Executive Summary

After years of economic isolation and a challenging political transformation, Burma has begun to implement the necessary reforms to spur economic development and attract foreign investment. Over the past several years, the government has addressed some of the long-standing obstacles to economic growth, including eliminating multiple exchange rates, reducing trade restrictions, reforming tax policy and administration, passing a new arbitration law and labor legislation in line with international standards, and easing some of the administrative hurdles to doing business in Burma. The government passed its new Myanmar Companies Law in December 2017, designed to make it easier to start and operate small businesses. This builds on the reforms within the new Investment Law passed in October 2016. The updated Companies Law is expected to go into force in August 2018. The Companies Law and the Investment Law represent a series of reforms aimed at modernizing Burma’s commercial framework. Burma now faces the challenge of implementing its laws and regulations to support its goal of inclusive economic growth. It also faces the challenge of shedding the prior military government’s attitude that the government should control all aspects of the economy.

Progress in strengthening the financial sector and passing economic reform legislation has attracted foreign investment into Burma. According to World Bank estimates, Burma experienced a 5.9 percent growth rate between 2016/17 and projected growth for 2017/18 is 6.4 percent. In contrast to previous decades, when the majority of foreign direct investment (FDI) went into natural resource sectors, since 2011, FDI has largely gone to the transportation and communication, manufacturing, real estate, and tourism sectors. While still facing implementation challenges, Aung San Suu Kyi’s National League for Democracy (NLD)-led government has countered government corruption and called for greater transparency and foreign investment. In 2017, Burma ranked 130 of 175 countries on Transparency International’s Corruption Perception Index, an improvement from the 2016 ranking of 136. Burma’s financial sector, while still underdeveloped, has improved sufficiently to result in the June 2016 removal of Burma from the Financial Action Task Force watch list. To attract more foreign investment, Burma must improve access to finance, establish clear land titles, increase energy supplies, and develop skilled workers. Transportation costs remain high, and the domestic banking sector has limited connectivity with the global financial system. Addressing these key constraints is critical to ensuring a fair and transparent business environment in which all enterprises can grow and create jobs. The 2017 World Bank Ease of Doing Business rankings (171 out of 190) show Burma still struggles with enforcement of contracts, protection of minority investors, and resolving insolvency, but improvements were made in registering property and access to credit.

Moving forward, observers expect the manufacturing, agriculture, and tourism sectors to grow and attract more FDI, with support from the democratically-elected government as Burma continues to reconnect to the global economy. Foreign investors are exploring investment opportunities in transportation and communication, manufacturing, real estate, and energy/power. With Burma’s location, natural resources, and political and economic reforms, many observers are optimistic about growth and opportunities in the next several years. One limiting factor, however, is the grossly disproportionate military action leading to a humanitarian crisis in Rakhine State, where 687,000 people have crossed the border into Bangladesh, with increasing international criticism of Burma affecting tourism and potentially decreasing some types of investor interests.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2017 130 of 175 http://www.transparency.org/
World Bank’s Doing Business Report “Ease of Doing Business” 2017 171 of 190 http://www.doingbusiness.org/rankings
Global Innovation Index 2017 NA https://www.globalinnovation
U.S. FDI in partner country (M USD, stock positions) 2016 1 http://www.bea.gov/
World Bank GNI per capita 2016 1,190 http://data.worldbank.org/

Policies Towards Foreign Direct Investment

Burma is open to foreign investors. In 2016, Burma passed the new Myanmar Investment Law (MIL) to attract more investment from both foreign and domestic businesses. The MIL is intended to simplify the rules and regulations for investment and bring Burma more in line with international standards. The government actively sought the advice of international experts and lawyers and held public consultations to help draft rules and regulations that were released on April 1, 2017, when the law went into effect. Burma also has three Special Economic Zones (SEZs) to encourage development and investment, and is continuing to expand those SEZs as they reach capacity.

The new Myanmar Companies Law will go into force in August 2018. It updates and streamlines business regulations. Pursuant to the new law, the government expects to launch a new online registry which should improve the investment climate if it is implemented well. The updated law will make it easier to start and operate small businesses, and provide the government with tools to enforce corporate governance rules and regulations. Foreign investment of up to 35 percent will be allowed in domestic companies—which will also open the stock exchange to limited foreign participation.

