Bureau of Economic and Business Affairs
July 5, 2016

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Executive SummaryShare    

Following years of isolation from the global economy, Burma in 2011 embarked on a new course and began implementing significant reforms to spur economic development and create an attractive business climate meant to generate more inward foreign investment. With the success of Burma’s historic nation-wide Parliamentary elections in November 2015, followed by the first transition to a democratic government in over 50 years in April 2016, the prospects are promising for a continued focus on inclusive economic growth. Over the past several years, the government has addressed some of the challenges facing Burma’s economy, including eliminating multiple exchange rates; reducing trade restrictions; reforming tax policy and administration; passing new arbitration, investment and labor laws; and easing some of the administrative hurdles to doing business in Burma. A revised investment law is expected to be passed in 2016. In their Doing Business 2016 report, the World Bank ranked Burma 167 out of 189 countries on the ease of doing business, a jump from the 2015 ranking of 177. Burma’s progress in the World Bank’s rankings was driven in part by improvements in regulations, costs, and procedures related to establishing a new venture and the creation of a one-stop shop for registering new businesses. The incoming government of Aung San Suu Kyi’s National League for Democracy (NLD) has already emphasized its focus on countering corruption throughout the government.

Burma’s move towards economic liberalization has improved its macroeconomic outlook. Initial forecasts of multilateral financial institutions suggest that for the fiscal year ending March 31, 2016, Burma’s real GDP growth was 7 percent, which is a decline from growth of 8.3 percent in FY 2014/15, mainly because of flood damage following Tropical Cyclone Komen and delays related to uncertainty regarding the 2015 elections and government transition. Growth is expected to rebound to 7.8 to 9 percent in FY 2016/17 because of agriculture-sector recovery and increased levels of investment after the new democratically-elected government is in place. Rising inflation affected Burma’s economic performance during FY 2015/16, driven by food shortages caused by midyear nationwide flooding, rising deficit spending, high levels of liquidity, and rising demand for consumer goods. The IMF reported inflation at 16.3 percent in October 2015, decreasing to 10.1 percent in January 2016. A recent census put Burma’s population 9 million people below previous figures. In turn, this increased per capita GDP from USD800 in 2010 to about USD1,200. According to the U.N.’s Development Program, this puts the country on track to fulfilling the per capita income criteria for graduation from least-developed country status by 2024.

Despite the reforms undertaken and improving economic indicators, the government has more work to do in order to create the foundation for a healthy investment environment that contributes to economic development and attracts foreign interest. The government has limited capacity and must prioritize among its long list of desired reforms. Currently, the country has many laws and regulations that are outdated and inadequate. Property rights are not well-established and conflicts over land title are a major concern. Investor protection, and the criteria for foreign investment, is not well-defined, and rule of law is weak. There is limited reliable market and consumer base information. The outgoing government’s investment approval procedures were at times unclear and excluded foreign participation in certain sectors.

According to the OECD’s investment policy review in 2014, Burma’s potential to attract Foreign Direct Investment (FDI) remains largely untapped. The majority of the investment that Burma received in past decades went into natural resource sectors, with only a small portion of that investment going to the manufacturing or services sectors. However, this has started to change. The sectors receiving the largest share of FDI since 2011 include oil and gas, transport and communication, tourism and power sectors.

Moving forward, observers expect the manufacturing and tourism sectors to continue growing and attracting more FDI, given the inauguration of a democratically-elected government, Burma’s re-entry into the global economy, and the removal of the majority of international sanctions. Conversely, observers suggest that political uncertainty and the rising influence of civil society might temporarily have halted or deterred new large-scale investments in the power and mining sectors that did not have sufficient support from the local communities most affected by the projects. Foreign investors are starting to explore investment opportunities in power, aircraft leasing, protection services, education, health services, banking, financial services such as accounting, and telecommunication.

However, as the World Bank’s 2014 Enterprise Services Report notes, reforms to improve Burma’s investment climate are urgently needed across a number of areas, especially in access to finance, land, electricity and skilled workers. In addition, private firms also indicate that the incidence of corruption as measured by bribe payments is one of the highest in the region. Addressing these key constraints is critical to ensuring a fair and transparent business environment in which all enterprises can grow and create jobs.

The international business community’s interest in Burma and the unique opportunities the country presents – including a rich natural resources base, a large market potential, a young labor force, and a strategic location between India, China and the countries that make up the Association of South East Asian Nations (ASEAN) – continues to grow. The U.S. Government has eased many of its economic sanctions on Burma, allowing U.S. investment, the importation of Burmese products into the United States, and the export of financial services, although remaining U.S. sanctions prevent U.S. persons from dealing with Specially Designated Nationals (SDN) and ban the import of Burmese jade and rubies into the United States. U.S. companies have expressed concern over the difficulty that remaining U.S sanctions, especially the SDN list, causes them in trying to do business in Burma. Some have also asserted reputational risks associated with Burma, given the remaining sanctions. The U.S. Government has designed the sanctions regime to target specific individuals who undermine the reform process while promoting broad and inclusive economic development, with the goal of bringing opportunities to both U.S. investors and the people of Burma, and continues to review the sanctions regime to ensure that it supports reform efforts in the country. Following the nation-wide elections in November 2015, and the inauguration of a democratically-elected government in 2016, the United States is encouraging U.S. economic engagement in Burma during this pivotal time in the country’s history. In May 2016, the U.S. Department of Treasury’s Office of Foreign Assets Control issued regulatory amendments to support U.S. trade and investment in Burma.

While the government’s efforts to date indicate tentative progress toward the goal of a sound investment framework, investors should prepare to do extensive due diligence and research in the market.

Table 1



Index or Rank

Website Address

TI Corruption Perceptions index


156 of 175


World Bank’s Doing Business Report “Ease of Doing Business”


177 of 189


Global Innovation Index


140 of 143


U.S. FDI in partner country ($M USD, stock positions)




World Bank GNI per capita




Millennium Challenge Corporation Country Scorecard

The Millennium Challenge Corporation, a U.S. Government entity charged with delivering development grants to countries that have demonstrated a commitment to reform, produced scorecards for countries with a per capita gross national income (GNI) of $4,125 or less. A list of countries/economies with MCC scorecards and links to those scorecards is available here: http://www.mcc.gov/pages/selection/scorecards. Details on each of the MCC’s indicators and a guide to reading the scorecards are available here: http://www.mcc.gov/pages/docs/doc/report-guide-to-the-indicators-and-the-selection-process-fy-2015.

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

Since 2011, Burma has made significant reforms to improve its legal and regulatory framework in order to create an attractive business climate capable of generating more inward investment. Over the past several years, Burma’s attitude towards Foreign Direct Investment (FDI) has been positive, and recent measures undertaken by the government, including ongoing revision of the Foreign Investment Law (FIL), a new Special Economic Zone law, labor reform and the award of certain tenders and licenses to foreign businesses, illustrate the government’s commitment to further opening its economy and to aligning itself with international standards. Many investors regard Burma’s historical 2015 elections – the degree to which they were open, transparent and inclusive, as well as the government’s actions after the elections – as a key indicator of the government’s ability to continue reforms. Observers note that Burma’s democratic transition has led to a slowdown in FDI, with a number of investors waiting until the new government is in place to continue with their investment activities. Following the transition to a new government in April 2016, FDI to Burma is expected to continue growing in the short-term, but further liberalization will be critical for sustaining FDI growth in the medium- to long-term. International investors are closely watching to see what actions Burma’s new government will take to reform the economy, promote inclusive growth and attract investment.

Other Investment Policy Reviews

The OECD conducted an investment policy review of Burma in March 2014. The entire report can be found at: http://www.oecd.org/daf/inv/investment-policy/Myanmar-IPR-2014.pdf.

The World Trade Organization (WTO) conducted a trade policy review of Burma in March 2014. The entire report can be found at: https://www.wto.org/english/tratop_e/tpr_e/s293_e.pdf.

The World Bank’s Doing Business 2016 report includes an analysis of Burma’s investment sectors and business environment, and can be found at: http://www.doingbusiness.org/data/exploreeconomies/myanmar/

The World Bank also conducted an enterprise survey of Burma in 2014, the results of which can be found at: http://www.enterprisesurveys.org/data/exploreeconomies/2014/myanmar.

