2023 Investment Climate Statements: Burma

Policies Towards Foreign Direct 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 A number of foreign investors have withdrawn from the market, evacuated foreign national employees, or suspended their operations in Burma.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 regime’s Ministry of Investment and Foreign Economic Relations (MIFER), serves as Burma’s investment promotion agency. DICA has limited operations because of staff boycotts and firings, and its corporate registry, Myanmar Companies Online (MyCO), may be inaccessible at times and its information neither current nor complete. 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 Federation Chamber of Commerce and Industry (UMFCCI), which principally includes domestic businesses. However, military authorities have summoned business leaders to make commercial demands 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 the regime’s economic policies that are heavily focused on preventing further capital flight yet continue to undermine the private sector, direct foreign investment, and Burma’s long-term economic growth. Regime-controlled media regularly praises PRC and Russian business cooperation without recognizing that state-owned enterprises (SOEs) and regime-affiliated cronies now control large sectors of the economy, undoing much of the liberalization of Burma’s economy over the past decade.

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, Burma 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 a 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. 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. 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 for approval.

Other Investment Policy Reviews.

In 2020, the OECD conducted an investment review for Myanmar, which can be found at: OECD Investment Policy Reviews: Myanmar 2020 | en | OECD .

In February 2021, the World Trade Organization produced a trade policy review for Myanmar based on pre-coup information, which can be found at: WT/TPR/G/405 (wto.org) .

Business Facilitation

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 are not fully operational. Many companies report difficulty accessing bank funds to pay employees and suppliers, and there is limited currency convertibility of the kyat to other more liquid currencies, including the U.S. dollar and Euro. Such foreign currency swaps are increasingly blocked by both the CBM for outbound funds transfers and correspondent banks for both inbound and outbound funds transfers without additional evidentiary support to justify the purpose of the funds transfer. 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, the military regime has blocked access to information at the “MyCo” since September 2022. The MyCo database previously offered detailed information about directors and shareholders including their ID numbers and birthdates, but this information has since been removed or limited to impede foreign financial institutions’ enhanced due diligence and to make the identification of company owners and directors difficult to those foreign jurisdictions attempting to sanction regime and regime-affiliated persons and entities.

The MIC is responsible for verification and approval of investment proposals above five million USD. 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 five million USD.

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 registered companies was 11,618 in 2022, 8,011 in 2021 and 15,080 in 2020.

Transparency of the Regulatory System

The military regime has not demonstrated an interest 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 the 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 the Attorney General reviewed and the Parliament discussed and then voted on. The current law-making process is opaque and the regime has made amendments to laws without public consultation.

Burma is not legally obligated to share regulatory development plans with the public, conduct public consultations, or offer advanced notification of rulemaking.

There is no 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 often 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 accessible or routinely posted.

There are no oversight or enforcement mechanisms to ensure the regime 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 instead incurring off-budget debt and using funds beyond those allocated in the budget. Prior to the coup, public financing and debt obligations, exclusive of contingent liabilities, were made public and transparent. Budget reports were published on the Ministry of Planning, and Finance website: https://www.mopf.gov.mm/ . Prior to 2021, the budget was published on the Ministry of Planning, Finance, and Industry website: https://www.mopf.gov.mm/my/content/budget-news . Since the coup, the military regime changed the fiscal year from October 1 to September 30 back to April 1 to March 31. The regime published two budgets: a six-month interim budget from October 2021 to March 2022 and a full budget year of April 2022 to March 2023.

Post-coup, the military has published a few budget documents including the budget law, supplementary budget, citizen budget, debt report, and quarterly execution budget reports. Budget proposals, state-owned enterprise (SOE) financial statements, and end-of-year reports are no longer available. Details regarding the budget allocations for defense expenditures are not transparent, a problem that has been exacerbated since the military coup. Burma publishes its debt obligation report on the Treasury Department’s website: https://www.mopf.gov.mm/my/page/finance/ . The Public Expenditure and Financial Accountability (PEFA) program last reviewed Burma’s public finance system in 2020.