There is no evidence that the Myanmar Investment Commission (MIC) discriminates against foreign investors. The MIL includes a “negative list” of prohibited, restricted, and special sectors.

The Directorate for Investment and Company Administration (DICA) is Burma’s investment promotion agency. One of DICA’s roles is to encourage and facilitate both foreign and local investment by providing information, fostering coordination and networks between investors and continually exploring new opportunities in Burma that would benefit both the nation and the business community. DICA added an “Americas Desk” in 2016 to facilitate and support U.S. direct investment in Burma.

The government engages with chambers of commerce and foreign companies to maintain a dialogue with investors. In June 2017, MIC announced prioritized sectors related to agriculture and livestock, power, education, health care, logistics, construction for affordable housing, export promotion industries, import substitution industries, aircraft and airports, and establishment of industrial estate and urban areas both for foreign and Burmese investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

The MIL went into effect in April 2017 and applies to all investment in Burma, both domestic and foreign. According to the MIL, some investments require a permit while others do not. The MIL also lists specific sectors where tax incentives are available. Under the MIL, foreign investors are now able to enter into long term leases. The MIL revised restrictions on investment to liberalize investment. Section 42 of the MIL lists types of investment activities that only the Union government can undertake; that are not permitted for foreign investors; that are permitted only as a joint-venture with resident citizens or citizen-owned entities; and that are subject to specifically prescribed conditions (e.g. approval from relevant ministries).

When forming or registering a business in Burma, generally two options exist: (i) registration under the 1914 Companies Act only or (ii) registration as an MIC-company under the MIL (with registration under the 2014 Special Economic Zone Law for businesses located in a Special Economic Zone as a third option). Under the MIL, investors involved in the following businesses must still submit a proposal to the MIC and apply for a permit: businesses/investment activities that are strategic for the Union; large capital intensive investment projects; projects which have large potential impacts on the environment and local communities; businesses/investment activities that use state-owned land and buildings; and/or businesses/investment activities that the government designates as requiring the submission of a proposal to the MIC.

The State-Owned Economic Enterprises Law, enacted in March 1989 and still in effect today, also regulates certain investments and economic activities. The previous government drafted a privatization law; the current government plans to merge this with a new state-owned enterprise (SOE) law, with discussions underway at the Ministry of Planning and Finance. As the government has encouraged more private sector development, however, SOEs are increasingly less important parts of the economy. While the 1989 law stipulated that SOEs have the sole right to carry out a range of economic activities, including teak extraction, oil and gas, banking and insurance, and electricity generation, in practice many of these areas are now open to private sector development.

The 2016 Rail Transportation Enterprise Law allows, for instance, foreign and local businesses to make certain investments in railways, including in the form of public-private partnerships.

More broadly, the MIC, “in the interest of the State,” can make exceptions to the SOE law. 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 Burmese military is associated with the Union of Myanmar Economic Holdings, Ltd. (UMEHL) and runs the Myanmar Economic Corporation (MEC), two large conglomerates with many commercial interests. As government policies continue to allow for greater private sector involvement in the economy, the market share of these conglomerates is decreasing.

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/tp393_e.htm .

The World Bank’s Doing Business 2017 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 2016, the results of which can be found at: http://www.enterprisesurveys.org/data/exploreeconomies/2016/myanmar 

Business Facilitation

The Directorate of Investment and Company Administration (DICA) website (http://www.dica.gov.mm/ ) provides information on how to register a business in Burma. Registration is the first step a businessperson must take before incorporating a company or making an investment in Burma, whether that person is a citizen of Burma or a foreigner. In accordance with the Myanmar Companies Act of 1914 and the Special Companies Act of 1950, a company may register in one of the following forms: as a private or public company by Burmese citizens, as a foreign company or branch of a foreign company, as a joint venture company, or as an association/nonprofit organization. First steps include checking availability of the company name at DICA, obtaining company registration forms at DICA and paying a stamp duty, and submitting the forms and paying a company registration fee. Under the new Companies Law, signed in December 2017 and expected to go into force August 2018, company registration will be available online and the process will be simplified. In addition to liberalization of corporate structures and the standardization of corporate governance rules, registration fees will be reduced along with regulations over small- and medium-sized business. The law will also eliminate the need for companies to get a “permit to trade,” removing an obstacle businesses faced under the old version of the law.