Burma’s Directorate of Investment and Company Administration (DICA) released its own investment guide in 2014 which can be found at: http://www.dica.gov.mm/files/document-files/myanmarinvestmentguide_2014.pdf?_ga=1.181010606.820975682.1458969219 DICA has announced that it will be publishing a new investment guide in 2016.

Laws/Regulations on Foreign Direct Investment

The Myanmar Investment Commission (MIC) is a government-appointed body, with Burma’s President appointing MIC’s Chairman and its members. The MIC reports directly to Burma’s President. MIC was formed under the FIL and the Myanmar Citizen Investment Law. The Directorate of Investment and Company Administration (DICA) is the Secretariat of MIC, and falls under the newly merged Ministry of Planning and Finance. However, DICA reports directly to the Chairman of MIC.

The main law applicable to foreign investors is the FIL, which was approved in November 2012. A new draft Investment Law, which would see a consolidation of the 2012 FIL and the 2013 Myanmar Citizen Investment Law, is currently being considered by the government of Burma. The draft law has been released for public comment 12 times and was last posted on DICA’s website in October 2015. The new Parliament is expected to take up the draft law in 2016.

The stated objectives of the 2012 FIL are to support:

  • The extraction/export of the rich natural resources of the state for the benefit of the people;
  • The creation and accumulation of jobs for the people;
  • The development of human resources;
  • The development of infrastructure such as banking and finance, modern roads, interstate highways, production of electricity and energy, and modern information technology;
  • Transportation of rail, water and air via an international standard to enable citizens to do business throughout the world; and
  • The advent of businesses and investments which are in line with established international practices and norms.

The FIL continues to limit certain types of foreign investment (see list of industries below in “Limits on Foreign Control and Right to Private Ownership and Establishment”).

The government did issue a number of notices to clarify the joint-venture activities of foreign companies such as Notification 96/2015 issued on November 11, 2015 allowing for a Burmese company and a foreign company to form a joint venture with the ability to import and trade specified goods. Imports are limited to fertilizer, insemination seeds, pesticides and hospital equipment. Foreign owned companies are still not permitted to be involved in trading.

On December 22, 2015 the government passed an amendment to the FIL decentralizing decision making authority to local (state and regional) government, while streamlining the coordination between the local and central governments in approving investments.

Although many foreign investors feel that the FIL’s stated objectives point to a positive, forward-thinking approach by the government, the OECD notes that the FIL “still leaves many questions unanswered, notably with respect to investor protection and the procedures for admitting foreign investors.” In addition, Burma’s current regulatory investment framework remains complex, and can cause confusion for investors given the numerous laws that regulate the entry of investors depending on the sector and the location, and depending on whether the investor is local or foreign. Investors have complained that the government’s investment approval process (outlined below) is opaque, complex, onerous with regard to the paperwork required, and lengthy.

Business Registration

All investors must register with the DICA – except for those in a joint venture with a State equity formed under the Special Company Act 1950. DICA has a website where businesses can register: http://www.investinmyanmar.com/myanmar-company-registration/. In 2013 DICA updated the registration process in an effort to make doing in business in Burma easier. However, observers have seen process improvements play out just this past year. Once a company submits their completed paper work to DICA and has deposited the registration fee in the Myanma Economic Bank, DICA will issue a temporary registration certificate within 2-3 days, allowing for the company to commence activities, such as applying for an investment permit. In the meantime, DICA will apply for the company’s “no objection certificate” with the relative ministries, yielding the company’s permanent registration certificate or the “Company Incorporation Certificate.”

The Ministry of Industry is responsible for issues pertaining to Small and Medium Size Enterprises. The MIC, using the Ministry of Industry’s definition, defines small enterprises to include no more than 50 employees and medium enterprises to include no more than 100 employees. However, according to the 2015 Small and Medium Enterprise Law, these categories can change according to sectors. For instance, a labor intensive manufacturer is considered a small enterprise with 300 or less employees and medium sized if it has less than 600 employees. In these cases the turnover in capital is also considered in its classification. As of March 2016, the Ministry of Industry had not implemented this definition because government officials on the ground have yet to receive implementing instructions. Because of this, the government is still using an outdated definition of SMEs from the 1990 Private Industrial Enterprise Law. A complete table illustrating these definitions can be found on Burma’s Central Department of Small and Medium Enterprise Development at http://www.smedevelopmentcenter.gov.mm/?q=en/def_sme.

Industrial Promotion

Different ministries and agencies promote investment into different sectors (e.g., the Ministry of Hotels and Tourism promotes responsible tourism investment), although DICA is officially mandated to coordinate investment promotion under the FIL. DICA is responsible for encouraging and facilitating foreign investment by providing information, fostering coordination and networks between investors, and continually exploring new opportunities in Burma that would benefit both nation and the business community. Currently, DICA’s main office is in Rangoon, but as of March 2015, it has six branches throughout the country including Pathein, Monywa, Dawei, Taunggyi, Mawlamiyine and Mandalay. DICA is paying particular attention to attracting FDI in labor intensive industries; agriculture and its related industries including products manufactured from raw agricultural materials, agricultural construction, building and heavy equipment; and projects that benefit infrastructure including transportation, energy and manufacturing. DICA uses seminars, workshops, investment fairs and other events to promote the above investment, as well as its website: http://www.dica.gov.mm/en

On May 26, the Ministry of Commerce launched its new National Trade Portal and Repository, an online platform that has all of Burma's Laws, processes, forms, and points of contact for trade. The U.S. Agency for International Development funded the development of the Portal. This portal represents increased transparency in Burma and also meets Burma's requirements under Articles 12 and 13 of the ASEASN Trade in Goods Agreement. http://www.myanmartradeportal.gov.mm/index.php

Limits on Foreign Control and Right to Private Ownership and Establishment

The FIL limits certain types of foreign investment. Specifically, foreign investments cannot be made in the following businesses and services: administration and conservation of natural forests; production of traditional medicines; drilling of oil wells whose depth does not exceed 1,000 feet; small and medium scale mining; cultivation and production of traditional herbal plants; wholesale trading of components and scrap-iron; traditional food production; production of religious items and wares; production of traditional and cultural items and wares; handicraft production; private specialist traditional hospitals; trading of raw materials used for traditional medicines; medical research and operation of laboratories for traditional medicine; ambulance services; care centers for the elderly; catering on trains, freight forwarding using trains, cleaning of coaches, management of trains; agency services; [erection and operation of] power plants with less than 10 megawatts; and printing, publishing and distribution of periodicals in local languages spoken in Burma.

The FIL restricts foreign investment in certain agriculture and farming businesses, certain animal husbandry businesses, and certain fishery businesses. In addition, the implementing rules list those sectors requiring a joint venture (with a maximum of 80 percent foreign equity), as well as other foreign equity limitations and joint ventures permitted only with the state.

On March 24, 2016 MIC issued notification 26/2016 which amends the list of economic activities that require joint venture under the FIL, and now permits 100 percent foreign investment in the production and distribution of hybrid seeds and the production and propagation of high-yield seeds and local seeds.

The FIL has no minimum capital requirement for foreign ownership, except for (as noted) joint ventures in restricted sectors, although individual ownership requirements can be established by the MIC, which is in charge of assessing business proposals, setting requirements and conditions for investment and interpreting and overseeing the implementation of the FIL.

In addition to the FIL, the State Owned Economic Enterprises Law, enacted in March 1989, and still in effect today, also regulates certain investments and economic activities. However, the government of Burma is in the process of drafting a new Privatization Law. New laws such as the Myanmar National Aviation Law are leading to the corporatization of State Owned Enterprises (SOEs), including the Myanmar National Airlines and the Yangon Electricity Supply Board. Under the 1989 law, SOEs continue to have the sole right to carry out the following economic activities: extraction of teak and sale of the same in the country and abroad; cultivation and conservation of forest plantations, with the exception of village-owned firewood plantations cultivated by the villagers for their personal use; exploration, extraction, sale, and production of petroleum and natural gas; exploration, extraction, and export of pearls, jade, and precious stones; breeding and production of fish and prawns in fisheries that have been reserved for research by the government; postal and telecommunications services; banking and insurance services; broadcasting and television services; exploration, extraction, and exports of metals; electricity generating services, other than those permitted by law to private and cooperative electricity generating services; and manufacturing of products relating to security and defense; air transport and railway transport services. On this last, according to a new January 2016 Rail Transportation Enterprise Law, foreign and local business can make certain investments in railways, such as in the form of Private Public Partnership (PPP).