The military regime does not promote or require environmental, social, and governance disclosure to help investors and consumers measure investment social and environmental impacts; governance of investment activity post-coup is no longer predicated on the rule of law. 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. There is significant illegal mining of gold, gems, and rare earths even though Burma is/was a member of the Extractives Industry Transparency Initiative (suspended since the coup).

International Regulatory Considerations

Burma has been a member of the Association of Southeast Asian Nations (ASEAN) since July 1997. 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 regulations, however, do not conform to ASEAN’s regulatory standards or international norms.

Burma’s regulatory system contains a unique mix Burma-developed standards and those left from its time as a British colony. 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. That reform has since been reversed, and imports today require regime permission through a difficult-to-obtain import license, the requirements for which may change by the month if not week and present considerable spoilage risk to companies importing products with a limited shelf-life or requiring uninterrupted, cold-chain storage.

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

Legal System and Judicial Independence

Burma’s legal system is a unique combination of customary law, English common law, statutes introduced in the pre-independence India Code, and post-independence legislation. Where there is no statute regulating an issue, courts are to apply Burma’s general law, which is based on English common law as adopted and modified by local case law.  Each state and region has a High Court, with lower courts in each district and township. The President appoints High Court judges while the Chief Justice through the Office of the Supreme Court of the Union appoints district and township judges. 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 pliable to regime interests. The military regime subsequently placed dozens of 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 imposition of martial law has expanded to more jurisdictions through March 2023, to the point that military courts now represent a parallel judiciary in Burma that regularly try civilians for a variety of alleged criminal infractions, ranging from minor offenses such as possessing a VPN on a phone to terrorism.

The regime’s 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. Commander-in-Chief Min Aung Hlaing  appointed the current Attorney General, Dr Thida Oo, the day after the coup. The Attorney General’s Office was reorganized as a ministry  on August 30, 2021. On January 31, 2022, the Office of Foreign Assets Control (OFAC) added Attorney General Dr. Thida Oo to its Specially Designated Nationals, i.e., sanctions 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, so 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. However, the Arbitration Law does not eliminate all risks. There is a limited track record of enforcing foreign arbitration awards in Burma and inherent jurisdictional risks remain in any recourse to the local legal system. Most foreign businesses seek arbitration in a third country, despite the risk that the award will or cannot be enforced in Burma.

Certain regulatory actions are appealable and are adjudicated with the respective regime 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 an administrative decision. The ministry may amend, revoke, or approve any decision made by the regulatory body. This decision is considered final and conclusive.

Laws and Regulations on Foreign Direct Investment

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) – 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.

Competition and Antitrust Laws

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 regime’s 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. Post-coup, foreign companies, particularly in the telecom and energy sectors, have divested hundreds of millions of dollars in telecom and energy infrastructure at fire-sale prices, resulting in further market consolidation. In other areas like aviation, where there is one private company and one SOE share in the market, market competition is more of an illusion, and there is no active regulator in Burma to protect consumers and foreign companies from monopolistic practices.

Expropriation and Compensation

The 2016 Myanmar Investment Law (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 stipulates that Burma will not terminate an enterprise without reasonable cause, and upon expiration of the contract, an investor is guaranteed 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.”

Despite the MIL, Burma has a history of asset expropriation, particularly when under the rule of a military regime. There is a significant risk of nationalization and expropriation by the military regime, particularly in the energy, 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. Both foreign-owned mobile telecom firms decided to depart Myanmar and have sold or are now selling their assets for roughly 10 percent of their investment.
The military regime has threatened private banks with nationalization and threatened to transfer certain deposits in private banks to state-owned or military-affiliated banks. In addition, security forces have cut private companies’ communications without notice, and the military regime’s onerous restrictions and suspension of mobile internet service has deprived private telecommunication operators and internet service providers of their property without compensation. The military regime has also banned many private media print outlets from publication and restricted citizens’ access to foreign websites and cloud services.

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. In 2016, the 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 or dispute settlement proceeding at the WTO.

Burma does not have a Bilateral Investment Treaty or Free Trade Agreement with the United States.

There are no reported investment disputes by U.S. persons against the government of Burma.