The MIC is responsible for verifying and approving investment proposals and regularly issues notifications about sector-specific developments. The MIC is comprised of representatives and experts from government ministries, departments and governmental and non-governmental bodies. 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 will be accepted within 15 days. If accepted, the MIC will review the proposal and reach a decision within 90 days. The MIC issued a statement in March 2016 granting authority to state and regional investment committees to approve any investment with capital of under USD 5 million. Such investments no longer need to seek approval from the MIC.

To attract foreign and domestic investors, the MIC has released lists of townships that fall under three different zones/categories: underdeveloped, moderately developed, and adequately developed. Investors will receive a tax break of seven years, five years or three years when they make investments in these respective zones. A total of 166 townships fall under the least developed zone category. In 2017, DICA expanded its presence throughout Burma to support companies and promote investment in of all the country’s states and regions.

Outward Investment

Burma does not promote outward investment, not does it restrict domestic investors from investing abroad.

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.

Burma has Avoidance of Double Taxation Agreements with the United Kingdom, Singapore, India, Malaysia, Vietnam and South Korea.

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

Transparency of the Regulatory System

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. Some Ministries now engage in public consultation before promulgating bills or issuing new regulations. For instance, the 2016 Investment Law was presented to the public and open for comments, including the drafting of the rules and regulations, which went through three rounds of public consultations. While there is no legal requirement to have public consultation, 75 percent of parliamentarians are elected representatives of their constituencies and are expected to respond to public engagement. An active and vocal civil society, alongside advances in press freedom, also results in more public discourse about proposed legislation and regulations than in the past.

The government of Burma publishes information online on government websites and has established 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, and in May 2016, launched the National Trade Portal. The government of Burma publishes new regulations and laws in government-run newspapers and “The Burma Gazette.” Burma has issued the annual Citizen Budget in the Burmese language since FY 2015-16. The Ministry of Planning and Finance 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. (See http://www.mof.gov.mm/my/ ) The Burmese government also publishes its debt obligation report on the Treasury Department’s Facebook page. (See https://www.facebook.com/pages/biz/Treasury-Department-of-Myanmar-777018172438019/ ). For more information on Burma’s regulatory transparency see http://rulemaking.worldbank.org/data/explorecountries/myanmar .

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 government announced its new EITI authority, the administrative body for the EITI process, in December 2016. In March 2018, the government published its second and third reports for FY 2014/15 and FY 2015/16 FY; a forestry sector report is expected in June 2018. (See https://eiti.org/myanmar http://myanmareiti.org/my/meiti-reconciliation-report-2014-2015-0 , and http://myanmareiti.org/my/meiti-reconciliation-report-2015-2016 )

International Regulatory Considerations

In 2016, 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. This portal represents increased transparency in Burma and also meets Burma’s requirements under Articles 12 and 13 of the ASEAN Trade in Goods Agreement. While Burma is not in compliance with WTO notification requirements, the government developed a WTO notification strategy that is expected to go into effect in 2018. This should increase the number and quality of notifications. More information on the Trade Portal can be found at: http://www.myanmartradeportal.gov.mm/index.php .

Legal System and Judicial Independence

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. 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 (prosecutors) operate sub-national offices in each state, region, district, and township.

The Attorney General enforces standards of due process in the criminal justice system and provides the government’s law officers with a mandate to act as an independent check in the criminal justice system. The Ministry of Home Affairs, led by a minister appointed by the Commander-in-Chief but reporting to the President, retains oversight of the Myanmar Police Force, which files cases directly with the courts. While foreign companies have the right to bring cases to and defend themselves in local courts, there are concerns about the impartiality and lack of independence of the courts.

In order to address the 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 much-anticipated 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 still little 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.

Laws and Regulations on Foreign Direct Investment

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 MIL 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 60 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. Joint ventures with military controlled enterprises require MIC approval and abide by the same rules as other investments. 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 MIL. Many import and export licenses requirements have been removed since 2014; for more information see http://www.myanmartradeportal.gov.mm/?r=site/display&id=13 

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

Competition and Anti-Trust Laws

A Competition Law was passed on February 24, 2015, and went 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 that 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.

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

Expropriation and Compensation

According to the OECD’s 2014 investment policy review, 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 2016 MIL 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.”