However, the MIC, "in the interest of the State," can make exceptions to this law. In the past, the MIC has routinely granted numerous exceptions including through joint ventures or special licenses in the areas of banking (for domestic investors only), mining, petroleum and natural gas extraction, telecommunications, radio and television broadcasting, and air transport services. The 2012 Foreign Investment Law and its implementing regulations continue to grant the MIC broad discretion with regard to its decisions on investments. This can at times be beneficial to investors wishing to engage in economic activities in certain prohibited economic sectors.

Although, as the OECD 2014 IPR notes, the system gives the government flexibility “to open progressively and selectively to foreign investment and to try to maximize the potential benefits from that investment,” the same flexibility also creates uncertainty for investors “concerning the criteria upon which the decision to admit them is based [and] creates opportunities for corruption when individual officials are given responsibility for deciding on what basis to admit an investment project.”

The Burmese armed forces are involved in many commercial activities via the Union of Myanmar Economic Holdings, Ltd. (UMEHL) and the Myanmar Economic Corporation (MEC). Under General License No. 17 issued by the Department of Treasury’s Office of Foreign Assets Control (OFAC) on July 11, 2012, U.S. businesses are not allowed to invest or enter into an agreement with the Burmese Ministry of Defense or any state or non-state armed group, or any entity in which any of the above own a 50 percent or greater interest.

Privatization Program

According to the government of Burma, the private sector accounts for a majority of the country’s GDP, with the State participating in telecommunication services, social and public administration, energy, forestry, construction, and electricity. The activities of MEHL, MEC, and other military-dominated companies are not included in the budget’s data.

Prior to 2011, foreign participation was not allowed in the privatization process. In 2012, President Thein Sein created a new Privatization Commission headed by a Vice President. As of April 2016, the new government has yet to appoint the new members of the Privatization Commission. Between 2011 and 2016, privatization took the forms of the private leasing of state-owned assets and the establishment of joint ventures and PPPs. Bidding for these leases lacked transparency, but the Privatization Commission adopted new privatization procedures that emphasized open tenders and PPPs.

On January 19, 2013, President Thein Sein’s administration announced the Framework for Economic and Social Reform (FESR), a 45-page report calling for further reforms on commercialization and possible privatization of SOEs, to include creating step-by-step privatization plans, establishing regulatory frameworks and institutions, commercializing SOEs, and attracting PPPs. The FESR also requires all Burmese government ministries to take a judicious and cautious approach in privatizing public utilities and infrastructure industries that are critical to the functioning of the economy and are strategic to Burma’s “natural monopolies.”

SOEs are in different stages of privatization, with some, such as the Myanmar National Airlines, operating independently while still owned by the government.

Screening of FDI

The MIC plays a leading role in the regulation of foreign investment, and approves all investment projects receiving incentives except those in special economic zones, which are handled by the Central Working Body, set up under the existing Special Economic Zone Law. Joint ventures between foreign investors and SOEs are the responsibility of the relevant line ministries. There is no evidence that the MIC discriminates against foreign investors.

The FIL’s outlines the procedures the MIC must take in considering foreign investments. Investment approvals are made on a case-by-case basis. The MIC evaluates foreign investment proposals and stipulates the terms and conditions of investment permits. To obtain an investment permit, the investor must submit a proposal in the prescribed form to the MIC, together with supporting documentation including details of intended activities and the financial credibility of the company/individual; an undertaking not to engage in trading activities; and annual reports for the last two financial years, or copies of the company’s Head Office’s balance sheet and profit and loss account for the last two financial years, notarized by the Burmese Embassy in the country where the company is incorporated. The MIC accepts or rejects an application within 15 days, and decides whether to approve the proposal within 90 days. In November 2015, the government’s Cabinet approved an Environmental Impact Assessment Procedure. The Chairman of the MIC gives the final approval.

The MIC does not record foreign investments that do not require MIC approval, particularly for investors forming a joint venture with a military-controlled enterprise. Many smaller investments may also go unrecorded. Once licensed, foreign firms may register their companies locally, use their permits to obtain resident visas, lease cars and real estate, and obtain import and export licenses from the Ministry of Commerce. 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 FIL.

More information on the MIC and DICA can be found at: http://www.dica.gov.mm/en/apply-mic-permit

Competition Law

A new Competition Law was passed on February 24, 2015, and will go 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 position and economic concentration which weakens competition. Specifically, the Competition Law sets a foundation for creation of a regulatory body with investigative and adjudicative powers, addresses the three standard pillars of competition law (agreements that restrain competition, abuse of dominance and mergers) as well as unfair trade practices, and establishes a comprehensive penalty regime.

The law classifies four types of behavior as sanctionable 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.

The Competition Law prohibits efforts to monopolize markets by: controlling prices of goods or services; limiting the availability of a good or service with the aim of controlling prices; reducing the availability of a good or service without appropriate reasons or lowering the quality of a good to reduce market demand; controlling or restrict the geographic market for sales to prevent entry and control market share; and interfering in another business’ operations in an unfair manner.

The Competition Law also prohibits mergers where the merger is intended to lead to excessive domination of the market; the merger will reduce competition in a market with few competitors; or the resulting market share exceeds the thresholds prescribed by the Competition Commission. However, the law permits an otherwise prohibited merger where the resulting enterprise remains a SME; one of the merging parties was, or was likely to become, bankrupt; or the merger promotes exports or development of technology, systems or innovation.

The Competition Law creates the Competition Commission, the principal regulatory authority under the law and the Investigation Committee which will investigate conduct that may infringe the law. The penalties provided for “acts restricting competition” in Burma range from imprisonment up to three years and/or a fine of up to $15,000.

Burma is not party to any bilateral or regional agreement on anti-trust cooperation.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

Since 2012 Central Bank of Myanmar manages a managed float of the Burmese kyat. Although the exchange rate is determined by daily dollar auctions at Burma’s Central Bank, the open market often sells foreign exchange at illegal rates outside of the 0.8 percent band around the Central Bank’s daily rate.

Remittance Policies

According to the FIL’s, foreign investors have the right of remittance of foreign currency. Foreign investors are allowed to remit foreign currency overseas through banks which are authorized to conduct foreign banking business at the prevailing exchange rate. Banks began introducing remittance services during 2012 and the volume of such formal transfer is low but growing, according to local bank managers.

Nevertheless, in practice, the transfer of money in or out of Burma has been difficult, as many international banks have been slow to update their internal prohibitions on conducting business in Burma, given the long history of U.S. and European sanctions that had isolated the country. The majority of foreign currency transactions are conducted through banks in Singapore. Despite an abundance of Burmese banks that are not on Treasury’s OFAC list, some U.S. banks still decline to process financial transactions with the Burmese market.

The difficulties presented by the formal banking system are reflected in the continued use of informal sources of finance for loans and remittances by both the public and businesses. Although these informal sources tend to have higher interest charges, they offer an alternative to the limited loan services offered by banks, which provide almost only short-term credit for trade on a limited basis and require collateral. Remittances are also often made through a well-developed informal financial network (commonly known as the "Hundi System”).

Burma is a “country of primary concern” in the 2015 International Narcotics Control Strategy Report. According to the report, Burma is not a regional or offshore financial center, and its economy is underdeveloped and its historically isolated banking sector is just beginning to reconnect to the international financial system. However, Burma’s prolific drug production and lack of financial transparency make it attractive for money laundering. Burma enacted anti-money-laundering laws on March 14, 2014 and issued relevant rules on September 11, 2015. Burma’s Financial Intelligence Unit (FIU) is the agency to investigate and take legal action. The FIU is now a part of Burma’s police force under Ministry of Home Affairs. The FIU is now strengthening their duties and functions to become an independent unit in line with the recommendations of the Financial Action Task Force.

Burma does not engage in currency manipulation tactics.

3. Expropriation and CompensationShare    

According to the OECD’s 2014 IPR, Burma’s “expropriation regime . . . does not appear to protect investors against indirect expropriations.” In addition, it reports that Burma has not incorporated the principle of non-discrimination into its investment framework. Other than a constitutional safeguard that states that the government will not nationalize economic enterprises, there is no specific provision in Burma’s legislation against expropriation without compensation. The FIL’s 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 guarantees that the government of Burma will not terminate an enterprise without reasonable cause, and upon expiry of the contract, the government of Burma 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 cease an investment enterprise operating under a Permit of the Commission before the expiry of the permitted term without any sufficient reason.”

