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Foreign Investment


Overall investment climate

The Government of Myanmar has taken measures to encourage foreign investment, most notably with the promulgation of the Foreign Investment Law in November 1988. In an effort to dispel any concerns about the country’s prior history of socialism and nationalization, the investment law guarantees against the nationalization and expropriation of foreign investments. In 1994, Myanmar furthered the scope of the FIL by promulgating the Myanmar Citizens Investment Law. The goal of this law was essentially to promote internal investment. Generally, the law dictated a national desire to increase technology, education, employment opportunities, private sector presence, import substitution, and export expansion. The method of achieving these goals was similar to the FIL, i.e. through tax exemptions as well as protection against nationalization. The government is responsible for ensuring that the country at large acquires some of the benefits of foreign investment, and therefore some of the seemingly disadvantageous policies (from the perspective of foreign investors) can be legitimized. However, the Myanmar government faces a monumental task in overcoming the reluctance of many foreign firms to investment in Myanmar, particularly the ones in Western Europe and the United States. Rectifying the situation will not be easy. Western European and American firms face extreme pressure not to invest in Myanmar, despite their desire to take advantage of the available natural resources, because of political differences between the Myanmar government on the one hand and many Western governments and activist organizations on the other. In some cases American firms have been penalized for business activities in Myanmar, and even though most of those laws have been struck down by the United States' courts as unconstitutional, consumer boycotts and other forms of pressure dissuade firms from entering the Myanmar market. Another major obstacle obstructing the flow of foreign investment is the overall legal and regulatory framework. Myanmar has made great strides in the past 13 years towards building a market economy, but numerous regulations remain on the books that seriously impede foreign investment. One of the most evident examples is the exchange rate system. The dual and sometimes triple exchange rates raise valid concerns among foreign investors who insist on a rational and consistent exchange rate system for conducting their activities. The wide disparity in the formal and informal exchange rates creates a multitude of problems for finance managers and bookkeepers. Difficulties in accessing foreign exchange within Myanmar is also a hindrance to investors, as only state-owned banks are allowed to deal in foreign exchange.

Foreign investment law and procedures

Investors should acquire copies of the full text of the investment laws, procedures, and regulations. The "package" of legislation and regulations includes: 
• The Union of Myanmar Foreign Investment Law (FIL) (1988) 
• Procedures Relating to the Union of Myanmar Foreign Investment Law (1988) 
• Form for theProposal of the Promoter to Make Foreign Investment in the Union of Myanmar 
• Types of Economic Activities Allowed for Foreign Investment (1989)
(i) Form of organization
Foreign investors can set up a business in two different ways. First, the enterprise can be 100 percent foreign owned, whereby the foreign company brings in the total amount of capital to establish the branch office. The second version is the joint venture with domestic companies, individuals, government enterprises, cooperatives, or a combination acting as the partner. In this case, the foreign partner must assume at least 35 percent of total equity capital. A foreign investor can enter into a partnership with his local counterpart or set up a limited liability company with shares held by local investors. The minimum amount of capital to be eligible under the FIL is US$500,000 for industry and US$300,000 service organization.
(ii) Eligible sectors
The State-Owned Economic Enterprise Law (SOEE) originally reserved 12 specific sectors for state-owned enterprises (SOEs): 
• Extraction of teak and sale of the same in the country and abroad 
• Cultivation and conservation of forest plantation, with the exception of village-owned firewood plantations cultivated by the villagers for their personal use 
• Exploration, extraction, and sale of petroleum and natural gas and the production of the same
• Exploration and extraction of pearls, jade and precious stones and their export 
• Breeding and production of fish and prawns in fisheries which have been reserved by the government 
• Postal and telecommunication services 
• Air transport and railway transport services 
• Banking and insurance services 
• Broadcasting and television services 
• Exploration and extraction of metals and their export 
• Electricity generating other than those permitted by law to private and cooperative electricity generating service 
• Manufacturing of products relating to security and defense which the government has prescribed by notification However, the government has liberalized most of these areas and allows at least joint ventures with the government in a majority of the cases. Investors need to acquire permission to enter these sectors under Section 4 of the State-Owned Economic Enterprises Law.
(iii) Incentives
Various incentives are offered to foreign investors, but because these can change regularly it is important to contact the MIC for the current package. All firms investing through the Foreign Investment Law are subject to a 30 percent tax on gross profit, but typically a three-year tax holiday is offered once the firm begins commercial activities.
A foreign investor who invests and operates under the Foreign Investment Law has the right to enjoy appropriate economic benefits particularly in the form of tax incentives. Some investment incentives include: 
• Exemption from income taxes for up to three years (renewable) 
• Accelerated depreciation of assets 
• A reduction of up to 50 percent on income taxes due on product exports from Myanmar 
• Exemption from customs duty on machinery and other capital goods imported as part of operation 
• Government guarantees against nationalism 
• Repatriation of profits and invested capital 
• Losses carried forward for up to three years 
• Exemption from customs duties on imported raw materials for the first three years of operation
(iv) Foreign investment application procedure (extracted from
Submitting a proposal:
A promoter must submit a proposal in the prescribed form to the Myanmar Investment Commission enclosing the following documents:
• Documents in support of the investor's financia l credibility (audited final accounts from the most recent year of the person or firm intending to make investment). 
• Bank recommendation regarding the business standing. 
• Detailed calculation relating to economic justification of the proposed project indicating, inter alia, estimated annual net profit; estimated annual foreign exchange earnings or savings as well as foreign exchange requirement for the operation; length of time to recoup investment; prospects of new employment; prospects of increased national income; local and foreign market conditions and distribution. If it is a hundred percent foreign investment, the investor must submit a draft contract to be executed with the organization determined by the Ministry concerned. If it is a firm, limited company or joint venture of any kind, a draft contract to be entered into between the foreign investor and local counterpart must be submitted. If it is a limited company or a joint venture in the form of a limited company, the investor must include in the application materials the draft Memorandum and Articles of Association.
Additional information must also be supplied, and thus investors should see Appendix 1 "Proposal of the Promoter to Make Foreign Investment in the Union of Myanmar".
Appraisal of the Proposal:
The Myanmar Investment Commission will scrutinize the proposal from the technical, financial, commercial, economic and social aspects within the framework of the policy objectives. Additional information may be requested by the MIC. Also, the Myanmar Foreign Commercial Bank will make inquiries with foreign banks regarding the business standing of the prospective investor.