The new Companies Law will replace a colonial-era Myanmar Companies Act from 1914, simplifying requirements for small and family-owned businesses, improving corporate governance standards and removing outdated regulations. The new law will also allow foreign investors to hold 35 percent of shares in Burmese firms. The authorities hope this will make it easier for local companies to attract international funding and expertise. The new legislation will not automatically treat companies with a degree of foreign ownership differently. The Director General of DICA said foreign-owned companies will be defined as those where foreign ownership exceeds 35 percent, but that the Ministry of Finance and Planning can change this ratio as the economy develops. This law would also allow foreigners to buy shares on the new Yangon Stock Exchange for the first time.

Dispute Settlement

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). In 2016, the Burmese parliament enacted the Arbitration Law, putting the 1958 New York Convention into effect (see international arbitration below).

Investor-State Dispute Settlement

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 Commercial Arbitration and Foreign Courts

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 Law 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.

Bankruptcy Regulations

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 Incentives

According to the MIL, investors may enjoy corporate tax exemption for seven, five or three years depending on whether investment takes place in underdeveloped, moderately developed or adequately developed regions, although income tax exemption shall be granted only to the investment in promoted sectors such as agriculture, manufacturing, power generation, etc. The detailed list of all types of business which are listed as promoted sectors can be seen at the DICA website: https://www.dica.gov.mm/en/why-invest-myanmar .

All investors must obtain a MIC permit. MIC permit holders are not only entitled to enjoy tax incentives but also the right to use land. With a MIC permit, foreign companies can lease regional government approved land for initial periods of up to 50 years, and two additional consecutive periods of ten years each may be extended.

DICA is officially mandated to coordinate investment promotion under the MIC, although different ministries and agencies promote investment in different sectors ( e.g. the Ministry of Tourism promotes responsible tourism investment). 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 the nation and the business communities. DICA’s head office is in Yangon and it has 14 branches throughout the country including Naypyitaw, Mandalay, Taunggyi, Mawlamyaing, Pathein, Monyaw, Dawei, Hpa-an, Bago, Magway, Loikaw, Myitkyina, Sittwe and Hakha. DICA uses seminars, workshops, investment fairs and other events to promote investment, as well as its website: http://www.dica.gov.mm/en .

Foreign Trade Zones/Free Ports/Trade Facilitation

The Myanmar Economic Zones Law also contains certain investment incentives. Under the law, investors located in an 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 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 August 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.

Performance and Data Localization 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 Burmese nationals.

Foreign investors are not yet required to use domestic content in goods or technology. 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.

Real Property

The MIL 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). Longer periods of land utilization or land leases may be allowed by the MIC to promote the development of difficult-to-access regions with lower development.

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.

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. The policy also establishes the National Land Use Council. Chaired by the Vice President, the council constitutes the highest authority within the government presiding over land issues, and is intended to ensure the policy and new national land law are implemented and used as a guide for the harmonization of all existing laws relating to land in the country.

Burma’s parliament passed the Condominium Law in 2016. The law states that up to 40 percent of condominium units of “saleable floor area” can be sold to foreign buyers. Condominium owners shall also have the shared ownership of both the land and apartment. In 2017 the Ministry of Construction pasted the Condominium Rules, implementing and clarifying provisions of the Condominium law. One clarification per the rules is that state-owned land may be registered as condominium land (Rules 20 and 21).

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.

Intellectual Property Rights (IPR)

Burma is in the process of improving 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. 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.

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 Education, with advice from external stakeholders and experts, drafted four new intellectual property bills – 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, but they have not yet been enacted by Parliament. In anticipation of passage of the trademark bill, Burma has established a single national Intellectual Property Office with USAID assistance that will monitor compliance with intellectual property laws and be responsible for further developing IPR 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.

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:

Kitisri Sukhapinda, Regional IP Attaché
U.S. Patent and Trademark Office
American Embassy Bangkok, Thailand
Tel: (662) 205-5913
Email: kitisri.sukhapinda@trade.gov

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

Information on legal service providers available in Burma can be found at: https://mm.usembassy.gov/u-s-citizen-services/attorneys/?_ga=2.25156595.833404297.1556637989-875676780.1556293227

Capital Markets and Portfolio Investment

Burma has very small publicly traded equity and debt markets. Banks have been the primary buyers of government bonds issued by Burma’s Central Bank, 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 Burmese government opened the Yangon Stock Exchange in 2015, and the first company was listed on March 25, 2016. As of April 2018, five companies are listed on the 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 state-owned Myanma Economic Bank. In 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 representation). The New Companies Law will allow foreign investment of up to 35 percent in domestic companies and allow foreign investment in the stock market.

