country report - myanmar - building & construction authority
TRANSCRIPT
2013
International Development Group
Building & Construction Authority
Country Report - Myanmar
2
Table of Contents
I General Information
Government Structure
Population
Economic Indicators
Economic Sectors
4
6
7
8
4
II Economic Forecast
GDP Growth
FDI
Overview of the Construction Sector
SWOT
9
10
11
13
9
III The Construction Industry
Construction Share of GDP and Growth
Cost of Materials
Labour Cost
Estimated Construction Cost and Trends
Types of Available Projects
Business Culture
FDI by Sectors
Setting up Business or a company
Registration of a Company
Sectors where Singapore can engage in
Green Building Standards
14
15
16
17
18
20
21
22
24
27
28
14
IV BCA, MND, Industry Engagements and Issues 28
3
Visits
Projects done by Singapore Companies
28
28
V Conclusion 29
VI Embassy Information 29
VII Bibliography 30
Complied by : Yong Ser Joo
Date : Dec 2013
The information contained herewith is for general information only and it is not be construed as advice
of any kind. Accordingly BCA does not make any warranty, expressed or implied, regarding the
accuracy, correctness, completeness or use of any information depicted in this report. BCA will also not
assume legal or any liability for the use of any such information or acts or omissions committed as a
result of the use of this information.
4
I General Information
Government Structure
1 Myanmar, also known as Burma, is a unitary presidential constitutional republic,
where the executive power is exercised by the President, while the legislative power is
vested among the Pyidaungsu Hluttaw.
2 The President is both the head of state and the head of government, who
oversees the Cabinet. He is assisted by 2 Vice President.
Source: http://en.wikipedia.org/wiki/Thein_Sein
Fig. 1 – President Thein Sein of Myanmar [1]
Portfolio Minister
Minister of Agriculture & Irrigation Myint Hlaing, U.
Minister of Commerce Win Myint, U.
Minister of Communications & Information
Technology
Myat Hein, U.
5
Minister of Construction Kyaw Lwin, U.
Minister of Cooperatives Kyaw Hsan, U.
Minister of Culture Aye Myint Kyu, U.
Minister of Defense Wai Lwin, Lt. Gen.
Minister of Education Mya Aye, Dr.
Minister of Electric Power Khin Maung Soe, U.
Minister of Energy Than Htay, U.
Minister of Finance & Revenue Win Shein, U.
Minister of Foreign Affairs Wunna Maung Lwin, U.
Minister of Environmental Conservation &
Forestry
Win Tun, U.
Minister of Health Pe Thet Khin, Dr.
Minister of Home Affairs Ko Ko, Lt. Gen.
Minister of Hotels & Tourism Htay Aung, U.
Minister of Immigration & Population Khin Yi, U.
Minister of Industry Aye Myint, U.
Minister of Information Aung Kyi, U.
Minister of Labour, Employment & Social
Security
Maung Myint, U.
Minister of Livestock & Fisheries Ohn Myint, U.
Minister of Mines Myint Aung, Dr.
Minister of National Planning & Economic
Development
Kan Zaw, Dr.
Minister of Border Affairs Thet Naing Win, Lt. Gen.
Minister of Rail Transport Zayar Aung, U.
6
Minister of Religious Affairs Hsan Sint, U.
Minister of Science & Technology Ko Ko Oo, Dr.
Minister of Social Welfare, Relief &
Resettlement
Myat Myat Ohn Khin, Dr.
Minister of Sports Tint Hsan, U.
Minister of Transport Nyan Tun Aung, U.
Minister of President Office Thein Nyunt, U.
Soe Maung, U.
Soe Thein, U.
Aung Min, U.
Hla Tun, U.
Tin Naing Thein, U.
Union Auditor General Thein Htaik, U.
Union Attorney-General Tun Shin, Dr.
Source: http://en.wikipedia.org/wiki/Politics_of_Burma
Fig. 2 – The Cabinet of Burma [2]
3 The Pyidaungsu Hluttaw consists of the People’s Assembly (Pyithu Hluttaw) and
the House of Nationalities (Amyotha Hluttaw). The People’s Assembly consists of 440
representatives, where 110 of them are military personnel chosen by the Commander-
in-Chief of the Defense Services. The House of Nationalities consists of 224
representatives, where 56 are military personnel [2].
Population
4 The statistics on the population of Myanmar is taken from the estimate given by
the US Bureau of the Census, which gave their estimation based on statistics from
population censuses, vital statistics registration systems, or sample surveys pertaining
to the recent past and on assumptions about future trends.
7
Source: http://www.indexmundi.com/g/g.aspx?v=21&c=bm&l=en
Fig. 3 – Population of Myanmar from 2000 to 2012 [3]
5 In 2012, the population of Myanmar was estimated to be 54,584,650, which
placed it as the 24th most populated country in the world, a comparison among 239
nations. The annual population growth rate in 2012 is 1.07%, putting it in the 108th place
among the 231 nations in the world [4].
Economic Indicators
6 In 2012, the Gross Domestic Product (Purchasing Power Parity) of Myanmar was
estimated to be US$89.23 billion, placing it in the 77th spot among the 229 nations in the
world. The GDP per capita (PPP) was US$1,400 in the same year, where it was in the
low income category [4].
41.7 42 42.2 42.5 42.7 42.947.4 47.4 47.8 48.1
53.4 54 54.6
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Million Population
8
Economic Sectors
Source: http://www.economywatch.com/world_economy/myanmar/structure-of-economy.html
Fig. 4 – GDP Composition by Sectors in Myanmar [5]
7 Figure 4 shows that the primary (ie agriculture) sector contributes 42.9% to
Myanmar’s GDP. In 2001, the primary sector provided employment to 70% of the
country’s workforce, where rice was the main agriculture produce. The government has
provided loans to farmers to encourage growth in the sector.