The MIC scrutinizes the application based on the following criteria:
1. estimated annual net profit
2. estimated annual foreign exchange earnings and requirements
3. recoupment period
4. prospects of new employment
5. prospects of increased national income
6. local and foreign market conditions
7. requirements for local consumption
8. prospects of foreign exchange savings

Upon approval by the Commission, a permit is issued to carry out the business specifying the terms and conditions as required according to the type of business. Application for a Permit to Trade from the Ministry of National Planning and Economic Development at the time of incorporation of the enterprise with the Registrar of Companies: Essentially any enterprise which has obtained a permit from the MIC can start its business constituting itself as a sole proprietorship, a partnership or a limited company, or a branch office of a foreign company. A limited company which brings one hundred percent foreign capital, forms a joint-venture limited company, or a branch company is deemed as a foreign company under section 27 A of the Myanmar Companies Act, and accordingly it is required to obtain a Permit to Trade by applying to the Registrar of the Companies Registration Office of the Directorate of Investment and Company Administration of the Ministry of National Planning and Economic Development. However, a limited company that is a joint venture with a state-owned economic enterprise formed under Special Company Act 1950 is exempted from obtaining a Permit to Trade. 

The application must also include the following documents: 
•   Required particulars entered in Form A of the Myanmar Companies Regulation, 1957 
• The Company's drafts Memorandum of Association, Articles of Association or other instruments defining the constitution of the company 
• Duly completed questionnaire form prescribed by the Capital Structure Committee of the Ministry of National Planning and Economic Development 
• List of economic activities intended to be performed in Myanmar (including permission from the relevant ministry, if any) 
• Estimated expenditures to be incurred in Myanmar for the first year operations 

In the case of a foreign branch the following shall be furnished in addition to the above mentioned documents: 
• A copy of the head office's Memorandum and Articles of Association or of the Charter, Statute or other instruments constituting or defining the constitution of the company duly notarized by the Myanmar Embassy in the country where the company is incorporated 
• Copies of the head office balance sheet and profit and loss accounts for the last two financial years 
• Where the Memorandum of Association Articles of Association and other relevant documents are not originally in English, then the investor must provide authentication of the translation into English 
The Ministry of National Planning and Economic Development will issue the Permit to Trade after considering the recommendation of the Capital Structure Committee. In the case of a company that has received a permit from the Myanmar Investment Commission, the terms and validity of the Permit to Trade shall be the same. 