Aside from the possibility of outright expropriation by the government of Burma, private businesses in the past have been subject to predatory practices by regime-linked cronies. Given the weak rule of law in Burma and the pervasive and powerful system of patronage, larger and more well-connected entities were generally able to muscle out smaller competitors by denying access to markets, forcing the sale of assets, or otherwise disrupting business operations. However, public scrutiny of businesses is beginning to increase due to a freer and more vibrant local press and an increasingly energetic Parliament, and that scrutiny is beginning to limit – or at least reduce the overt exercise of – such practices.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Burma’s legal system is a unique combination of customary law, English common law and statutes introduced through the pre-independence India Code, and post-independence Burmese legislation. Examples include the Evidence Act, and the Civil and Criminal Procedure Codes. 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 molded 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 Law Officers operate sub-national offices in each State, Region, district, and township.

Following the transfer of power to a civilian government in March 2011, a new Attorney General enforces standards of due process in the criminal justice system and provides the government’s Law Officers (prosecutors) with a mandate to act as an independent check in the criminal justice system. The military-run Ministry of Home Affairs retains control the Myanmar Police Force, which files cases directly with the courts. Foreign companies have the right to bring cases to and defend themselves in local courts, but this option was rarely exercised due to concern about the impartiality and lack of independence of the courts.

In order to address the concerns of foreign investors regarding dispute settlement, the government took the significant step of acceding, on April 16, 2013, to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). On January 5, 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. As of April 1, 2016, foreign companies can now pursue arbitration in a third country. However, the Arbitration Law does not eliminate all risks. There is still no track record of enforcing foreign awards in Burma and inherent jurisdictional risks remain in any recourse to the local legal system. The new Arbitration Law however brings Burma’s legislation more in line with internationally accepted standards in arbitration.


There is no bankruptcy law in Burma. Existing, antiquated insolvency laws – such as The Insolvency Act of 1910 and The Insolvency Act of 1920 – are rarely used.

Investment Disputes

To date, Burma has not been party to any investment dispute. In addition, Burma has not been party to any dispute settlement proceeding at the WTO.

International Arbitration

The new 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 Bill provides that arbitrations seated in Burma must adopt Burmese law as the substantive law if those arbitrations do not fall within this definition. This may create uncertainty as to what can be defined as an international commercial dispute, such that parties are allowed to adopt any foreign law as substantive law under this provision. 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 ironed out, the Arbitration Law brings Burma’s legislation much closer to international arbitration standards and legislation.

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). On January 5, 2016 the Burmese parliament enacted the Arbitration Law, putting the 1958 New York Convention into effect (see international arbitration above).

Duration of Dispute Resolution – Local Courts

No data available.

5. Performance Requirements and Investment IncentivesShare    


Burma is a World Trade Organization member. To date, no claims have been raised against Burma on its maintenance of any measures that are inconsistent with the WTO’s Trade Related Investment Measures (TRIMs) requirements.

Investment Incentives

According to Article 27 of the FIL, in order to promote foreign investment, the government of Burma will grant new investors a five year tax holiday with an option for further exemption if the enterprise is beneficial to the State. Other exemptions and avenues of relief include a three year exemption on custom duties and relief from commercial tax for goods produced for export. In addition, Article 27 (j) grants an exemption from customs duty or other internal taxes for any machinery or equipment, or materials imported in order to expand the business.

The Myanmar Economic Zones Law also contains certain investment incentives for investors. Under the law, investors located in a Special Economic Zone (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 proceeding five year period. Under the law, if profits during the next 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. On August 27, 2015 the Ministry of National Planning and Economic Development issued new rules governing the SEZs including the establishment of a One Stop Service Department 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, approve employment permits and/or permissions for factory construction and other investments See also section 15 – labor and section 17 – Foreign Trade Zones/Free Ports/Trade Facilitation

Research and Development

There is no data that indicates foreign firms are able to participate in government/authority financed and/or subsidized research and development programs.

Performance 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 Myanmar nationals.

Data Storage

The government of Burma does not follow forced localization, and foreign investors are not yet required to use domestic content in goods or technology. The government of Burma is currently developing laws, rules and regulations on information technology (IT), and does not have in place requirements for foreign IT providers to turn over source code and/or provide access to surveillance.

6. Protection of Property RightsShare    

Real Property

To date, foreigners cannot purchase and own land. However, according to Article 31 of the FIL, foreigners can invest in real estate development through a joint venture or through 100 percent ownership of a build-operate-transfer (BOT) lease agreement with the government. Under the joint venture scheme, foreign participation is limited to 80 percent. The BOT lease agreements provide full ownership to foreign investors, although they are limited to 70 years. The law also allows foreigners to take over BOT leases from locals.

However, a continuing area of concern for foreigners involves investment in large-scale land projects. Property rights of 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 communities about inadequate consultation and compensation regarding land that they are seeking to lease from the government or private parties.

The government did make legislative changes with regards to foreign investment in agricultural land through the 2012 Farmland Law and the 2012 Vacant, Fallow and Virgin Land Management Law (VFVLM). Under the Farmland Law, the township authority issues a Land Use Certificate to the individual user, allowing them the right to sell, transfer or mortgage the land, a departure from previous user rights. The VFVLM allows for the Central Committee to grant investors the right to use the land, but only in areas where citizens are unable to carry out the land development activity such as agriculture, mining, raising livestock and other ventures. This is an effort to ensure that people do not purchase land and leave it vacant, but that investors make the land economically productive. Furthermore, the VFVLM also stipulates that foreign firms can use farmland only through ventures with Burmese entities (per the FIL) and that MIC can approve a land lease for commercial activities with the permission of the Central Committee on Vacant, Fallow and Virgin Land.

In January 2016, the government published the approved National Land Use Policy. The policy includes provisions on ensuring the use of effective environmental and social safeguard mechanisms; improving public participation in decision-making processes related to land use planning; improving public access to accurate information related to land use management; and developing independent dispute resolution mechanisms. The policy is to be updated every five years as necessary and stipulates that a new national land law will be drafted and enacted using this policy. This policy will also be used as a guide for the harmonization of all existing laws relating to land in the country.

After three year of debate, Burma’s parliament passed the Condominium Law on January 22, 2016. The law states that up to 40 percent of condominium units can be sold to foreign buyers on a building’s sixth floor and above. As per the new law, condominium owners shall have the shared ownership of both the land and apartment. However, new residential condominiums built in Rangoon will not meet the criteria stipulated in the law as most of the projects were built by foreign investors on government land under build-operate-transfer (BOT). Such private-public partnership investments cannot be considered condominiums under the new law. The Ministry of Construction is drafting rules to clarify the new law.

In accordance with the Transfer of Immovable Property Restriction Law of 1987, mortgages of immovable property are prohibited if the mortgage is a foreigner, foreign company or foreign bank.

Intellectual Property Rights

Burma does not have adequate intellectual property rights protection. Patent, trademark, industrial design, and copyright laws and regulations are antiquated and deficient, and there is minimal regulation and enforcement of existing statutes. For example, the registration of patents and designs in Burma is still governed by the Indian Patents and Designs Act of 1911, enacted under British colonial rule. The British colonial government also published a Copyright Act in 1914, but neither the colonial government nor the government of Burma ever instituted a means to register copyrights. Consequently, there is no legal protection in Burma for foreign copyrights. In addition, Burma has no trademark law, although trademark registration is possible. Some firms place caution notices in local newspapers to declare ownership of their trademarks. After publication, the owners can take criminal and/or civil action against trademark infringers. Title to a trademark depends on use of the trademark in connection with goods sold in Burma.

Burma does not have in place a judicial court specifically dealing with intellectual property rights. Disputes related to the infringement of intellectual property rights are governed by common rules of civil and criminal procedure. Similarly, there is no institution in charge of supervising the administration, registration and enforcement of intellectual property.

The lack of adequate intellectual property rights translates to piracy and other intellectual property rights violations in Burma. Piracy of music CDs, video CDs, CD-ROMS, DVDs, books, software, and product designs is evident nationwide, especially in border regions and in the two major urban centers of Rangoon and Mandalay. Most consumers of information technology products in Burma, both in the private sector and in government, use pirated software. However, in September 2015 and November 2015, two large local firms signed multi-year software licensing agreements with a foreign company in an effort to raise local business practices to international business standards and best practices. Given the small number of local customers, poor state of the economy, and lack of infrastructure, piracy does not have a significant adverse impact on U.S. products.

