Burma

Executive Summary

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 2022 Business Advisory for Burma, 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.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
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

Although the military regime has told investors and foreign chambers of commerce it welcomes foreign investment, its actions have undercut pre-coup efforts to improve the enabling environment for investment. A number of foreign investors have withdrawn from the market, evacuated foreign national employees, or suspended their operations in Burma.

The 2016 Myanmar Investment Law (MIL) and the 2018 Companies Law continue to govern treatment of foreign investment. The MIL includes a “negative list” of prohibited and restricted sectors for foreign investment. The Companies Law implemented August 1, 2018, permits foreign investment of up to 35 percent in domestic companies— which also opened the stock exchange to limited foreign participation.

The Directorate for Investment and Company Administration (DICA), which is part of the Ministry of Investment and Foreign Economic Relations (MIFER), serves as Burma’s investment promotion agency. However, following the coup, the regime named former military major Aung Naing Oo to lead the Ministry and he terminated staff he deemed unsupportive of the regime. DICA as a consequence has limited operations because of staff boycotts and firings. Previously, DICA encouraged and facilitated foreign investment by providing information, fostering networks between investors, and providing market advice to potential investors.

The regime maintains a private sector advisory forum with the Union of Myanmar Chamber of Commerce and Industry, which principally includes domestic businesses. However, military authorities have summoned business leaders for command appearances rather than to conduct voluntary consultations. The U.S. Trade Representative suspended the U.S.-Myanmar Trade and Investment Framework in March 2021. Foreign Chambers of Commerce have limited interactions with the military regime following the coup, mainly by issuing letters of protest to regime economic policies that undermine the private sector. Regime-controlled media regularly praises PRC and Russian business cooperation.

Limits on Foreign Control and Right to Private Ownership and Establishment

Generally, foreign and domestic private entities have the right to establish and own business enterprises and engage in remunerative activity with some sectoral exceptions. Under Article 42 of the Myanmar Investment Law, the Burmese government restricts investment in certain sectors. Some sectors are only open to government or domestic investors. Other sectors require foreign investors to set up a joint-venture with a citizen of Burma or citizen-owned entity or obtain a recommendation from the relevant ministries.

The State-Owned Economic Enterprises Law, enacted in March 1989, stipulates that SOEs have the sole right to carry out a range of economic activities in certain sectors, including teak extraction, oil and gas, banking and insurance, and electricity generation. However, in practice many of these areas have been opened to private sector investment. For instance, the 2016 Rail Transportation Enterprise Law allows foreign and local businesses to make certain investments in railways, including in the form of public-private partnerships.

The Myanmar Investment Commission (MIC), “in the interest of the State,” can also make exceptions to the State-Owned Enterprises Law. The MIC has routinely granted exceptions, including through joint ventures or special licenses in the areas of insurance, mining, petroleum and natural gas extraction, telecommunications, radio and television broadcasting, and air transport services, although whether such exceptions will continue to be granted after the coup is unclear.

As one of their key functions, DICA and the MIC are responsible for screening and approving inbound foreign investment to ensure it does not pose a risk to national security, as well as to determine if the investment furthers Burma’s growth and development. However, since the coup, the military regime has independently approved many foreign investments, including electricity generation projects, for example, that were not submitted to the DICA or MIC.

The regime frequently favors regime-owned or affiliated businesses as well as those run by cronies.

In 2020, the OECD conducted an investment review for Myanmar, which can be found at http://www.oecd.org/investment/countryreviews.htm 

In February 2021, the World Trade Organization produced a trade policy review for Myanmar based on pre-coup information, which can be found at http://www.wto.org/english/tratop_e/tpr_e/tpr_e.htm 

Following the coup, the military regime’s approach to governance has caused a sharp reduction in commercial activities including in Yangon and Mandalay. Many routine services that businesses require like customs, ports, and banks were not fully operational as of April 2022. Many companies report difficulty accessing bank funds to pay employees and suppliers, and there is limited foreign and local currency available. The security situation is volatile and unpredictable, and some companies’ local staff have been killed by security forces and foreign-owned factories have been burned. The civilian government previously provided limited business facilitation services through DICA, but services are restricted at present.

The previous civilian government instituted online company registration through “MyCo” ( https://www.myco.dica.gov.mm ). Investors were able to submit forms, pay registration fees, and check availability of a company name through a searchable company registry on the “MyCo” website. However, military regime officials have publicly threatened to take down the company registration website so it may not continue to operate, and military-imposed restrictions on internet and mobile access limit businesses’ ability to access this website.