Money and Banking System

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 independent from the Ministry of Finance.

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 2016 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. Burma’s largest private bank, KBZ, and Japan-headquartered Sumitomo Mitsui Banking Corporation announced in February 2017 the beginning of a direct correspondent relationship between the United States and Burma via Sumitomo Mitsui’s New York branch office.

The Financial Institution Law was enacted in January 2016. In Burma’s banking sector, credit is extended through loans not exceeding 12 months – 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, according to numerous business surveys. There are high levels of informality throughout the economy, with a pervasive, unregulated financial sector constituting the large majority of lending. In July 2017, the Central Bank issued four regulations on capital adequacy ratio, asset classification and provisioning, large exposures and liquidity ratio requirements aiming to align Burma’s banking standards with international Basel II standards.

Foreign Exchange and Remittances

Foreign Exchange

Since 2012, the Central Bank of Burma runs 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 MIL, 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.

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 generally provide 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 money laundering concern” according to the 2017 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, the report notes that Burma’s prolific drug production and lack of financial transparency make it attractive for money laundering. Burma enacted anti-money-laundering laws in 2014 and issued relevant rules in 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 the Ministry of Home Affairs.

The FIU is building its capacity to become an independent unit in line with the recommendations of the Financial Action Task Force. In July 2016, Burma was delisted from the Financial Action Task Force list. While Burma is still designated as a jurisdiction of “primary money laundering concern” under Section 311 of the USA PATRIOT Act, the U.S. Department of the Treasury issued an administrative exception to this finding in October 2016, similar to waivers issued for certain banks since 2012, thereby allowing corresponding banking relationships with the United States. For more information on the Department of Treasury exception, please see: https://www.fincen.gov/news/news-releases/fincen-issues-exception-prohibition-imposed-section-311-action-against-burma 

Burma does not engage in currency manipulation tactics.

Sovereign Wealth Funds

Burma does not have a sovereign wealth fund.

Revenue from SOEs contributes about 40 percent of the total revenue of Burma, while costs of SOEs amount to 35 percent of expenditures. In July 2016, the NLD announced 12 economic policies including to reform SOEs and to privatize SOEs, designed to enable the private sector to create employment opportunities. During 2017, Burma initiated more transparency-related initiatives by publishing the executive budget proposal for FY 2017-18 and sent to Parliament SOE commercial statements for FY 2015-16, FY 2016-17, and FY 2017-18. The disaggregate figures of each SOE under the respective ministries are made public, but are only available in the Burmese language.

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 has moved in the direction of public private partnerships, corporatization, and privatization. Burma is not party to the Government Procurement Agreement (GPA) within the framework of the WTO.

SOEs can secure loans at four percent 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. 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 historically had an advantage over private entities in terms of land access since, according to the Constitution, the State owns all the land.

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 the two military associated conglomerates of MEHL and MEC are not included in the budget data; these companies are not considered SOEs under Burmese law.

The new government has prioritized the privatization of SOEs, largely because many of these entities cost the government money. In May 2016, the NLD appointed the new members of the Privatization Commission headed by a Vice-President. The Minister of Planning and Finance is the secretary of the commission. Privatization can take the form of system-sharing, public-private partnership, private-private partnership, franchise, joint-venture, and sales of assets in line with international standards.

Burma’s awareness of 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 that they view as violating social standards.

Burma has implemented the OECD Guidelines for Multinational Enterprises. According to DICA, the MIL was itself passed in response to the OECD call for a level playing field, by merging the previously separate domestic and foreign investment laws.‎

The elected government has prioritized fighting corruption, and has succeeded in countering high-level corruption to some extent. Low-level corruption is still common in some areas but business representatives report a sharp decrease in required payments. In its 2017 Corruption Perceptions Index, Transparency International rated Burma 130 out of 175 countries, continuing a trend of improvement. Investors might face corruption when seeking investment permits, during the taxation process, when applying for import and export licenses, and when negotiating land and real estate leases.