The government of Burma is attempting to address these legal deficiencies and the high level of piracy within Burma. After Burma joined ASEAN in 1997, it agreed to modernize its intellectual property laws in accordance with the ASEAN Framework Agreement on Intellectual Property Cooperation. The Ministry of Science and Technology, with advice from external stakeholders and experts, drafted four new intellectual property laws – on trademarks, copyrights, patents, and industrial design – with the aim of creating a modern, comprehensive legal framework for intellectual property rights and improving Burma’s business climate. Draft trademarks and industrial designs laws were submitted to Parliament in June/July 2015, whereas draft copyrights and patent laws are still being considered within the government. Burma is also exploring the establishment of a single national Intellectual Property Office that would monitor compliance with intellectual property laws and be responsible for further developing intellectual policy and regulations. In addition, the WTO has delayed required implementation of the Trade Related Aspects of Intellectual Property (TRIPs) Agreement for Least Developed Nations – including Burma – until 2021.

Burma is not listed in USTR’s Special 301 report or in USTR’s notorious market report.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

For Intellectual Property Rights issues in Burma, please contact:

Peter N. Fowler, Regional IP Attaché
U.S. Patent and Trademark Office
American Embassy Bangkok, Thailand
Tel: (662) 205-5913
Email: Peter.Fowler@trade.gov

Information on the American Chamber of Commerce (AmCham) Myanmar Chapter can be found at: http://www.amchammyanmar.com/

Information on legal service providers available in Burma can be found at: http://burma.usembassy.gov/legal_assistance.html

7. Transparency of the Regulatory SystemShare    

Burma lacks regulatory and legal transparency. In the past all existing regulations were subject to change with no advance or written notice, and without opportunity for public comment.

The government of Burma, however, is attempting to enhance transparency in the public sector by using websites to publish information online and by establishing websites through which businesses can access trade information. The Ministry of Commerce publishes a weekly Commerce Journal and a monthly Trade News booklet, providing trade-related information. In the past three years, the government of Burma has also published new regulations and laws in government-run newspapers and "The Burma Gazette" more frequently than in the past. The U.S.-based International Budget Partnership’s 2015 Open Budget Index, the only independent, comparative measure of central government budget transparency, places Burma as tied second-to-last among countries surveyed globally, stating that the Burmese government provides the public with “scant” budget information.

As part of the government’s commitment to transparency of its regulatory system, Burma became a candidate country in the Extractive Industries Transparency Initiative in 2014, and on January 2, 2016 Burma’s Extractive Industries Transparency Initiative (EITI) National Coordination Office, a global standard for the promotion of revenue transparency, submitted the country’s first EITI report covering three sub-sectors for 2013-2014 – Oil and Gas, Gems and Jade, and other minerals. The next EITI report is due on January 2, 2017 followed by a validation procedure. The World Bank, and a multi-stakeholder group, is guiding Burma on the conditions it must fulfill as part of the EITI program. (See https://eiti.org/report/myanmar/2013)

8. Efficient Capital Markets and Portfolio InvestmentShare    

Burma has very small publicly traded equity and debt markets. Banks are the primary buyers of government bonds issued by Burma’s Central Bank, which has established a fledgling bond market auction system. The Central Bank issues government treasury bonds with maturities of two, three and five years. Several Burmese companies sell bonds privately on a very small scale and a small number of firms have shares traded over-the-counter.

The Burmese government opened the Yangon Stock Exchange on December 9, 2015, and the first company was listed on March 25, 2016. Six companies (one diversified enterprise, two real estate and construction companies, one agricultural firm, and two relatively small banks) have been approved to list on the stock exchange. Japan Exchange Group and Japan-based Daiwa Securities Group helped launched the bourse, owning a combined 49 percent of the stock exchange, with the remaining 51 percent owned by the state-owned Myanma Economic Bank. On July 30, 2013, the Securities Exchange Law came into effect, establishing a securities and exchange commission and helping clarify licensing for securities businesses (such as dealing, brokerage, underwriting, investment advisory and company’s representative). Foreign entities will not be able to acquire Yangon stock exchange-listed shares until the Burmese government passes an updated Companies Law, and Burma also needs to adopt, implement, and enforce sound practices such as rules for company disclosures, transparency and corporate governance requirements, and share-holder voting rights to increase international and domestic appeal.

Money and Banking System, Hostile Takeovers

Burma’s banks continue to face a number of significant regulatory restrictions that limit the growth of the formal financial sector. Burma’s Central Bank is tasked with supervisory and regulatory functions for the banking sector. The Central Bank’s policy objectives include domestic price stability, financial stability, and efficient payment systems, and it is responsible for approving new banks and supervising new and existing banks. In 2013, the Central Bank Law established the Central Bank as nominally independent from the Ministry of Finance.

There are four state-owned banks: the Myanmar Economic Bank (MEB), the Myanmar Foreign Trade Bank (MFTB), the Myanmar Investment and Commercial Bank, and the Myanmar Agricultural Development Bank. The role of the MEB, the largest bank in Burma, is to provide domestic and international banking services. The MFTB specializes in international banking. The Myanmar Investment and Commercial Bank carries out domestic and international banking business and extends banking services to private companies, including foreign joint ventures. The MADB extends agricultural credits to farmers. According to the government, the regulatory regime is the same for state-owned banks and private banks.

In October 2014, the government awarded limited banking licenses to nine foreign banks – all from the Asia-Pacific region – allowing each bank to set up one branch and provide loans to foreign companies. All nine banks began operations by the end of October 2015. In mid-December 2015, the Burmese government announced a second round of foreign bank licensing, designed to increase the presence of banks headquartered in a wider variety of countries, and in early March the Central Bank granted new licenses to banks headquartered in India, South Korea, Taiwan, and Vietnam. Foreign banks are restricted to providing loans to foreign entities and are required to partner with local banks in order to lend in local currency and lend to local companies.

In Burma’s unusual credit market, more than 90 percent of credit is extended through 12-month loans, the maximum duration the Central Bank allows, and these are routinely rolled over with capitalization of interest, masking non-performing loans both to banks, the Central Bank, and international financial institutions. Insufficient access to formal sources of credit is the most frequently identified obstacle to doing business in Burma, and a more significant constraint than access to land, electricity, and skilled labor, according to the World Bank’s 2014 Myanmar Investment Climate Assessment. Only 1 percent of fixed-asset investment costs were financed by bank borrowing, for example, while 92 percent of firms rely on their own funds. Only 30 percent of Burmese firms report having a bank account—the lowest level among all the World Bank’s comparator countries. There are high levels of informality throughout the economy, with a pervasive, unregulated financial sector constituting the large majority of lending. An estimated 9.2 million adults have a loan from an unregulated financial services provider with total outstanding debt as high as USD5.7 billion, according to a 2013 study conducted by the Centre for Financial Regulation and Inclusion.

9. Competition from State-Owned EnterprisesShare    

As noted above, the government of Burma reserves many lucrative sectors and sectors deemed sensitive for state-owned enterprises (SOEs). These include: agriculture, construction, building and heavy equipment; environmental technologies; information and communication; energy and mining (including exploration and downstream operations); industrial equipment and supplies; textiles, apparel, and sporting goods; health technologies; finance; food processing and packaging; services; travel; and publishing. Despite these limitations, the government has licensed some private sector competitors to operate in these nominally restricted sectors, including in the aviation and banking and non-banking financial sector.

During the Burmese 2015-16 fiscal year, the government published a brochure, the “Citizen Budget,” which summarizes the budget and lists the SOEs under each ministry (Burmese language only). SOEs primarily contribute to the government’s budget through the State Fund Account (SFA) using two fiscal instruments. The first is the profit tax or income tax from all enterprises (both private and public enterprises are the same) at 25 percent rate and the second is characterized as a “state contribution” to the union budget at a direct transfer of 20 percent of the profits of SOEs. The remaining 55 percent of the net revenues are retained in company-controlled “Other Accounts” that are not subject to the regular annual budget process. Hard budget constraints do not apply to the SOE sector as a whole, but they apply to the many individual enterprises that have historically been operating at a loss and have relied on budget subsidies or borrowing from banks for their survival.

Starting in 2012, the government of Burma began taking steps to reduce SOEs’ reliance on government support and to make them more competitive through joint ventures. This included reducing budget subsidies for financing the raw material requirements of SOEs. The government of Burma continues efforts to privatize or lease enterprises and real estate properties to both foreign and domestic investors.