Registration of Business Organizations: 
• A sole proprietorship is not required to register at the Companies Registration Office. 
• A partnership firm may be registered, but registration is not compulsory. 
• A company limited by shares is required to register under the Myanmar Companies Act at the Office of Registrar of Companies Registration.
• A company with share contribution of the State shall be registered under the Special Company Act of 1950 and the Myanmar Companies Act as a “special company” in Myanmar on behalf of the company (for a branch office of a foreign company). 
• A company which comes under the definition of foreign company shall apply and obtain a permit from the Ministry of National Planning and Economic Development before registration. 

In applying for registration of a company or branch office of a foreign company, the following 
papers and documents shall be submitted: 
• Two sets of Memorandum of Association and Articles of Association duly stamped and printed both in Myanmar and English 
• Declaration of registration 
• Declaration of legal and official version of the documents 
• Declaration of the situation of registered office 
• Translation certificate by a competent translator 
• List of Directors and Myanmar for a company incorporated in Myanmar 
• List of person(s) authorized to accept services of process and notice 

For a public company the following additional documents shall be submitted before commencing the business: 
• List of persons to act as directors 
• List of persons who have consented to act as directors 
• Agreement to take qualification shares 
Registration Fees: 
For a partnership firm the registration fee is fixed at 45 kyat. For a company limited by shares, the registration fee ranges from a minimum of 600 kyat to a maximum of 15,000 kyat, depending upon the authorized capital of the company. It is calculated according to Table “B” of the Myanmar Companies Act.


Myanmar has 15 types of taxes and duties in four categories:
1) taxes on domestic production and public consumption;
2) taxes on income and ownership; 3) customs duties; and 4) taxes on the utility of state-owned property. The relevant tax legislation derives from several laws and related acts, namely the Income Tax Law (1974), the Profit Tax Law (1976), the Commercial Tax Law (1990) and its amendment in 1991, the Myanmar Stamp Act (1935), and the Court Fee Act (1937). The Internal Revenue Department under the Ministry of Finance and Revenue administers the tax legislation. The fiscal year begins on April 1 and ends on March 31 of the following year.
(i) Personal income tax
Income tax on salaries for foreigners range from 3 to 50 percent, but tax on foreigners employed on government projects receive a rate of 20 percent. For the rates, see Table 1. The employer must deduct the income tax from the salaries and send it to the Township Revenue Office.

Table 1. Tax rates on income 

Income Level (in kyat) Tax Rate (percent)
1 - 5,000 3
5,001 - 10,000 10
10,001 - 15,000 15
15,001 - 20,000 20
20,001 - 30,000 25
30,001 - 40,000 30
40,001 - 50,000 35
50,001 - 70,000 40
70,001 - 100,000 45
100,001 - 150,000 48
Over 150,001 50
Source: UMFCCI, 1999 Myanmar Business Directory 

Table 2. Withholding tax rates 

 Type of Income   For Resident Foreigners   For Non-Resident Foreigner
Interest 15% 20%
Royalties for use of license, trade-mark, patents, copy right 15% 20%
Payment on contracts with state agencies 3% 3.5%
Payment on work done for foreign contractors 2.5% 3%
Source: UMFCCI, 1999 Myanmar Business Directory 