The MIC is responsible for verification and approval of investment proposals above USD5 million. Companies can use the DICA website to retrieve information on requirements for MIC permit applications and submit a proposal to the MIC. If the proposal meets the criteria, it is supposed to be accepted within 15 days. If accepted, the MIC will review the proposal and is supposed to reach a decision within 90 days. In 2016, state and regional investment committees were granted the right to approve any investment of less than USD5 million. The World Bank assessed pre-coup that it takes on average seven days to start a business in Burma involving six procedures. Following the coup, it is likely to take substantially longer to register a business because of the suspension of many government services, bank closures, and internet access restrictions and suspensions. Post-coup, the MIC has approved several pending investment applications. According to DICA data, the number of new companies registered has declined 87 percent in the last 12 months compared to the year earlier.

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:  https://investmentpolicy.unctad.org/international-investmentagreements/countries/144/myanmar  

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

The military regime has not demonstrated an interest in providing, or an ability to provide, clear rules. Regulatory and legal transparency are significant challenges for foreign investors in Burma. The military established the SAC, which is vested with authority to make and issue laws, regulations, and notifications with no oversight or transparency. Previously, government ministries drafted most laws and regulations relevant to foreign investors, which were reviewed by the Attorney General and then voted on and discussed by Parliament. The current law-making process is opaque and amendments to laws have been made without public consultation.

Burma is not legally obligated to share regulatory development plans with the public or conduct public consultations.

There is not a centralized online location where key regulatory actions are published similar to the Federal Register in the United States. The Burmese government previously published new regulations and laws in government-run newspapers and “The State Gazette,” and also sometimes posted new regulations on government ministries’ official Facebook pages. Presently, the military regime announces some regulatory changes via state media or in the Commander-in-Chief’s public addresses, but copies of the changes are not easily accessibly or routinely posted anywhere.

There are no oversight or enforcement mechanisms to ensure the government follows administrative processes.

Foreign investors previously could appeal adverse regulatory decisions. For instance, under the Myanmar Investment Law, the MIC serves as the regulatory body and has the authority to impose penalties on any investor who violates or fails to comply with the law. Investors have the right to appeal any decision made by the MIC to the government within 60 days from the date of decision.

Under the military regime, there is no demonstrated action or espoused commitment to transparent public finance and debt obligations. There are allegations that the military is incurring off-budget debt and using government funds beyond which was allocated in the government budget. Prior to the coup, public finance, and debt obligations, exclusive of contingent liabilities, were public and transparent. Budget reports were published on the Ministry of Planning, and Finance website ( https://myanmar.gov.mm/ministry-of-planning-finance ). Prior to 2021, the budget was published on the Ministry of Planning, Finance, and Industry website (https://www.mopfi.gov.mm/en/content/budget-news). Burma has issued the annual Citizen Budget in the Burmese language since FY 2015-16. The Ministry of Planning, Finance, and Industry has published quarterly budget execution reports, six-month-overview-of-budget-execution reports, and annual budget execution reports on its website since FY 2015-16. However, details regarding the budget allocations for defense expenditures were not transparent, a problem that has been exacerbated since the military coup. The Burmese government also previously published its debt obligation report on the Treasury Department’s Facebook page. (See:  https://www.facebook.com/pages/biz/Treasury-Department-of-Myanmar-777018172438019/  ). The Public Expenditure and Financial Accountability (PEFA) program reviewed Burma’s public finance system in 2020 ( https://www.pefa.org/about ).

The government does not promote or require environmental, social, and governance disclosure to help investors and consumers distinguish between high- and low-quality investments. Businesses seeking to legally extract mineral resources, however, are required to prepare an environmental management plan to receive a license to mine from the regime.

Burma has been a member of the Association of Southeast Asian Nations (ASEAN) since July 1997. However, there is not a consistent relationship between ASEAN and Burma regulatory standards. As an ASEAN member state, Burma’s regulatory systems are expected to conform to harmonization principles established in the ASEAN Trade in Goods Agreement (ATIGA) to support regional economic integration.

Burma’s regulatory system does not consistently use international norms or standards. It contains a mix of unique Burma-developed standards and some British-colonial era standards. Prior to the coup, the government had been making progress on legal reforms to ensure the country’s regulations and standards reflected international norms or standards, including ASEAN-developed standards. In an example of ASEAN regulatory harmonization, Burma officially joined the ASEAN Single Window in March 2020 with the launch of the National Single Window Routing Platform, which streamlined the import process by adopting the ASEAN Certificate of Origin Form D.