The government of Burma recognizes the international community’s perception of corruption in the country. In 2016, the government issued Anti-Corruption Rules detailing the powers and functions of an investigation board and an Anti-Corruption Commission established by the 2013 Anti-Corruption Law. The rules also outline obligations of banks in response to an investigation, but do not create an obligation for proactive reporting when corruption is suspected.

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

Amy Roth, 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

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. 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. Two additional armed ethnic groups joined the NCA in February 2018.

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. While most of the major cities are quite safe, several areas of the country routinely see conflict between the government and ethnic armed groups. Recently, there has been a rise in attacks involving Improvised Explosive Devices (IEDs). These bombings are often perpetrated by ethnic armed groups or other anti-state actors and generally target government security forces. Ethnic armed groups have used IEDs in Rakhine, Chin, Shan, and Kachin States during attacks on government security forces, and the continued use of landmines by the Burma military and ethnic armed groups in the north, northeast, and southeast has led to an increase in landmine incidents over the past year. Civilians have also been killed in the north and northeast as a result of airstrikes and increased use of heavy weapons by the Burma military.

On August 25, 2017, a Rohingya insurgent group attacked approximately 30 security outposts in northern Rakhine State. The government characterized this event as a terrorist attack, and Burma’s security forces launched clearance operations throughout northern Rakhine State. Hundreds of Rohingya villages were burned, and there were widespread, credible allegations of abuses by security forces. Some 687,000 Rohingya fled to Bangladesh, and tens of thousands of non-Rohingya were displaced inside Rakhine State. In November 2017, the U.S. Secretary of State determined that the situation constituted ethnic cleansing. Violence has not spread to other areas of Burma as a result of the crisis in Rakhine State although, as noted above, certain states in Burma continue to experience ethnic or religious violence. Burma has a minority Muslim population, and violence between Buddhists and Muslims did break out in other parts of the country in 2013 and 2014 following intercommunal violence in Rakhine State in 2012.

In October 2011, the Government of Burma passed the Labor Organization Law, which legalized the formation of trade unions and allows workers to strike. As of April 2018 roughly 2,750 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.

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 from 1988 to the mid-2000’s have taken a toll on the country’s work force. 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 and is being further revised. The law provides for compulsory contributions on the part of employers to a “skill development fund,” although this provision has not been implemented. According to the government, 70 percent of Burma’s population is employed in agriculture.

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. According to the government’s labor force survey, the informal sector accounts for 75.6 percent.

A new national minimum wage is expected to go into effect in April 2018, raising the minimum wage from 3600 kyat (USD 2.80) to 4800 kyat (USD 3.70). 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 previous minimum wage has been widely implemented, compensation for overtime work is still unclear. Labor compensation in Burma is still lower than some of its Southeast 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 and amended a range of labor-related laws, such as the 2016 Shops and Establishment Law and the Payment of Wages Law. The government introduced to Parliament new laws on occupational safety and health and alien workers, which are currently under review. In November 2016, the U.S. government reinstated Burma’s Generalized System of Preferences (GSP) trade benefit in recognition of the progress that the government had made in protecting workers’ rights. The U.S. government reauthorized the GSP program globally in March 2018 through December 31, 2020.

In September 2016 the government institutionalized the National Tripartite Dialogue Forum (NTDF), as a venue to engage with employers and workers, especially in drafting legislation. The NTDF is currently reviewing drafts of the Settlement of Labor Disputes Law, Labor Organization Law, and revisions to employment contracts as part of the Employment and Skill Development Law.

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 the third Stakeholder’s Forum in January 2018. The overarching goal of the Initiative is to promote a culture of compliance with fundamental labor rights. The Initiative is intended to cultivate relationships between business, labor, and civil society stakeholders and the government of Burma.

In May 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 and in October 2016 announced intent to double investment financing from USD 250 million to USD 500 million over the next five years. 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 USD 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.

In 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. In July 2017 EXIM Bank also authorized long-term transactions in the public sector.

In December 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.

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





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


USD 68,660


USD 66,966


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






http://www.mof.gov.mm/en  (Citizen Budget 2016-17)
** Accurate statistical data are limited in Burma, although this capacity is also being developed

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 6678 100% Total Outward 0 100%
Singapore 3789 57% N/A
Vietnam 1386 21%
China 483 7%
Hong Kong 423 6%
Thailand 258 4%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Accurate statistical data are limited in Burma, although this capacity is also being developed.

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

2018 Investment Climate Statements: Burma
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