurance organization and underwrites various classes of insurance.
2. Exchange Arrangement
The currency Myanmar Kyats is pegged to the SDR at K. B.50847=SDR 1.
Both exportation and importation of the Kyat is prohibited. All external
payments are subject to authorization. The CBM has issued Foreign
Exchange Certificates (FECs) which is equivalent in US dollar since
February 1993 for the convenience of tourists and to enhance the foreign
There are 15 types of taxes and duties under four main heads, they are:
(1) Taxes levied on domestic production and public consumption - excise
duty; licence fees on imported goods; state lottery; taxes on transport,
commercial tax and sale proceeds of stamps.
(2) Taxes levied on income and ownership - income tax and profit tax.
(3) Customs duties.
(4) Taxes levied on utility of State-owned properties - taxes on land;
water tax, embankment tax; taxes on extraction of forest products,
minerals, rubber and fisheries.
Income of tax payer is computed on the basis of one fiscal year (April 1
to March 31 of the following year). The fiscal year in which income is
received is expressed as "income year" and the year following as
A resident foreigner or a resident citizen is subject to tax on all
income derived from sources within the Union of Myanmar and on income
from sources outside the Union of Myanmar. In the case of an enterprise
operating under the Union of Myanmar Foreign Investment Law, the tax is
payable only on income derived from sources within the Union of Myanmar.
A non-resident foreigner is subject to tax on all income from sources in
A resident foreigner is
(a) a foreigner who lives in Myanmar for not less than 183 days during
the income year,
(b) a company formed under the Myanmar Companies Act or any other
existing Myanmar Law wholly or partly with foreign share holders.
(c) an Association of persons other than a company formed wholly or
partly with foreigners and where control, management and decision making
of its affairs are situated and exercised wholly in the Union of
A foreigner or a foreign organization who is not a resident in Myanmar
is classified as a non resident. A branch company is treated as a
non-resident. However, this classification is irrelevant to an
enterprise operating under the Union of Myanmar Foreign Investment Law.
2. Tax Rates
A flat tax rate of 30'%o 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 foreigner (including a branch company), income tax is
a payable at 35% or at graduated rates from 3 % to 5(%/a whichever is
The income from "salaries’* other than income of non-residentforeigner
the tax is computed at progressive rates of 3% of 30%.
Payments on income such as interest, royalties and on contracts are
subject to withholding tax as shown below.
Class of income
Rate applicable to resident citizens and resident foreigners
Rate applicable to non-resident foreigners
- Royalties for use of licences, trade marks, patent rights etc..
- Payments to contractors made Government Organizations, Municipalities
and Co-operative Societies
There is no withholding tax on dividends, repatriation of branch profits
and proceeds from sale of shares and stocks. These items are not
considered as forming part of taxable income.
Carry Forward of Loss
A loss not being a capital loss or a share of loss from a source of
income can be set off against profits from the remaining sources of
income in the same year Unabsorbed loss can be carried forward and set
off against profits in the following there consecutive years.
5. Customs Duties
With a few exceptions, all imported goods are liable to customs duties.
As for exports, tax is levied on export of a few commodities namely:
rice and rice flour, rice bran, rice dust, oil cakes, pulses and
cereals, bamboo and raw hides and skins.
Commercial Tax is turnover tax levied on goods either domestically
produced or imported. It is also levied on services such as transport of
passengers, entertainment, trading, operation of hotels, lodging and
enterprises engaged in sale of foods and drinks.
For goods and services supplied in Myanmar, commercial tax is imposed at
the time of supply. For the import of goods, commercial tax is collected
by the Customs Department at the point of importation in the same manner
that customs duties are collected.
Commercial tax is levied according to the Schedules appended to the said
Law. Briefly, the schedules are as follows:-
1. Schedule I details tax free items which comprises 65 essential and
2. Schedule II to V specify tax rates ranging from 5 per cent to 25 per
cent depending on the nature of the goods produced within Myanmar;
3. Schedule VI is for specific types of commodities such as cigarettes,
fuel oil, liquor, jade and gems on which tax is chargeable at rates
ranging from 30 per cent to 200 per cent;
4. Schedule VII is applicable to services including trade services.
The commercial tax rates for services are as follows:-
- 5 per cent on trading;
- 8 per cent on passenger transport fares,
- 10 per cent on hotel, lodging and reataurant services;
- 15 per cent on other forms of public entertainment; and
- 30 per cent on movie or cinema shows.
VIII. Current Economic
At the time of assumption of state power in 1988, the economy was in an
extremely bad shape having had suffered severe declines for three
consecutive years from 1986/87 to 1988/89. Thus, in the light of
market-oriented economic system the Government took urgent reform
measures to cease the decline and spur immediate recovery and
stabilization of the economy during the first three years from 1989/90
As soon as the rule of law and order was re-established and measures of
economic stability were restored, a Short Term Four Year Plan (1992/93
to 1995/96) was formulated with special focus given to the enhancement
of production, especially agriculture and export promotion. The plan was
successfully implemented with an average annual growth rate of 7.5
percent against the targeted rate of 5.1 percent.
The Government formulated another Five Year Plan spanning 1996/97 to
2000/2001 in which the direction, priorities and strategies to be
implemented during the next five years were charted and clearly
identified. Average annual growth rate in real terms of the Gross
Domestic Product was targeted at 6 percent. During 1996/97, the GDP grew
by 6.4 percent. The financial crisis in Asia resulted in 5.6 percent
reduction of foreign investment, thus indirectly impacting on Myanmar.
However, even then, the GDP growth was still considerable registering
4.6 percent in 1997/98. By 1998/99, the economy bounced back showing a
GDP growth of 5.7 percent.
Exports and imports increased during 1988/89 and 1998/99 registering
from US$ 320 million to US$ 1,134 million for exports anf from US$ 541
million to US$ 2,480 million for imports.
Myanmar has been trading mainly with Asian countries. During the year
1998/99, trade with Asia (including Japan) accounted for 71.9 percent of
total exports and 93.9 percent of total imports.
Myanmar's development endeavors gained further momentum and in 1999-2000
the GDP grew by 10.9 percent.
Myanmar, rich in natural resources, human resources and cultural and
national heritage, offers a range of opportunities to potential
investors. Myanmar also practises the legal system based on Common Law
legal system. What she really needs to reap the best benefit out of
such’ endowments are influx of capital, appropriate technology,
managerial skills and access to international markets. It is believed
that foreign direct investment can play a vital role in the development
Myanmar, bearing the said fact in mind, has laid down four economic
objectives one of those being " development of the economy inviting
participation in terms of technical know-how and investments from
sources inside the country and abroad" In order to facilitate this
objective in particular, Myanmar provides a spectrum of incentives in
the form of taxes and duties. Myanmar believes in doing business in the
light of mutually beneficial economic cooperation for the long term. The
potential foreign investors can carry on business conveniently by
utilizing these advantages and facilities.
SALIENT ECONOMIC INDICATIONS
2. Gross Domestic Products (GDP)
||Annual Growth Rate
||Per Capita Share
||(Kyat in mm)
3. Structure of GDP
4. Consumer Price Index
||Annual Change ( % )
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