International Commercial Arbitration and Foreign Courts

Under the 2016 Arbitration Law, local courts must recognize and enforce foreign arbitration awards against the government unless a valid ground for refusal to enforce the award exists. Valid grounds for refusal include: one or more parties’ inability to conclude an arbitration agreement; the invalidity of the arbitration agreement; lack of due process if the award falls outside the scope of the arbitration agreement; the arbitration was not in compliance with the applicable laws; or the award is not in force or has been set aside.

There is no public record of foreign investor disputes with state-owned enterprises.

Bankruptcy Regulations

In February 2020, 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 law encouraged debtors to enter a voluntary yet legally binding arrangement with their creditors. This agreement allows part or all 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.

Investment Incentives

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

Foreign Trade Zones/Free Ports/Trade Facilitation

Burma has three Special Economic Zones (SEZs) – 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.

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. In August 2021, the regime recommended private banks name a citizen of Burma 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 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.

Business travelers may receive e-visas. Some 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 Internet Service Providers (ISP) to disclose subscribers’ identities and share data on websites frequented. In practice, virtual private networks (VPN) are rampant in Burma, so it is difficult for any ISP to know the location and identity of a user without correlating other user data, like a cell phone’s IMEI or SIM registration number linked to a national ID. That said, the regime has access to sophisticated foreign surveillance tools and software and has the capability to monitor mobile phone conversations. There should be no expectation of privacy when communicating over phone or Internet in Burma. In January 2022, the regime proposed banning VPNs as part of an updated draft Cyber Security Law; however, the regime has yet to implement a VPN ban but has used possession of VPN software on a cell phone as a basis for arresting and trying civilians in areas under martial law.

Real Property

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 no reliable recording system.

The Myanmar Investment Law allows foreign investors to 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 depressed 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, Burma 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 titles to lands for investment and infrastructure construction. However, controversy still 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 real property title chains are not well established, particularly following a half-century of repeated military expropriation and civilian displacement. It is not uncommon for foreign firms to face complaints and protests from local communities about inadequate consultation and compensation regarding land rights.

Because of opaque land titling and unclear ownership, squatters are de facto permitted to adversely possess and use land that is unoccupied or land where ownership is contested following an established history of living on that property.

Intellectual Property Rights

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

Prior to the coup, Burma had expanded its legal intellectual property protections, but enforcement was limited. Burma’s Parliament passed four intellectual property laws (IPR) in 2019 – the Trademark Law, Industrial Design Law, Patent Law, and Copyright Law. The regime announced in notification No. 82 on March 10, 2023, that the Trademark Law will take effect on April 1, 2023. Prior to the announcement, the Intellectual Property Department under the regime Ministry of Commerce, held a seminar at the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) on trademark law and announced additional trademark regulations. The IPR registration system will be implemented in four phases:

1. Soft opening (which started October 2020) and online filing of trademarks registered under the 1908 Myanmar Registration Act.
2. The opening of the registration system for payment of fees and appointment of representatives via filing of TM-2 Form, to begin in May or June 2023.
3. Opening of the registration system with both the old and new trademarks able to be registered on an ongoing basis at a time to be determined.
4. Establishment of the registry for Myanmar Copyright Law and Industrial Design Law, tentatively scheduled for 2024.

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. 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 does not record the value of the amount seized.

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/  .

Capital Markets and Portfolio Investment

The military regime’s attitude towards foreign portfolio investment is unknown but can be assumed to be hostile to any foreign investment from investors in countries and regions seeking to impose significant economic costs on the regime. In addition, funds transfers through Singapore and other countries that maintain correspondent banking relations with Burma banks are increasingly restricted due to anti-money laundering and countering of financing of terrorism controls. Previously, Burma 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 Myanmar (SECM) announced that foreign individuals and entities are permitted to hold up to 35 percent of the equity in companies listed on the Yangon Stock Exchange.
Burma also has a very small publicly traded public 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 CBM issues government treasury bonds with maturities of two, three, and five years, though such issuances are likely to depend on CBM’s access to its foreign reserve accounts. If such foreign accounts become inaccessible or restricted, then repayment of any principal and interest will become increasingly uncertain.

