Myanmar is rich in natural resources such as arable land, forestry, minerals, as well as freshwater and marine resources, gems and jade.
Reasons to invest in Myanmar
Myanmar, a country that has high potential for rapid growth and development given its rich natural resources, abundant labour force, and strategic location is gradually embracing wide ranging reforms.
The government is deepening and broadening management while facilitating trade and foreign direct investment (FDI) and removing structural impediments to growth by establishing physical and social infrastructure, building legal and institutional frameworks, and developing banking and financial sectors; causing the upbeat of recent near-term Myanmar’s economy outlook and pick-up of FDI flow, making it one of the next rising stars in Asia.
The economy is expected to grow 5.5%1 in the fiscal year ending 31 March 2014 due to higher investment in hydropower, natural gas and oil and commodity exports. Almost all the sanctions against Myanmar have been either lifted or temporarily suspended by the EU, the US, Australia and Canada.
Forms of doing business in Myanmar
Under the new Foreign Investment Law, an investment may be carried out in any of the following forms:
- Carrying out an investment by a foreigner with 100% of foreign capital on the business permitted by the Commission;
- Carrying out a joint venture between a foreigner and a citizen or the relevant government department and organization;
- Carrying out by any system contained in the contract which approved by both parties.
The form of investment shall be as a company in accordance with the existing law. If it is formed as a joint venture, the ratio of foreign capital and citizen capital may be prescribed with the approval of both the foreigner and citizen making joint venture. In reviewing investments by foreigners, the Commission shall prescribe the minimum amount of investment required depending on the sector and the nature of the business, with the approval of the Union Government. The foreigner may, if a joint venture is carried out with a citizen in a prohibited and restricted business, propose the ration of the foreigner as prescribed by the rule. Under section 20 of the Foreign investment rules, the maximum foreign investment capital ratio shall not be more than 80% of the total investment amount for a joint venture for the above restricted and prohibited business sector.
Limited liability company
A limited liability company may be 100% owned by foreign investors except in certain industries that
are closed to private investment and can only be carried out by the government. The government, on a
case-by-case basis, may permit these activities to be carried out by any person or economic organisation, with or without a joint venture with the government and subject to unspecified conditions.
There are two types of limited liability company in Myanmar, namely a private limited liability company and a public limited liability company. Currently, there are no public foreign companies in Myanmar. A private limited liability company is required to have at least two but no more than 50 shareholders. The transfer of shares to a foreigner is restricted. A public limited liability company is required to have at least seven shareholders.
Registration of companies
Foreign investors may register their companies under the Myanmar Companies Act (CA) or the Union of Myanmar Foreign Investment Law (MFIL). The main difference between the two is that companies registered under the MFIL are eligible for tax incentives whereas companies registered under the CA are not.
Registration of foreign investment under the MFIL involves the following steps:
- Obtaining a permit from the Myanmar Investment Commission (MIC)
- Applying for a permit to trade from the Directorate of Investment and Company Administration (DICA)
- Applying for registration with the Companies Registration Office (CRO).
A foreign company formed under the CA does not need to obtain an MIC permit, and is only required to apply for a permit to trade and then for registration with the CRO.
At least two shareholders and two directors are required. There is no requirement for the shareholders to be natural persons and there is no requirement for the directors to be resident in Myanmar or be Myanmar nationals.
Minimum share capital requirements
The level of minimum share capital requirements imposed on the companies varies depending on the types of activities that a company intends to undertake. For companies registered under the CA, the minimum share capital is US$150,000 and US$50,000 for a manufacturing company and a service company respectively.
For companies registered under the MFIL, the minimum foreign share capital will be as determined by the MIC, based on its own discretion.
Types of company Minimum foreign share capital
- Companies registered under the CA
- Manufacturing company US$150,000
- Service company US$50,000
Registration fees on the incorporation of a company are MMK1,000,000.
Branch of a company incorporated outside Myanmar
A foreign company can also set up its branch office in Myanmar. A foreign branch formed under the CA does not need to obtain an MIC permit, and is only required to apply for a permit to trade and then for registration. The branch is allowed to be formed as a manufacturing or a services company (for instance oil companies are set up mostly in the form of branches).
In contrast, a foreign branch formed under the MFIL is required to obtain an MIC permit in addition to a permit to trade and a registration certificate. Registration fees on the registration of a branch are 1,000,000.
Representative office of a company incorporated outside Myanmar
Foreign companies with business relations or investment projects in Myanmar may apply to open representative offices in Myanmar. In contrast with a branch, a representative office of a company incorporated outside Myanmar is not allowed to perform direct commercial or revenue generating activities in Myanmar. However, it is permitted to liaise with its head office and collectdata useful for the head office.
Foreign investors can set up their business in the form of a joint venture, either as partnerships or limited companies, with any Myanmar partner (an individual, a private company, a cooperative society or a state-owned enterprise).
An extensive list has been issued by the MIC with regard to the type of foreign investments allowed in the form of joint ventures with Myanmar partners with minimum shareholdings of 20%, examples include construction related to development of rail/road links, manufacturing raw materials for drugs, etc.