On February 1, 2021, the Burmese military seized power in a coup d’état that reversed much of the economic progress of recent years. The military’s brutal crackdown on peaceful protests destabilized the country, prompted widespread opposition, and created a sharp deterioration in the investment climate. Burma’s economy shrank by 18 percent in 2021, with a forecast for one percent growth in 2022, according to the World Bank. The regime’s ongoing violence, repression, and economic mismanagement have significantly reduced Burma’s commercial activity, compounded by the pro-democracy Civil Disobedience Movement that emerged in response to the coup. Many routine business services like customs, ports, and banks are not fully operational as of April 2022. Immediately after the coup, the military detained the civilian leadership of economic and other ministries as well as the Central Bank of Myanmar (CBM) and replaced them with appointees who are beholden to the regime. The CBM has imposed severe foreign exchange restrictions that limit commercial activity, and the regime severely limits access to U.S. dollars. Frequent power outages and reliance on generators have dramatically raised costs for business. The regime’s suspensions of internet and other telecommunications have restricted access to information and seriously hindered business operations. Due to COVID-19 concerns, commercial international flights resumed only on April 17, 2022. Many foreign companies have suspended operations, invoked force majeure to exit investments, and evacuated foreign national staff. The rule of law is absent, regime security forces engage in random violence, there are attacks in response by pro-democracy People’s Defense Forces, and arbitrary detentions of perceived regime opponents including labor organizers and journalists. Companies invested in the market face a heightened reputational risk. There is also the potential for the regime to expropriate property or nationalize private companies. In response to the coup, the U.S. government has imposed targeted sanctions, including on members of the regime’s so-called State Administration Council (SAC), ministers, and other authorities. The U.S. has also suspended our Trade and Investment Framework Agreement and instituted more stringent export controls. In the , the United States reaffirmed that it does not seek to curtail legitimate business and responsible investment in Burma. Nevertheless, investors should exercise extreme caution, avoid joint ventures with regime-affiliated businesses, and conduct heightened due diligence when considering new investments in this market.
|TI Corruption Perceptions Index||2021||140 of 180||https://www.transparency.org/en/cpi/2021/index/mmr|
|Global Innovation Index||2021||127 of 132||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2020||-6.0||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2020||$1,350||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
2. Bilateral Investment Agreements and Taxation Treaties
Burma has signed and ratified bilateral investment agreements with China, India, Japan, South Korea, Laos, Philippines, and Thailand. It has also signed bilateral investment agreements with Israel and Vietnam, although those have not yet entered into force. Texts of the agreements or treaties that have come into force are available on the UNCTAD website at:
Burma does not have a bilateral investment treaty or a free trade agreement with the United States. In March 2021, the United States suspended the bilateral Trade and Investment Framework Agreement in response to the coup.
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 ASEAN-China Free Trade Agreement, all of which contain an investment chapter that provides protection standards to qualifying foreign investors.
Burma also has border trade agreements with Bangladesh, India, China, Laos, and Thailand.
Burma does not have a bilateral taxation treaty with the United States.
Burma has Avoidance of Double Taxation Agreements with the United Kingdom, Singapore, India, Malaysia, Vietnam, and South Korea.
Burma is not a member of the OECD Inclusive Framework on Base Erosion and Profit Sharing.
The Tax Administrative Law (TAL) went into effect on October 1, 2019. This tax law provides guidance on administrative procedures on the following tax laws: the Income Tax Law; the Commercial Tax Law; the Special Goods Tax Law; and any other taxes deemed as such by the Internal Revenue Department. The law includes an advanced ruling system, an anti-avoidance provision, and the imposition of interest on unpaid or overpaid taxes. The TAL also clarified certain provisions under the existing tax laws with respect to tax filing and payment procedures, maintenance of documents, re-assessment of tax returns, changes to the appeal process, and the imposition of penalties.
3. Legal Regime
4. Industrial Policies
5. Protection of Property Rights
6. Financial Sector
7. State-Owned Enterprises
State-owned enterprises (SOEs) in Burma are active in various sectors, including natural resource extraction, print news, energy production and distribution, banking, mobile telecommunications, and transportation. SOEs employ approximately 145,000 people, according to a 2018 report by the Natural Resource Governance Institute. The 1989 State-Owned Economic Enterprises Law does not establish a system of monitoring enterprise operations, hence detailed information on Burmese SOEs is difficult to obtain. However, according to commercial statements, the total net income of all SOEs during fiscal year 2020`21 was approximately USD 828 million. The top profit-making SOEs are found in the natural resource sector, namely the Myanma Oil and Gas Enterprise, Myanma Gems Enterprise, and Myanma Timber Enterprise. Within Burma, there are 32 SOEs managed directly by six ministries without independent boards.