The CBM sets commercial loan interest rates and saving deposit rates that banks can offer, so banks cannot conduct risk-based pricing when extending credit and private banks’ credit is not strictly allocated and priced at true market rates that compensate banks and investors for repayment, regulatory, and inflation risks. Foreign direct investors generally do not issue debt instruments in Burma and seek financing from outside the country, in part, because of Burma’s currency and regulatory environment.

Money and Banking System

There is limited penetration of banking services in the country, but the usage of mobile payments had grown rapidly. A government 2020 census found 14 percent of the population had access to a savings account through a traditional bank. The banking system remains 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.

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 banks in Burma, though U.S. banks often serve as clearinghouses for Burma banks’ correspondent banks in third countries. U.S. dollar-denominated transactions to or from correspondent banks on behalf of or to or from Myanmar persons and entities are subject to enhanced due diligence and additional regulatory risk, both from the U.S. financial regulator FinCEN but also Financial Action Task Force (FATF) recommendations. FATF blacklisted Burma in October 2022 for inaction on its action plan to address anti-money laundering and countering of financing of terrorism risks that its banks pose to the international banking system.

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.

Foreign Exchange and Remittances

Foreign Exchange

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. Following the coup, a shortage of U.S. dollars, cash withdrawal limits, CBM restrictions on holding foreign currency, and restrictions on inbound and outbound transfer of foreign currency have further limited investors’ ability to conduct foreign exchange transactions and other necessary business operations to pay salaries in Burma and vendors and business units abroad.

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 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, a draft loan agreement, and a recent bank credit statement.

In April 2022, the regime formed the Foreign Exchange Supervisory Committee (FESC) to approve foreign currency conversion, make exemptions to foreign exchange restrictions, supervise foreign currency use on imports and permit overseas foreign currency transfers.

In April 2022, the Central Bank fixed the exchange rate at 1850 kyat/1 USD. In August 2022, CBM changed the fixed exchange rate at 2100 kyat/USD. As of March 2023, the black-market exchange rate was around 2860 kyat/1 USD, meaning the CBM earns the difference between the fixed rate and market rate on all imports. Foreign currency conversion rules and the lack of notice and due process around these CBM rules are perhaps the most significant form of taxation and expropriation in Burma post-coup and should be seriously weighed in any decision to maintain or wind down operations in Burma. The U.S. Embassy cannot assist U.S. companies in obtaining import permits or in accessing foreign currency to pay foreign vendors or creditors abroad in more liquid foreign currency, including U.S. dollars.

Remittance Policies

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 is also reflected in the continued use of informal remittance services (such as the “hundi system,” also known as “hawala” elsewhere) 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 inbound and outbound hundi transfers that entail sharing with the Central Bank data on the identities of persons and entities conducting such transactions. To date, eleven companies have received remittance/hundi business licenses.

Sovereign Wealth Funds

Burma does not have a sovereign wealth fund.

Privatization Program

The military regime has not publicly announced any plans or timelines 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, but the regime halted those plans.

Climate Issues

With funding from the European Union, UN-Habitat, and UN Environment, the Ministry of Natural Resources and Environmental Conservation (MONREC) released its Myanmar Climate Change Policy, Strategy and Action Plan for 2018-2030. The Myanmar Climate Change Strategy was prepared in close consultation with national and local stakeholders representing a cross-section of government institutions, national non-governmental organizations (NGOs), communities, the private sector, development partners, professionals, and academia, covering a wide range of sectors, under the civilian government. Following the 2021 military coup, UN agencies suspended current climate projects. MONREC staff have recently lamented to the Embassy that they have limited capacity due to limited resources, personnel, and political will.

Additional Resources

UN-Habitat

• Myanmar Climate Change Policy ( https://unhabitat.org/myanmar-climate-change-policy )
• Myanmar Climate Change Strategy (2018-2030) ( https://unhabitat.org/myanmar-climate-change-strategy-2018-2030 ).
• Myanmar Climate Change Master Plan (2018-2030) ( https://unhabitat.org/myanmar-climate-change-master-plan-2018-2030 ).