Allowances are given for a spouse (2,500 kyat) and for children according to their age, with the latter rates ranging from 500 kyat to 1,000 kyat. The basic allowance is 20 percent of total income but maximum basic allowance is 6000 kyat. Several exemptions are available for foreign firms. The following items are among the most common exemptions, but investors should consult with the MIC for additional categories and for the ones for which they qualify: 1. Minimum three consecutive years tax holiday, starting from commencement of production or services 2. Exemption or relief on half of profits put back into the company within one year 3. Depreciation of capital assets 4. 50 percent relief on income tax on profits from export of goods produced by the firm 5. Allowances for research and development 6. Carry forward and offset losses for up to three consecutive years from first year of loss 7. Deduct income tax paid to the state on behalf of foreign employee from the assessable income of the enterprise 8. Exemption or relief on customs duties on machinery, components, spare parts, and other items imported during the construction period 9. Exemption or relief on raw materials imported during first three of production after completion of construction
Exemptions on income and allowable expenses include: 1. Dividends received and share profits 2. Expenses incurred in the production of income 3. Statutory contributions to the provident fund recognized by the Myanmar Income Tax Act Other exemptions include donations to religious or charitable organizations but not exceeding 25 percent of the income and depreciation and amortization of capital assets.
(ii) Business taxes
The Commercial Tax Law 1990 and its amendment in 1991 apply to the turnover of goods and services produced within Myanmar or imported from abroad. The commercial tax is an ad valorem tax on the point of sale except for the tax paid on imported goods, which is collected by the Customs Department. The tax levels vary from 0 to 200 percent and are listed in the various tax schedules contained in the legislation. Myanmar also has a commercial tax of 10 pe cent on hotel and restaurant services and for goods and services that go to the government.
(iii) Capital gains tax
The capital gains tax is determined by deducting the following items from the full value of the sales proceed of capital good: 1. The net remaining after deducting the total depreciation allowed under the Myanmar Income Tax Act from the total of the original cost to the assessee and any expenditure of a capital nature incurred for making any additions 2. Expenditures incurred in procuring the asset and in its sale, exchange, or transfer 3. Application of a flat rate of 10 percent on capital gains for resident foreign companies, but 40 percent for non-resident foreign companies 4. No tax is applied to the capital gains if the amount is less 50,000 kyat within one year

Foreign remittances

Regarding foreign remittance, Section 26 of the Union of Myanmar Foreign Investment Law stipulates that the following shall be transferable abroad in relevant foreign currency through the bank prescribed by the commission (Myanmar Investment and Commercial Bank and Myanmar Foreign Trade Bank) at the prevailing official rate of exchange: 
• Foreign currency entitled to by the person who has brought in foreign capital 
• Foreign currency permitted for withdrawal by the Commission to the person who has brought in foreign capital 
• Net profits after deducting from the annual profits received by the person who has brought in foreign capital, all taxes and the prescribed funds 
• Legitimate balance, after causing payment to be made in respect of taxes and after deducting in the manner prescribed, living expenses incurred for himself and his family out of the salary, and lawful income obtained by the foreign personnel during performance of service in the State

Labour issues

Labour issues in Myanmar are covered by several pieces of legislation dating back to the 1920s.
Employers should familiarize themselves with the following laws: 
• Employment Restriction Act, 1959
• Employment Statistics Act, 1948 
• Employment and Training Act, 1950 
• Factories Act, 1951 
• Minimum Wages Act, 1949 
• Payment of Wages Act, 1936 
• Shops and Establishments Act, 1951 
• Social Security Act, 1954 
• The Leave and Holidays Act, 1951 
• Trade Disputes Act, 1929 
• Workmen's Compensation Act, 1923 
Enterprises seeking five or more workers must apply to the Township Labour Office, which prepares a list of candidates with the requisite qualifications. The company can then choose workers from the township's list of eligible names. However, it is also possible in certain circumstances to recruit workers through employment agencies or by posting public notifications. Wages and salaries vary according to the private enterprise. Myanmar does not have a standardized minimum wage, but in some industrial estates the wages may be predetermined. Myanmar has had a Social Securit y scheme since 1954. Private firms with five or more employees must contribute two percent of their insured wages to Social Security, and the employee contributes 1.5 percent of his or her wages. The scheme entitles workers to sickness cash benefits, funeral grants, disability benefits, and a survivor's pension. Myanmar's Workmen's Compensation Act covers workers not under the Social Security system and who are injured or killed during their work duties. The typical working hours in Myanmar are based on the type of business activity. For companies, retail shops, services, and entertainment, the usual working hours are eight hours per day and 48 hours per week. In factories, oil fields, and above ground mines, the hours are 8 per day and 44 hours per week. Factories involved in continuous production will have a maximum of 48 hours per week. Lastly, underground mining has a limit of eight hours per day and 40 hours per week. People employed by private enterprises are entitled each year to six days of casual leave, 30 days of medical leave, 10 days earned leave, and 21 public holidays with wages. By law women are entitled to a paid maternity leave.