Burma is a WTO member, but it does not regularly notify draft technical regulations to the WTO Committee on Technical Barriers to Trade.

Burma’s legal system is a unique combination of customary law, English common law, statutes introduced through the pre-independence India Code, and post-independence Burmese legislation. Where there is no statute regulating a particular matter, courts are to apply Burma’s general law, which is based on English common law as adopted and modified by Burmese case law.  Each state and region has a High Court, with lower courts in each district and township. High Court judges are appointed by the President while district and township judges are appointed by the Chief Justice through the Office of the Supreme Court of the Union. The Union Attorney General’s Office law officers (prosecutors) operate sub-national offices in each state, region, district, and township.

Immediately following the 2021 coup, the military regime replaced several members of the Supreme Court with judges seen as more reliable to its interests. After several weeks of largely peaceful protest and increasingly violent responses by security forces including arbitrary detentions, the military regimes placed several Yangon townships under martial law, where court proceedings are conducted by military judges who have meted out harsh punishments with limited to no due process rights for those accused.

The Ministry of Home Affairs, led by an active-duty military minister appointed by the Commander-in-Chief, controls the Myanmar Police Force, which files cases directly with the courts. The Attorney General prosecutes criminal cases in civilian court and reviews pending legislation. The current Attorney General, Dr Thida Oo, was appointed the day after the coup by Commander-in-Chief Min Aung Hlaing . The Attorney General’s Office was reorganized as a ministry  on August 30, 2021. On January 31, 2022, the U.S. Department of the Treasury  added Attorney General, Dr Thida Oo to its Specially Designated Nationals list. While foreign companies have the right to bring cases to and defend themselves in local courts, there are deep concerns about the impartiality and lack of independence of the courts.

Burma does not have specialized civil or commercial courts.

To address long-standing concerns of foreign investors regarding dispute settlement, the government acceded in 2013 to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). In 2016, Burma’s parliament enacted the Arbitration Law, putting the New York Convention into effect and replacing arbitration legislation that was more than 70 years old. Since April 2016, foreign companies can pursue arbitration in a third country. However, the Arbitration Law does not eliminate all risks. There is a limited track record of enforcing foreign awards in Burma and inherent jurisdictional risks remain in any recourse to the local legal system.

Certain regulatory actions are appealable and are adjudicated with the respective ministry. For instance, according to the Myanmar Investment Law, investment disputes that cannot be settled amicably are “settled in the competent court or the arbitral tribunal in accord with the applicable laws.” An investor dissatisfied with any enforcement action made by the regulatory body has the right to appeal to the government within 60 days from the date of administrative decision. The government may amend, revoke, or approve any decision made by the regulatory body. This decision is considered final and conclusive.

The Myanmar Investment Law outlines the procedures the MIC must take when considering foreign investments. The MIC evaluates foreign investment proposals and stipulates the terms and conditions of investment permits. The MIC does not record foreign investments that do not require MIC approval. Many smaller investments may go unrecorded. Foreign companies may register locally without an MIC license, in which case they are not entitled to receive the benefits and incentives provided for in the Myanmar Investment Law.

There is no “one-stop-shop” for investors except in Special Economic Zones. Burma has three Special Economic Zones (SEZs) in Thilawa, Dawei, and Kyauk Phyu with preferential policies for businesses that locate there, including “one-stop-shop” service. Of the three SEZs, Thilawa is the only SEZ currently in operation.

A Competition Law went into effect in 2017. The objective of the law is to protect public interest from monopolistic acts, limit unfair competition, and prevent abuse of dominant market position and economic concentration that weakens competition. The Myanmar Competition Commission serves as the regulatory body to enforce the Competition Law and its rules. The Commission is chaired by the Minister of Commerce, with the Director General of the Department of Trade serving as Secretary. Members also include a mixture of representatives from relevant line ministries and professional bodies, such as lawyers and economists.

The 2016 Myanmar Investment Law prohibits nationalization and states that foreign investments approved by the MIC will not be nationalized during the term of their investment. In addition, the law stipulates that the Burmese government will not terminate an enterprise without reasonable cause, and upon expiration of the contract, the Burmese government guarantees an investor the withdrawal of foreign capital in the foreign currency in which the investment was made. Finally, the law states that “the Union government guarantees that it shall not terminate an investment enterprise operating under a Permit of the Commission before the expiry of the permitted term without any sufficient reason.”