SOEs enjoy several advantages including serving in some cases as the market regulator, preferential land access, and access to low-interest credit. According to the State-Owned Economic Enterprises Law, SOEs wield regulatory powers that provide SOEs a significant market advantage, including through an ability to recommend specific tax exemptions to the MIC on behalf of private sector joint-venture partners and to monitor private sector companies’ compliance with contracts. In addition, the law stipulates that SOE managers have sole discretion in awarding contracts and licenses to private sector partners with limited oversight. SOEs can secure loans at low interest rates from state-owned banks, with approval from the cabinet. Private enterprises, unlike SOEs, are forced to provide land or other real estate as collateral in order to be considered for a loan. SOEs have historically had an advantage over private entities in land access because under the Constitution the State owns all the land.
In April 2021, the U.S. Department of Treasury sanctioned three Burmese SOEs for their roles in financing the military regime: the Myanma Gems Enterprise, the Myanma Timber Enterprise; and the Myanmar Pearl Enterprise. In March 2021, the U.S. Department of Treasury also sanctioned two Myanmar military holding companies: Myanmar Economic Corporation and Myanmar Economic Holdings Limited, and those sanctions also apply to entities that are owned, directly or indirectly, 50 percent or more by one or more blocked entities or persons. Investors should conduct careful due diligence, including by consulting the Special Designated National list, to identify which entities are subject to U.S. sanctions given the broad scope of these firms and their privileged position in the economy.
8. Responsible Business Conduct
The military regime has not demonstrated any awareness or commitment to responsible business. On the contrary, the regime had enacted policies and practices that undermine economic governance and the rule of law. Moreover, security forces are engaged in an escalating pattern of human rights abuses including mass detentions, extrajudicial killings, and violence deliberately targeting civilians. These human rights abuses have seriously also impacted the business community. Two foreign national business advisors were detained and put under house arrest without charge and one economic advisor was charged for violation of the official secrets acts, with no credible evidence provided to support the charge. Local businesspeople have been interrogated and subject to detention without charges by security forces. Several employees of local businesses have been killed by security forces.
Although there are labor unions, independent NGOs, and business associations in Burma, their ability to operate has been several constrained and in some cases these organizations have been openly targeted by the military regime’s security forces. Child and forced labor are present in Burma. For more information on the human rights and labor situation, please refer to the additional resources.
The Extractive Industries Transparency Initiative (EITI) Secretariat suspended Burma’s participation in the EITI initiative following the military coup. Burmese government officials do not regularly participate in meetings of the Voluntary Principles on Security and Human Rights, although several businesses, civil society organization, and diplomats participate in Burma country discussions.
The regime has not demonstrated an interest in protecting the environment. On the contrary, the regime has pursued environmentally destructive projects like hydro-electric dams. Illegal timber harvesting and mining have increased under the regime with little regard to existing environmental regulations.
The government of Burma is not a signatory of The Montreux Document on Private Military and Security Companies, a supporter of the International Code of Conduct or Private Security Service Providers, or a participant in the International Code of Conduct for Private Security Service Providers’ Association. The Myanmar Centre for Responsible Business is a civil society member of the International Code of Conduct Association.
Although the pre-coup civilian government made some progress in addressing corruption, including opening — with U.S. support — two new Anti-Corruption Commission branch offices in November 2020, law enforcement and judicial institutions do not have the independence or capacity to be effective in the fight against corruption under the new military regime. Corruption is rampant within the military, and the post-coup military regime appointed new members to the Anti-Corruption Commission. The military regime has used the Anti-Corruption Commission (ACC) to investigate politically motivated corruption charges, including against deposed State Counsellor Aung San Suu Kyi and deposed President Win Myint. Business leaders whom the regime believes are not adequately supportive of the regime have been detained and charged with corruption and/or tax evasion.
In 2018, the government amended its anti-corruption law to give the ACC authority to scrutinize government procurements. Family members of politicians can also be prosecuted under the anti-corruption law, though office holders face higher penalties.
Some companies are legally required to have compliance programs to detect and prevent bribery of government officials. Under Burma’s Anti-Money Laundering Law, law firms, banks, and companies operating in the insurance and gemstone sectors are required to appoint compliance officers and conduct heightened due diligence on certain customers.
Burma does not have laws to counter conflicts-of-interest in awarding contracts or government procurement. However, prior to the coup the President’s office issued orders to prevent conflicts-of-interest for construction contracts and several ministries had put in place internal rules to avoid conflicts-of-interest in awarding tenders. In the private sector, some of Burma’s largest companies have developed anti-corruption policies, which they have published on-line.
Burma signed the UN Anticorruption Convention in 2005 and ratified it on December 20, 2012.
Burma is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
The military regime does not provide protection to NGOs investigating corruption.
10. Political and Security Environment
Burma has a long history of civil wars and military coups marked by violence. In the aftermath of the February coup, Burmese security forces launched a brutal crackdown against the people of Burma, who peacefully protested the coup and the military’s upending of their democratic transition. In the face of brutal force by the regime, the people of Burma have disrupted the military’s ability to govern by launching a nationwide Civil Disobedience Movement, including general strikes and protests. Burma is also home to multiple long-running insurgencies in border regions, where the military competes for control with various ethnic armed organizations (EAOs). Shortly after the February 2021 coup, the military launched brutal and unprovoked attacks against EAOs, perceived opponents, and peaceful demonstrators across the country seeking to terrorize the public into submission. On September 7, 2021, the National United Government (NUG) announced a “People’s Defensive War against the military regime.” Violence is widespread and could continue to escalate.