Foreigners seeking to acquire land have to apply to the Central Committee (which governs the allocation of land for agriculture) through the MIC. Once the right to use land has been granted, it cannot be mortgaged, sold, or transferred without the approval of the Central Committee. Leases are limited to 30 years, but they can be extended. Individuals and firms, whether foreign or domestic, that desire to invest in commercial agro-enterprises will be allowed to use the land as follows: 

1) Agriculture  
  a) Plantation crops 
  b) Orchards 
  c) Seasonal crops 
 5,000 acres
3,000 acres
1,000 acres
2) Livestock, poultry farming and aquaculture   
  a) Aquaculture 
  b) Livestock and Poultry Farming
     i) Buffalo, cattle, horses           
     ii) Sheep, goats 
     iii) Poultry, pigs
2,000 acres

5,000 acres
1,000 acres
500 acres

Rent for agricultural land per acre is as follows: 
• Perennial crop cultivation on fallow land US$8-15 
• Crop cultivation on deep water area US$8-20 
• Crop cultivation on fallow land in dry zone US$15-40 

Customs and Trade Procedures



Firms under the Foreign Investment Law that will conduct trade activities must register as an exporter-importer with the Export Import Registration Office, Directorate of Trade, Ministry of Commerce. The export procedures are detailed in the UMFCCI's 1999 Myanmar Business Directory. The following selection is extracted from that publication: 
1. A registered exporter must obtain an export license...laid down by the Directorate of Trade. No fee is charged for the issuance of an export license. 
2. In applying for an export license, the application shall have attached a sales contract or agreement and/or pro forma invoice mentioning detailed specifications with regard to grade, quantity, price, name of buyer and country, method of payment, shipment period, and destination. 
3. An irrevocable letter of credit has to be opened at the Myanmar Foreign Trade Bank by the buyer through correspondent or an acceptable bank. 
4. The vessel on which the cargo is to be shipped has to be nominated by the buyer. 
5. The Myanmar Port Authority has to be contacted for the shipment of cargo on F.O.B. basis. 
6. Pre-shipment inspection will be conducted by Inspection and Agency Services. 
7. Details of the cargo, such as shipping bills, other shipping documents, and customs pass must be presented to the Bank. 

As for the documentation required for exporting goods, a firm will need to submit the following: 
a) Export license/permit 
b) Invoice 
c) Packing list 
d) Sales contract 
e) Shipping instructions 
f) Letter of credit or General Remittance Exemption Certificate 
g) Payment advice for the Inward Telegraphic Transfer Private Number/Inward Telegraphic Transfer Government Number 
h) Sample of the goods Additional documents may be required for certain types of goods.

The customs duty on exports is 10 percent on export earning, comprising:
a) 8 percent commercial tax
b) 2 percent income tax

Only a few items are forbidden from export by private firms or face restrictions. Currently these include logs and rice, but the government does occasionally place restrictions on certain goods. Credit is also a key issue for traders. Export activities must be self-financed in most cases, as lines of credit from banks in Myanmar essentially require that trader have the required amount in hand already. 


The procedure for imports is outlined once again in the UMFCCI's 1999 Myanmar Business Directory: 
1. A registered importer is required to open a foreign exchange account at a bank in order to apply for an import license from the Directorate of Trade. 
2. In applying for an import license, the applicant shall attach the sales contract and/or pro forma invoice mentioning detailed specifications, mode of packing, and delivery phasing. 
3. Import license fees payable on the C.I.F (Yangon) value of the goods imported from abroad.  4. An irrevocable letter of credit has to be opened by the importer at the bank. 
5. If the purchase is made on F.O.B basis, the importer has to secure insurance from Myanmar Insurance and freight booking from Myanmar Five Star Line. 
6. After receiving shipment advice from the suppliers, the importer has to arrange for the clearance of the goods. Imports are subjected to an import license fee, which ranges from a minimum of 250 kyat to a maximum of 50,000 kyat. 

Certain goods are exempted under the following terms for foreign investment enterprises: 
1. Machinery, components, spare parts, and materials used during the construction phase and imported as foreign capital. 
2. Raw materials and packing materials imported during the first three years of commercial production after completion of construction. 
3. Medicine and selected pharmaceutical raw materials used in the manufacturing of medicines or for improving the public health. 
State-owned enterprises receive additional import license fee exemptions. 
As for the documentation required for importing goods, a firm will need to submit the following for customs clearance: 
a) Import license/permit 
b) Invoice 
c) Bill of lading or air consignment note 
d) Packing list 
e) Other documents as required Customs duties on imports were reduced in 1996 from the extremely high rates first enacted in 1992 under the Tariff Law. Customs duties now range from a low of 0.5 percent to a high of 40 percent, depending on the classification in the tariff schedule.
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