The government of Burma has taken the direction of public private partnership, corporatization, and privatization. However, in some sectors that are open to both the private sector and foreign competition, SOEs receive a larger percentage of government contracts and business than their private sector competitors. Burma is not party to the Government Procurement Agreement (GPA) within the framework of the WTO.

Private enterprises do not have the same access to financing as SOEs. In some instances, SOEs can secure loans at very low interest rates from other SOEs within the same ministry, with approval from the Ministry of Transport and Finance. SOEs can secure loans 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. However, SOEs are now subject to stricter financial discipline, as the government has sharply cut direct subsidies to the SOEs while opening markets for competition with the private sector. Furthermore, the government is removing the easy credit from state banks. SOEs also have an advantage over private entities in terms of land access since, according to the Constitution, the State owns all the land (see Real Property section above).

OECD Guidelines on Corporate Governance of SOEs

Corporate governance of state-owned enterprises (SOEs) is not transparent, and they are not required by law to publicly release annual reports. There are no specified ownership policies, guidelines, or governance code regarding SOEs as per OECD guidelines. In general, a regulatory framework for corporate governance, including both private sector companies and state-owned ones, is lacking. In addition, the Government of Burma requires that SOEs use only state-owned banks for their financial transactions. This practice is changing for some SOEs, such as the Myanmar National Airlines, which under the Myanmar National Airlines Law in 2015, can now use commercial banks for its financial transactions. Private enterprises do not compete on the same terms and conditions as SOEs. As a result, Burmese SOEs are inefficient and are unlikely to be able to compete with the private sector, especially foreign companies, on a level playing field.

Many SOEs are in different stages of corporatization, with some having government-appointed Boards of Directors but independent operations, while others are moving towards this stage. For instance, the Myanma Port Authority Law, announced in late 2015, instructs the Myanma Port Authority (MPA) to reform its structure, to include a Board of Directors and a CEO, and to hand over administration to MPA. On the other hand, the senior management of other SOEs report directly to the line minister of the relevant ministry. Corporate governance of these SOEs is less transparent, but their de facto management practices appear to be grounded in the internal procedures of each ministry and the companies under its purview, rather than in any formal mechanisms or legislation. These SOEs still exist as agencies within the ministry structure, and do not include an independent Board of Directors – their Board members are political appointments.

Sovereign Wealth Funds

Burma does not have a sovereign wealth fund.

10. Responsible Business ConductShare    

Burma’s awareness for corporate social responsibility (CSR) is growing. However, many local companies (and some international firms) still equate CSR with in-kind donations or charitable contributions. In recent years the Union of Myanmar Chambers of Commerce and Industry (UMFCCI), Burma’s largest private sector association, has been promoting the United Nations Global Compact and CSR principles in general. Burma’s Cabinet approved the Environment Impact Assessment (EIA) Procedure in November 2015, requiring investors to not only accept social and environmental conservation, but to also highlight transparency and publicize their work in “real time”. Investors are required to self-monitor projects and report concerns to the relevant government departments. Since 2011, Burmese civil society organizations have become more vocal in protesting against companies or government sponsored projects which they view as violating social standards. As mentioned in section 8 - Transparency of the Regulatory System, Burma became a candidate country in the Extractive Industries Transparency Initiative in 2014, an indication of its growing commitment to responsible investment and CSR principles.

Private companies owned by foreign nationals from China, South Korea, Japan or other ASEAN countries may practice some form of CSR, but such practices are largely absent in the Burmese market. Several U.S. companies are actively incorporating CSR as an integral part of their entry (or pre-entry) strategy for Burma.

The United States remains concerned about the protection of human rights, corruption, and the role of the military in the Burmese economy and as such require all new U.S. investment in excess of USD500,000 to be subject to certain reporting requirements available at http://www.humanrights.gov/2012/07/11/burmaresponsibleinvestment/. There are several components to these reporting requirements. Investors are required to file reports with the State Department on an annual basis, to include a version of the report that the Department will make publicly available, consistent with relevant U.S. law. Key information that companies report on include information regarding policies and procedures with respect to human rights, workers’ rights, environmental stewardship, land acquisitions, arrangements with security service providers, and, aggregate annual payments exceeding USD10,000 to Burmese government entities, including state-owned enterprises. The purpose of the public report is to promote greater transparency and encourage civil society to partner with our companies toward responsible investment. The above reporting requirements apply to any investment, whatever corporate form it might take. In addition, individuals or entities undertaking new investment pursuant to an agreement or pursuant to the exercise of rights under such an agreement, that is entered into with the Myanma Oil and Gas Enterprise (MOGE) must notify the Department of State within 60 days of their new investment.

Burma has not implemented the OECD Guidelines for Multinational Enterprises.

11. Political ViolenceShare    

Historic national parliamentary elections were held in November 2015, where the National League for Democracy won a landslide victory. The campaign season and post-election period were generally peaceful, although there were several isolated incidents of violence against politicians from ethnic political parties, allegedly by ethnic armed groups. Although political demonstrations and rallies are normally peaceful, spontaneous rioting and attacks on individuals can occur. In February and March 2015, student demonstrators protesting a new education law and police forces clashed in Rangoon and in Letpadan, leading to violent police crackdowns. In February 2015, garment workers on strike in an industrial zone in Rangoon also clashed with police forces (see section 15 – Labor).

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 government of Burma. Since 2011, the government has signed cease-fire agreements with 14 ethnic armed groups. On October 15, 2015 the government of Burma and eight ethnic armed groups signed a Nationwide Ceasefire Agreement (NCA); however, several ethnic armed groups did not sign this new agreement and conflict with the government of Burma has escalated in some parts of the country.

The government is sensitive to the threat of terrorism and is engaged with international partners. There is no evidence to suggest that terrorist organizations have operational capacity in Burma or are actively targeting Western interests. Burma experiences periodic small-scale bombings. These bombings are often perpetrated by ethnic armed groups and are usually designed to intimidate, harass, or extort. In 2015, there were bombings in northern, western, and eastern Burma, and unexploded improvised explosive devices (IEDs) were discovered in Shan and Kachin states. Some of these bombings caused casualties.

Certain states in Burma have also experienced ethnic or religious violence in the recent past. Burma has a minority Muslim population, and violence between Buddhists and Muslims has led to enhanced international scrutiny, but there were no significant cases of such violence in 2015.

12. CorruptionShare    

There are high levels of corruption in Burma. Due to a complex and capricious regulatory and legal environment and extremely low government salaries, rent-seeking activities are ubiquitous. Bribes are expected – and given – to facilitate many official transactions, from the smallest to the largest. Most citizens view corruption as a normal practice and requirement for survival. The newly elected government has stated that reducing corruption is a priority, and one of the first acts of the new government was partly geared toward streamlining government and eliminating opportunities for corruption. In March 2016 the government consolidated the number of ministries from 36 into 21. The NLD’s five pillars of economic reform, published in August 2015, also focus on the need to address corruption within the government.

Many economists and businesspeople consider corruption one of the most serious barriers to investment and commerce in Burma. In its 2015 Corruption Perceptions Index, Transparency International rated Burma 147 out of 177 countries, a jump up from the 2014 ranking of 156. Areas where investors run into corruption are when seeking investment permits, during the taxation process, when applying for import and export licenses, and when negotiating land and real estate leases. The World Bank’s 2014 Myanmar Enterprise Survey, however, contained a surprising survey result that business owners and managers did not cite corruption as a major constraint for doing business in Burma. The survey – which included survey results from business owners and managers from 632 private firms in five urban areas in Burma - cited access to financing as the top constraint facing businesses. Less than one percent of businesses owners and managers cited corruption as the top business constraint facing their firms. World Bank officials stressed that the World Bank continues to view corruption as a serious problem in Burma, adding that perceptions among local businessmen of corruption as a “fact of life” may have contributed to the low figure.