There have been several reported fires and explosion targeting foreign businesses since the coup, including at Chinese-owned factories, an agricultural storage facility, and military related companies. Attacks resulting in destruction of property and injuries have also been reported at banks and ATMs as well. Foreign businesses are concerned about the potential for violence and destruction of property to escalate, although principally the targets have been companies or infrastructure associated with the military or companies that are perceived to be supportive of the military. The Chinese government has reportedly sought increased regime protection for an oil and gas pipeline that runs through Burma to China because of the deteriorating security situation.
The military regime has also declared martial law in several industrial townships in Yangon, suspending even the veneer of civil liberties and allowing security forces to be more aggressive in response to protests.
Protestors and military opponents have organized boycotts of businesses that have ties to the military regime with great success.
11. Labor Policies and Practices
Due to the February 1, 2021 coup, progress on labor reforms stalled and in most cases reversed. The national labor tripartite dialogue among the government, employers, and union leaders, which had been an important forum for advancing workers’ rights before the coup, dissolved in February after several large labor unions withdrew in protest. Burma’s labor union leaders, who have been active in organizing strikes and peaceful demonstrations against the regime since February 1, have been openly targeted by the military, and several union leaders have been killed or arrested. The regime has responded to organized labor’s participation in the CDM, declaring 16 labor-related organizations illegal and issuing warrants for the arrest of more 70 union organizers. The U.S. government released a statement noting it is closely monitoring the labor situation and potential impact on Burma’s Generalized System of Preferences (GSP) eligibility. The EU has made similar statements questioning future GSP eligibility if labor practices continue to deteriorate.
Burma has a large supply of mostly unskilled workers. Skilled labor and managerial staff are in high demand and short supply. According to the government, 70 percent of Burma’s population is employed in agriculture. From the World Bank’s 2014 “Ending Poverty and Boosting Prosperity in a Time of Transition” report on Burma, 73 percent of the total labor force in Burma was employed in the informal sector in 2010, or 57 percent if one excludes agricultural workers. Casual laborers represented another 18 percent, mainly from the rural areas. Unpaid family workers represent another 15 percent.
Many companies struggle to find and retain skilled labor. The military’s nationalization of schools in 1964, its discouragement of English language classes in favor of Burmese, the lack of investment in education by the previous governments of Burma, and the repeated closing of Burmese universities from 1988 to the mid-2000’s have taken a toll on the country’s workforce. Most people in the 15- to 39-year-old demographic lack technical skills and English proficiency. To address this skilled labor shortage, Burma’s Employment and Skill Development Law went into effect in December 2013. The law provides for compulsory contributions on the part of employers to a “skill development fund,” although this provision has not been implemented.
In October 2011, the Burmese government passed the Labor Organization Law, which legalized the formation of trade unions and allows workers to strike. As of April 2019, roughly 2,900 enterprise-level unions 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 engendered a labor movement in Burma, and there has been a low, yet increasing, level of awareness of labor issues among workers, employers, and even civilian government officials. Still, at present, the use of collective bargaining remains limited. Strikes are increasingly common in the post-coup environment as a form of political protest against the military regime and pre-coup were common in response to employment grievances, particularly in factories.
Prior to the military coup, the Burmese government was bringing the legal system into compliance with international labor standards. The civilian government had passed a number of labor reforms and amended a range of labor-related laws, such as the Shops and Establishment Law, the Payment of Wages Law, and the Occupational Safety and Health Law. In 2019, Parliament also passed the Settlement of Labor Disputes Law. Under this law, parties to labor disputes can seek mediation through arbitration councils. All stakeholders have a say in the selection of arbitration mediators. If arbitration fails, disputes enter the court system. Parliament approved Burma’s ratification of an international treaty to abolish child labor in the country (Minimum Age Convention 138) in December 2019. A mechanism to submit forced labor complaints became operational in February 2020 although it is unclear if the current military regime is accepting or investigating complaints under this mechanism. Complaints of forced labor made against the military itself are resolved through internal military procedures and the outcome of these complaints are not shared publicly.
In March 2022, the Governing Body of the International Labor Organization (ILO) decided to establish a Commission of Inquiry due to the deterioration of International Labor Standards in Myanmar following the military coup in February 2021.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Host Country Statistical source*||USG or international statistical source||USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other|
|Host Country Gross Domestic Product (GDP) ($M USD)||2020||$76.19 billion||2021||N/A||www.worldbank.org/en/country|
|Foreign Direct Investment||Host Country Statistical source*||USG or international statistical source||USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other|
|U.S. FDI in partner country ($M USD, stock positions)||2020||N/A||2021||N/A||BEA data available at https://apps.bea.gov/international/factsheet/|
|Host country’s FDI in the United States ($M USD, stock positions)||2019||-$1 million||2020||N/A||BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data|
|Total inbound stock of FDI as % host GDP||2020||44.3%||2021||N/A||UNCTAD data available at
* Source for Host Country Data
Table 3: Sources and Destination of FDI
Data not available.