However, under previous military regimes, private companies have been nationalized. The current military regime has threatened private banks with nationalization if they fail to reopen, including threatening to transfer certain deposits in private banks to state-owned or military-affiliated banks. In addition, security forces have physical cut private company’s fiber wires and the military regimes onerous restrictions and suspension of mobile internet service have deprived private telecommunication operators and internet service providers of their property without any compensation offered. The military regime has also banned a number of private media print outlets from publication and restricted citizen’s access to other private company’s internet platforms.

There is a significant risk of nationalization and expropriation by the military regime, particularly in the financial and telecommunications sectors. There is no expectation of due process should the military regime pursue nationalization of private companies despite the provisions in the Myanmar Investment Law prohibiting nationalization and expropriation.

In February 2020, the government of Burma passed the new Insolvency Law. The law adopted the UNCITRAL Model Law on cross-border insolvency, providing greater legal certainty on transnational insolvency issues.

The legislation established an insolvency regime that addresses both corporate and personal insolvency, with a focus on protecting micro, small and medium-sized enterprises. With regards to personal insolvency, the new law encourages debtors to enter into a voluntary legally binding arrangement with their creditors. This agreement allows part or all of the debt to be written off over a fixed period of time. The law also provides equitable treatment for creditors by enabling an efficient liquidation process to ensure creditors receive maximum financial recovery from the property value of a non-viable business.

The law also established the Myanmar Insolvency Practitioners’ Regulatory Council to act as an independent regulatory body and assigned DICA the role of Registrar with the authority to fine individuals contravening the law. In addition, the court with legal jurisdiction can order an individual to make good on the default within a specified time.

4. Industrial Policies

In January 2020, the Ministry of Investment and Foreign Economic Relations (MIFER) announced tax exemptions for investments made in five priority sectors in all 14 states and regions in Burma as well as the capital territory. The tax exemption period is three, five, or seven years depending on the location. For a list of priority sectors by state and regions, please see MIFER’s website at:  http://www.mifer.gov.mm/region.  

Myanmar Investment Commission permit and endorsement holders are entitled to tax incentives and the right to use land. With a MIC permit, foreign companies can lease regional government-approved land for periods of up to 50 years with the possibility of two consecutive ten-year extensions.

Burma has no established sovereign guarantee mechanism for foreign direct investments nor does it generally provide joint financing for foreign direct investment projects.

The government does not offer any incentives, such as feed-in tariffs, discounts on electricity rates, or tax incentives for clean energy investments.

Burma has three Special Economic Zones (SEZs) in Thilawa, Dawei, and Kyauk Phyu with preferential policies for businesses that locate there. Of the three SEZs, Thilawa is the only SEZ currently in operation. Under the Myanmar Special Economic Zones Law, investors located in a Special Economic Zone may apply for income tax exemption for the first five years from the date of commencement of commercial operations, followed by a reduction of the income tax rate by 50 percent for the succeeding five-year period. Under the law, if profits during the third five-year period are re‐invested within one year, investors can apply for a 50 percent reduction of the income tax rate for profits derived from such re‐investment. In 2015, the government issued rules governing the SEZs, including the establishment of on-site one-stop-service centers to ease the approval and permitting of investments in SEZs, incorporate companies, issue entry visas, issue the relevant certificates of origin, collect taxes and duties, and approve employment permits and/or permissions for factory construction and other investments.

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. In August 2021, the regime recommended private banks name a citizen of Myanmar as CEO. The investors are also required to submit a report to the MIC with details of the practices and training methods that have been adopted to improve the skills of Burmese nationals.

Foreign investors may appoint expatriate senior management, technical experts, and consultants, but are required to submit a copy of the expatriate’s passport, proof of ability, and profile to the MIC for approval.

In part because of travel restrictions implemented in 2020 by the Burmese government to prevent the spread of COVID-19 including the suspension of international commercial flights, as well as regime-instituted additional measures, foreign investors have found it difficult to enter Burma or to travel within the country to check on investments. These restrictions were lifted on April 17, 2022. Business travelers may receive e-visas. Several foreign investors have complained about inability to secure or renew required work or residency permits for foreign employees.

Foreign investors are not required to use domestic content in goods or technology. Burma is developing laws, rules, and regulations on information technology (IT) and data protection standards but does not currently have a legal requirement for foreign IT providers to turn over source code and/or provide access to surveillance. Burma has not implemented data localization laws although the military regime proposed such laws in 2022. In 2021, the military regime has required some IT companies to disclose all wi-fi subscribers’ identities and provide all their usage data including websites visited. The regime Ministry of Transport and Communications and the State Administrative Council appear to both have authority to initiate these data requests. In January 2022, the regime proposed banning VPNs as part of an updated Cyber Security Law; no implementation has taken place to date.