The government of Burma appears to recognize the international community’s perception of corruption in the country. Consequently, on March 7, 2013, the government of Burma enacted an Anti-Corruption Law (which stipulates the specific offenses and accompanying punishment in bribery cases as well as includes language on an anti-bribery enforcement mechanism), and followed implementation of the law with its February 25, 2014 formation of a national commission to address bribery and graft (as mandated under the law). In 2016, the government issued Anti-Corruption Rules detailing the powers and functions of an investigation board and Anti-Corruption Commission. The rules also outline obligations of banks in response to an investigation, but do not create an obligation for proactive reporting of corruption suspicion.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Burma signed the UN Anticorruption Convention in 2005, and ratified it 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

Suzanne Yountchi, Economic Officer
U.S. Embassy/110 University Avenue/Kamayut Township 11041/Rangoon, Burma
Telephone: 95 (0)1 536 509 Ext. 4248
Email Address : BurmaBusiness@state.gov

13. Bilateral Investment AgreementsShare    

Burma has signed and ratified several bilateral investment agreements with China, India, Japan, Philippines, and Thailand. It has also signed bilateral investment agreements with Israel, Laos, South Korea, and Vietnam although these have not yet entered into force. Burma has engaged in investment treaty negotiations with Bangladesh, China, Hong Kong, Iran, Mongolia, Russia, and Serbia. Texts of the agreements or treaties that have come into force are available on the UNCTAD website at: http://investmentpolicyhub.unctad.org/IIA/CountryBits/144

In 2013, the United States and Burma signed a Trade and Investment Framework Agreement. Burma does not have a bilateral investment treaty or a free trade agreement with the United States.

Through its membership in ASEAN, Burma is also a party to the ASEAN Comprehensive Investment Agreement, as well as to the ASEAN-Australia-New Zealand Free Trade Agreement, the ASEAN-Korea Free Trade Agreement, and the China-ASEAN Free Trade Agreement, all of which contain an investment chapter that provides protection standards to qualifying foreign investors.

Burma has bilateral trade agreements with Bangladesh, Sri Lanka, China, South Korea, Laos, Malaysia, the Philippines, Thailand, and Vietnam in the Asian region, as well as with a number of Eastern European countries.

Bilateral Taxation Treaties

Burma does not have a bilateral taxation treaty with the United States.

14. OPIC and Other Investment Insurance ProgramsShare    

On May 21, 2013, the Overseas Private Investment Corporation (OPIC) signed an Investment Incentive Agreement with Burma. In 2014, OPIC announced that its financing and insurance programs are available for Burma. OPIC provides political risk insurance, debt financing, and private equity capital to support U.S. investors and their investments. OPIC can provide political risk insurance for currency inconvertibility, expropriation, and political violence for U.S. investments including equity, loans and loan guarantees, technical assistance, leases, and consigned inventory or equipment. OPIC debt financing in the form of direct loans and loan guarantees of up to $250 million per project are also available for business investments in Burma, covering sectors as diverse as tourism, transportation, manufacturing, franchising, power, infrastructure, and others.

On February 6, 2014, the Export-Import Bank of the United States (EXIM Bank) announced that it would open for sovereign-backed business in Burma to help finance short-term and medium-term U.S. export sales. Short-term insurance is available for sovereign transactions with repayment terms of 180 days or less, and up to 360 days for capital goods. Medium-term insurance, loan guarantees and loans are available for sovereign transactions with terms typically up to five years. The EXIM Bank is also able to provide long-term support in Burma, provided there are financing arrangements that eliminate or externalize country risks, such as asset-backed financings and structures that earn revenues offshore in a third country. In June 2015, EXIM approved its first transaction in Burma for the export of Cessna Caravan aircraft for Myanmar National Airlines.

On December 17, 2013, Burma became a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA), which means that direct foreign investment into the country is eligible for the agency’s investment guarantees.

15. LaborShare    

In October 2011, the government of Burma passed the Labor Organization Law, which legalized the formation of trade unions and allows workers to go on strike for the first time in Burma’s modern history. The Labor Organization Law took effect in March 2012, and as of January 2016 roughly 1100 enterprise level unions had been formed in a variety of industries ranging from garments and textiles to agriculture to heavy industry. The passage of the Labor Organization Law has engendered a nascent labor movement in Burma, and there is a low, yet increasing, level of awareness of labor issues among workers, employers, and even government officials. Labor groups and unions as well as other civil society actors are devising awareness-raising campaigns in order to educate workers on their rights.

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. 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 over the past 20 years have taken a toll on the country's young. Most in the 15-39 year old demographic group lack technical skills and English proficiency. In order to address this gap, the government of Burma’s Employment and Skill Development Law entered into effect in December 2013. Among other things, the law provides for compulsory contributions on the part of employers to a “skill development fund”, although this provision has not been implemented yet. According to the government, 70 percent of Burma’s population is employed in agriculture.

Burma has a large informal sector. According to 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 excluding agricultural workers. Casual laborers represented another 18 percent, mainly from the rural areas. Unpaid family workers represent another 15 percent. By way of comparison, according to ILO estimates, the informal sector share of non-agricultural employment was 42 percent in Thailand (2010) and 68 percent in Vietnam (2009).

On June 24, 2015 the National Committee appointed by Burma’s Minimum Wage Law in 2013 announced a new national minimum wage - 3600 kyat (USD2.80) - which went into effect on September 1, 2015. This wage is an increase from the 2009 wage of 1000 kyat (roughly USD 1.17) per day. The minimum wage covers a standard eight-hour work day across all sectors and industries (i.e., there are no carve-out or separate wages for garment sector workers as had previously been debated), and applies to all workers except for those in businesses with less than 15 employees. While the new minimum wage has been widely implemented, compensation for overtime work is still unclear. Even with a new minimum wage, labor compensation is lower than some of Burma’s South East Asian neighbors.

The Burmese government, in an effort to align Burma’s labor regulations with international standards and increase trade and investment in the country, set out to abolish all antiquated labor laws and to introduce new labor laws and regulations. The government passed a number of labor reforms in 2015 and 2016 and amended a range of labor-related laws, including those associated with factory labor, wage payments, and shops and establishments. The government introduced to Parliament new laws on occupational safety and health and alien workers, which are currently under review. In addition to the above mentioned Minimum Wage Law, new laws and amendments include:

Amendment on Employment Contracts: Parliament passed an amendment on the execution of employment contracts aimed at protecting workers on August 31, 2015. Although the Employment and Skills Development Law, issued on August 30, 2013 requires an employer to execute an employment contract, this amendment stipulates that contracts must include the agreed salary and use a salary payment book to record these salaries and that written contracts would be signed by employees working in small businesses (15 workers or less) and family businesses, although they are not subject to the minimum wage. The Ministry of Labor released a basic standard employment contract applicable to all Burmese and foreign employees, but employers are not limited to the contract’s basic requirements.

Amendment to Severance Pay: The Ministry of Labor issued an amendment to the Severance Pay Law on July 3, 2015 requiring employers to make severance payments when terminating employees without cause. The amount of compensation depends on the time of employment. For instance, a severance payment of half -month’s salary after a minimum employment period of at least six months is to be made upon termination or 13 months’ worth of salary for employees having worked for more than 25 years.

Payment of Wages Law: Burma’s Parliament passed the payment of Wages Act on January 25, 2016. This law updates the 1936 version of the law and requires that employers pay employees on the date the salary is due for companies with 100 employees or less. For companies with more than 100 employees, the employer is required to pay employees within 5 days of the designated pay day.

Laws amending the 1951 Shops and Establishments Act and the 1951 Factories Act: On January 20 and January 25 respectively, Parliament passed laws amending the 1951 Factories Act and the 1951 Shops and Establishments Act. Together, these laws mandate that overtime cannot exceed 12 hours per work week, and can only exceed 16 hours in a work week on special occasions. The amendments also stipulate that an employee’s total working hours cannot exceed 11 hours per day (including overtime and 1 hour break) and applies to shops, commercial establishments, and establishments for public entertainment. Employment under the age of 14 is banned, but there are special provisions for “youth employment” above the age of 14. For instance, employees between the ages of 14 and 16 can only work in a “non-hazardous environment” and can only work four hours per day. For employees aged 16-18, they must have a certificate to authorize them to carry out “work fit for an adult.” Employees under the age of 18 are prohibited from working in a hazardous environment.

Some employers, particularly in the garment industry, employ temporary or contract workers even if they are not temporary in nature, in order to avoid paying them a full wage or additional benefits. For this reason, there have been complaints from labor activists that some employers try to terminate the workers every three months, and replace them with new workers for another three months, as a result of the minimum wage law. In response, the government issued the above mentioned Severance Pay Act.