5. Protection of Property Rights

Property rights and interests are not consistently enforced. Land disputes involving foreign investments are common and land titling is opaque. Mortgages and liens exist, but there is not a reliable recording system.

The Myanmar Investment Law provides that any foreign investor may enter into long-term leases with private landlords or – in the case of state-owned land – the relevant government departments or government organizations, if the investor has obtained a permit or endorsement issued by the MIC. Upon issuance of a permit or an endorsement, a foreign investor may enter into leases with an initial term of up to 50 years (with the possibility to extend for two additional terms of ten years each). The MIC may allow longer periods of land utilization or land leases to promote the development of difficult-to-access regions with lower development.

The 2016 Condominium Law allows for up to 40 percent of condominium units of “saleable floor area” to be sold to foreign buyers.

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

In September 2018, the Burmese government amended the Vacant, Fallow, and Virgin Lands Management Law and required occupants of these lands to register at the nearest land records office within a six-month period. The six-month deadline was intended to offer clear title to lands for investment and infrastructure construction. However, controversy exists over which lands have been designated as vacant, fallow or virgin, and whether the notification or registration period was sufficient.

A continuing area of concern for foreign investors is investments involving large-scale land projects. Property rights for large plots of land for investment commonly are disputed because ownership is not well established, particularly following a half-century of military expropriations. It is not uncommon for foreign firms to face complaints and protests from local communities about inadequate consultation and compensation regarding land.

In practice because of opaque land titling and unclear ownership, squatters de facto are permitted to use land that is unoccupied or land where ownership is contested or where they have an established history of living on that property.

Prior to the coup, Burma had expanded its legal intellectual property protections, but enforcement was limited. Burma’s Parliament passed four intellectual property laws in 2019 – the Trademark Law, Industrial Design Law, Patent Law, and Copyright Law.

Burma does not maintain publicly available data on seizures of counterfeit goods, although occasionally the government will announce seizures of counterfeit goods in government media or previously on Facebook government accounts. The Myanmar Police Force’s Criminal Investigative Department (CID) investigates and seizes counterfeit goods, including brands, documents, gold, products, and money, but not medicines. The CID currently does not record the value of the amount seized.

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

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

6. Financial Sector

The military regime’s attitude towards foreign portfolio investment is unknown. Previously, the Burmese government had gradually opened to foreign portfolio investment, but both the stock and bond markets are small and lack sufficient liquidity to enter and exit sizeable positions.

Burma has a small stock market with infrequent trading. In July 2019, the Securities and Exchange Commission announced that foreign individuals and entities are permitted to hold up to 35 percent of the equity in Burmese companies listed on the Yangon Stock Exchange.

Burma also has a very small publicly traded debt market. Banks have been the primary buyers of government bonds issued by the CBM, which has established a nascent bond market auction system. The Central Bank issues government treasury bonds with maturities of two, three, and five years.

The CBM sets commercial loan interest rates and saving deposit rates that banks can offer, so banks cannot conduct risk-based pricing for credit. Consequently, credit is not strictly allocated on market terms. Foreign investors generally seek financing outside of Burma because of the lack of sophisticated credit instruments offered by Burmese financial institutions and lack of risk-based pricing.

There is limited penetration of banking services in the country, but the usage of mobile payments had grown rapidly prior to the coup. A government 2020 census found 14 percent of the population has access to a savings account through a traditional bank. The banking system is fragile with a high volume of non-performing loans (NPLs). Financial analysts estimate that NPLs at some local banks account for 40 to 50 percent of outstanding credit but accurate calculations are hard because of accounting inconsistencies about what constitutes a non-performing loan.

According to Central Bank of Myanmar’s report for FY 2020-2021, total assets in Burma’s banking system were 75 trillion kyat (USD 40.5 billion).

The CBM is responsible for the country’s monetary and exchange rate policies as well as regulating and supervising the banking sector.

Prior to the coup, the government had gradually opened the banking sector to foreign investors. The government began awarding limited banking licenses to foreign banks in October 2014. In November 2018, the CBM published guidelines that permit foreign banks with local licenses to offer “any financing services and other banking services” to local corporations. Previously, foreign banks were only allowed to offer export financing and related banking services to foreign corporations.