In order to attract a greater amount of investment, the Myanmar Special Economic Zone (SEZ) Law (2014), and the FIL include special rules regarding the minimum percentages of employees who must be citizens in foreign owned entities. On August 27, 2015, the Ministry of National Planning and Economic Development passed a set of SEZ Rules (Notification No. 1/2015) creating a One Stop Service Department. This Department groups various government departments under one roof where matters, including labor issues, can be carried out. According to the Ministry of Labor, the same labor laws governing the country apply to activities within the SEZ. The SEZ Management Committee (SEZMC) monitors compliance with Myanmar labor laws. In addition to the One Stop Service Department, the SEZ rules provide benefits including allowing investors and developers to submit internal employment codes to SEZMC and to receive 24 hour advance notice of inspections. SEZMC is able to issue orders regarding recruitment and can ask for reports on training. Employers are also required to notify SEZMC of any labor disputes within 24 hours.

Labor unions are independent of the government and employers, although some still fear repercussions for joining a union. On September 25, 2015, the National Tripartite Dialogue Forum was formed with representatives from government, nine trade unions (three union representatives from the Confederation of Trade Unions of Myanmar (CTUM) the Myanmar Trade Unions Federation (MTUF) and the Agriculture Farmers Federation Myanmar-(AFFM), and employers including representative from the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). The ILO acts as a moderator facilitating this consultative forum for all matters concerning labor law.

The 2011 Labor Organization Law regulates collective industrial relations including trade unions, employers’ associations, lockouts and collective actions. The law applies to labor organizations at the company, township, state and regional levels as well as to labor federations at the national level. The law allows employers to organize in parallel structures. Additionally, it bans strikes or lock-outs during the dispute settlement process, and prohibits dismissal of the members due to collective actions. This law does apply to all sectors, but has been most utilized by the garment industry.

The Government passed the Settlement of Labor Dispute Law in 2012 shortly after the 2011 Labor Organization Law, which repealed the 1926 Trade Dispute Act. The individual dispute may start at a workplace coordinating committee, go to the township conciliation body and end at the competent courts if conciliation is not successful. Collective dispute cases pass through an arbitration process at the tribunal in addition to negotiation and conciliation.

Workers have been able to organize and strike since the passage of the Labor Organization Law, but Burma has not had a large scale strike since March 2015, when 900 garment workers from five Korean-owned factories in Rangoon’s Shwe Pyi Thar industrial zone went on strike demanding higher wages. Some small strikes did occur in Rangoon when some factories, many Chinese or Korean owned, failed to implement the new minimum wage in 2015.

Given the rapid succession of labor laws being adopted, there are still gaps in labor legislation and some missed opportunities to align with international labor standards. As noted above, the ILO is working with the Government to develop one harmonized, overarching labor law. Until such time, benchmarking policies and practices against international standards provides for sound worker-management relationships. The government has made progress in passing legislation preventing the exploitation of child labor, but as discussed in the State Department’s Human Rights Report on Burma http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/#wrapper and the Department of Labor’s Child Labor Report http://www.worldbank.org/content/dam/http:/www.dol.gov/ilab/reports/child-labor/, child labor still remains a concern for Burma.

In the past, the government of Burma has utilized forced labor in its construction of commercial enterprises and for military building. In addition, the Burmese military and ethnic armed groups have been condemned for recruitment and use of child soldiers. These labor practices are inconsistent with Burma's obligations under several ILO Conventions, leading to the imposition of sanctions against Burma in 2000. In 2012, the ILO suspended those actions because of recent progress in labor rights and reform. The government has made progress on the issue of child soldiers as part of a broader push to address issues related to trafficking in persons.

In addition to passage of the Labor Organization Law (see above), in March 2012 the government of Burma passed the Ward or Village Tract Administration Law which defines, prohibits and criminalizes the use of forced labor in Burma, and simultaneously repealed an old colonial era law that had sanctioned the practice. In December 2013, the government of Burma ratified ILO Convention 182 on the elimination of the worst forms of child labor. The ILO continues to work with the Burmese Government on forced labor issues under the Supplementary Understanding on Forced Labor which was signed in February 2007 and renewed in January 2012, and will also engage with the government of Burma on the issues of child soldiers and child labor. In 2014, The Ministry of Labor signed an agreement with the ILO to participate in a project to eliminate all forms of forced labor by 2015.

Although the government does not publish unemployment figures, anecdotal evidence indicates a level of unemployment as high as 20 percent and underemployment in formal, non-agricultural sectors.

On November 13, 2014, the Governments of the United States, Burma, Japan, Denmark, and the ILO formally launched the Initiative to Promote Fundamental Labor Rights and Practices in Myanmar (Initiative) and held a Stakeholder’s Forum in May 2015. The overarching goal of the Initiative is to promote a culture of compliance with fundamental labor rights. The Initiative supports two main objectives: (i) improving Myanmar’s system of labor administration through comprehensive labor law reform and government capacity building on enforcement and administration; and (ii) building stakeholder engagement and strengthening labor relations. The Initiative is intended to cultivate relationships between business, labor, and civil society stakeholders and the government of Burma. These relationships are expected to serve as the foundation for a strong system of institutionalized social dialogue, industrial relations (employers and workers), and effective government engagement with broader civil society going forward, as well as to facilitate the promotion of corporate social responsibility in Burma, drawing from the United Nations (UN) Guiding Principles on Business and Human Rights.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

The government has set aside 48 industrial zones, large tracts of land surrounding Rangoon, Mandalay, and other major cities, and is exploring the creation of more such zones. All these areas are merely zoned for industrial use in niche industries. The draft Investment Law includes incentives for both foreign and domestic investors including easier land acquisition, tax and customs exemptions, and duties and relevant levies on the import of machinery and construction or raw materials.

Burma enacted a Special Economic Zone Law in January 2011 that was replaced by the Myanmar Economic Zones Law which was ratified in January 2014. Under the newer law, investors located in a Special Economic Zone (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 proceeding five year period. Under the law, if profits during the preceding 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. The law also mandates the formation of an SEZ central authority and a management committee. The management committee will be responsible for setting wage levels and monitoring the ratio of local and foreign labor. (See section 16 - Labor for employment and other labor requirements within the SEZ.)

On August 27, 2015, the Ministry of National Planning and Economic Development issued new rules governing the SEZs including the establishment of a One Stop Service Department 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, approve employment permits and/or permissions for factory construction and other investments. The new rules also provide the minimum requirements for businesses operating in SEZs, such as requiring that a minimum of 75 percent of goods manufactured within an SEZ be exported. As discussed above, the new SEZ Rules also established a One Stop Service Center which includes several government departments under one roof enabling easier applications by investors regarding matters including labor permits, investment permits, company registration, export/import licenses, permits to establish factories, tax filing, entry visas and permits for foreigners, and other necessary permits and licenses for business operations.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy


Host Country Statistical source*

USG statistical source

USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other

Economic Data






Host Country Gross Domestic Product (GDP) ($M USD)


$54.53 billion


$64.33 billion


Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)






Host country’s FDI in the United States ($M USD, stock positions)






Total inbound stock of FDI as % host GDP






* Data is from Burma’s December Central Statistical Yearbook (p. 198, Table 8.01)

Table 3: Sources and Destination of FDI

Burma has not reported any data to the IMF’s Coordinated Direct Investment Survey.

The data on inward direct investment presented below is sourced from the government of Burma’s Ministry of National Planning and Economic Development’s Selected Monthly Economic Indicators (January 2016) publication. A disproportionately large percentage of inward direct investment appears to come from Singapore, and this can be explained by U.S., and other international companies routing their investments to Burma through their presence/branches in Singapore for ease of logistics and transfer. Local contacts report that Hong Kong’s large share of inward direct investment can be explained by Chinese companies routing their investments to Burma through Hong Kong. Of note is the presence of India and Japan on the top five list of direct investment: this is a recent phenomenon as neither were top five investors last year. Last year sizeable investments from Vietnam and the U.K. placed them on this list.

Burma did not present any data on outward direct investment in the Ministry of National Planning and Economic Development’s Selected Monthly Economic Indicators (January 2015) publication.

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment 2014-2015

Outward Direct Investment

Total Inward



Total Outward















Hong Kong








"0" reflects amounts rounded to +/- USD 500,000.

Table 4: Sources and Destination of Portfolio Investment

Data not available.

18. Contact for More InformationShare    

Suzanne M. Yountchi, Economic Officer
U.S. Embassy/110 University Avenue/Kamayut Township 11041/Rangoon, Burma
Telephone: 95 (0)1 536 509
Email Address: BurmaBusiness@state.gov