No U.S. banks have a correspondent relationship with Burmese banks. Following the military coup and the imposition of U.S. sanctions on Burma, including on two large military holding companies, some non-U.S. international banks are considering whether to terminate their correspondent banking relationship with Burmese banks.

Foreigners are allowed to open a bank account in Burma in either U.S. dollars or Burmese kyat. In April 2022, the CBM issued rules requiring most accounts with foreign currency holdings to be converted into Myanmar kyat at a fixed rate within one business day excluding foreign investment businesses, diplomatic missions, UN missions and international development partners. To open a bank account, foreigners must provide proof of a valid visa along with proof of income or a letter from their employer.

The Germany development agency GIZ published the fifth edition the GIZ Banking Report in January 2021.

According to Chapter 15 of the Myanmar Investment Law, foreign investors can convert, transfer, and repatriate profits, dividends, royalties, patent fees, license fees, technical assistance and management fees, shares and other current income resulting from any investment made under this law. Nevertheless, in practice, the transfer of money in or out of Burma has been difficult, as many international banks have internal prohibitions on conducting business in Burma given the long history of sanctions and significant money-laundering risks. The intermittent closure of banks following the coup, shortage of U.S. dollars, and low cash withdrawal limits, and CBM restrictions on holding foreign currency have further limited investors’ ability to conduct foreign exchange transactions and other necessary business operations.

Under the Foreign Exchange Management Law, transfer of funds can be made only through licensed foreign exchange dealers, using freely usable currencies. The CBM grants final approval on any new loans or loan transfers by foreign investors. According to a new regulation in the Foreign Exchange Management Law, foreign investors applying for an offshore loan must get approval from the CBM. Applications are submitted through the MIC by providing a company profile, audited financial statements, draft loan agreement, and a recent bank credit statement.

In April 2022, the Central Bank fixed the exchange rate at 1850 kyat/1 USD. In April 2022, the black-market exchange rate was roughly 2010 kyat/1 USD.

According to the Myanmar Investment Law, foreign investors can remit foreign currency through authorized banks. Nevertheless, in practice, the transfer of money in or out of Burma has been difficult, as many international banks have internal prohibitions on conducting business in Burma given the long history of sanctions and significant money-laundering risks. The military coup and the regime’s economic policies, including restrictions placed on holding and transferring foreign currencies, has further exacerbated these investment remittance challenges.

The challenge of repatriating remittances through the formal banking system are also reflected in the continued use of informal remittance services (such as the “hundi system”) by both the public and businesses. On November 15, 2019, the CBM adopted the Remittance Business Regulation in order to bring these informal networks into the official financial system. The regulations require remittance business licenses to conduct inward and outward remittance businesses from the Central Bank. It is unclear how the military regime will proceed with this regulation and the training of businesses to grant them a license to conduct remittances.

Burma does not have a sovereign wealth fund.

7. State-Owned Enterprises

State-owned enterprises (SOEs) in Burma are active in various sectors, including natural resource extraction, print news, energy production and distribution, banking, mobile telecommunications, and transportation. SOEs employ approximately 145,000 people, according to a 2018 report by the Natural Resource Governance Institute. The 1989 State-Owned Economic Enterprises Law does not establish a system of monitoring enterprise operations, hence detailed information on Burmese SOEs 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.

The military regime has not publicly announced any plans or timeline for privatization and in the past has preferred nationalization and supporting state-owned enterprises. Prior to the coup, the civilian government had been implementing a privatization plan, which permitted foreign investment.

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.

Department of State

Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/);

Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/);

Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/) and;

North Korea Sanctions & Enforcement Actions Advisory ( https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf ).

Department of Labor

Findings on the Worst forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  );

List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods );

Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab ) and;

Comply Chain ( https://www.dol.gov/ilab/complychain/ ).

9. Corruption

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.

Anti Corruption Commission
Cluster (1), Sports’ Village, Wunna Theikdi Ward
Nay Pyi Taw
Phone: + 95 67 810 334 7
Email: myanmaracc2014@gmail.com
http://www.accm.gov.mm

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

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
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

https://unctad.org/topic/investment/world-investment-report 

* Source for Host Country Data

Table 3: Sources and Destination of FDI
Data not available.

14. Contact for More Information

Chad Wilton
Economic Officer
U.S. Embassy Rangoon
110 University Avenue/Kamayut Township 11041
Rangoon, Burma
+95-1-753-6509
wiltoncl@state.gov 

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The Lessons of 1989: Freedom and Our Future