8 The secondary sector contributes 19.8% to the country’s GDP and employed
only 7% of the workforce as of 2001. The industrial growth rate in 2009 was 0.2%,
where petroleum, liquefied natural gas (LNG), and minerals are the major industries in
the country. Government-owned factories and cottage industries are also involved in
large-scale tobacco production that contributed to the sector.
9 Contributing 37.3% to the country’s GDP, the tertiary sector employed 23% of the
workforce in 2001. Socio-economic conditions and poor infrastructure have crippled
Myanmar’s tourism industry, which used to contribute a significant share to the country’s
GDP. In addition, the banking industry is suffering from tight controls that restrict the
private sector’s access to formal credit. However, the country is now participating in
international trade travel shows and encouraging domestic travel agencies, airlines and
hotels to attract tourists for economic growth [5].
42.9
19.8
37.3
GDP Composition by Sectors
Primary
Secondary
Tertiary
9
II Economic Forecast
GDP Growth
Source: IMF – World Economic Outlook April 2012
Fig. 5 – Real GDP Growth of Myanmar from 2001 to 2011 [6]
10 The International Monetary Fund (IMF) projected a rise in Myanmar’s economic
growth rate to 6.25% in 2013 as a result of recent economic reforms and increasing
foreign investment in natural resources and commodities exports. The reforms
modernise and open up the country’s economy, which could facilitate strong and
inclusive long-term growth that reduces poverty and vastly improves the living standards
of the people [7].
11.312
13.8 13.6 13.613.1
11.9
3.6
5.1 5.3 5.5
0
2
4
6
8
10
12
14
16
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
% Real GDP Growth
10
Foreign Direct Investment (FDI)
Source: http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD
Fig. 6 – Net FDI Inflow to Myanmar from 1997 to 2011 [8]
11 Figure 6 shows that the net FDI was generally a downward trend from 1997 to
2006, with the exception in 2003. This was largely due to the sanctions imposed on FDI
by the United States (US). In the late 2000s, investments from ASEAN and China made
a considerable contribution to an increase in FDI inflows to Myanmar. However, the
country experienced a new slowdown in FDI in 2010 due to the global economic crisis
and sanctions on FDI imposed by Canada in 2007 and by the European Union (EU) in
2008.
12 Such economic sanctions caused multinational corporations (MNC) to pull out
investments from Myanmar. For example, Adidas and Levi Strauss shut down their
production plants, and stopped sourcing intermediaries and materials from the country
due to public pressure from human rights groups. Other firms such as Wal-Mart and
Tommy Hilfiger are also included. Consequently, FDI inflows to Myanmar from Western
countries fell sharply.
13 However, the interest of Asian countries was gradually increasing. Thailand was
the largest foreign investor among the ASEAN countries in Myanmar between 1988 and
2008, accounting for more than 50% of FDI inflows. However, recent data from the
391318
256 258210
152
251214 235
276
710
864
1080
901
1000
0
200
400
600
800
1000
1200
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US$ million Net FDI Inflow
11
Myanmar’s Ministry of National Planning and Development, which records the FDI
inflows to the country up to October 2012, indicated that the largest investor based on
cumulative amounts of investment has been China. The main sectors invested by the
foreign countries had been power, oil and gas, manufacturing, hotel and tourism, real
estate, and construction [9].
Overview of the Construction Sector
14 The Myanmar construction sector was valued at close to US$3 billion in 2012
and is expected to achieve an 8% compound annual growth rate (CAGR) and a total of
46% growth over the next five years to US$4.2 billion in 2016. The country has faced
trouble in achieving economic growth potential in part due to the mismanagement of
national finances, where its expenditure on military is large; amounting to 20-25% of the
total annual budget. In addition, the country is also affected by external debt, tax
evasion and corruption [10].
Source:http://newcrossroadsasia.com/main/images/myanmar%20macro%20-%20infrastructure%20-
%20preview.pdf
Fig. 7 – Market Contribution to Myanmar’s Construction Industry from 2007 to 2011 [10]
15 Figure 7 show that the residential and infrastructure construction markets
contributed a significant 77% of the total Myanmar construction industry in 2011. The
51 51 51 51 51
26 26 26 26 26
14 13 14 14 14
6 7 6 6 6
3 3 3 3 3
0
20
40
60
80
100
120
2007 2008 2009 2010 2011
Institutional
Commercial
Industrial
Infrastructure
Residential
12
residential construction market registered a CAGR of 11.31%, which was supported by
the country’s favourable demographics, expanding middle-class population and rising
housing demand. The market is anticipated to continue its growth and achieve a
projected CAGR of 7.18%.
16 The infrastructure construction market recorded a CAGR of 11.88%, the second-
largest share of the total Myanmar construction industry value in 2011. Increased
foreign investment in energy and hydropower, estimated at over US$2.5 billion in 2011,
helped the international investments in infrastructure development to reach a high level
in March 2012. The construction of roads and power plants to meet the infrastructure
needs of the country also help the market achieve a CAGR of 8.89%.
17 The industrial construction market increased in value at a CAGR of 13.13%,
which was mainly supported by the growth in refinery building, waste processing plant
and manufacturing plant categories. The market is anticipated to increase in value at a
CAGR of 8.21% due to Myanmar’s industrialisation and the construction of several
industrial zones across the country.
18 The commercial construction market registered a CAGR of 8.09%, which was
mainly driven by the leisure and hospitality and office categories. Furthermore, since the
2013 Southeast Asian Games (SEA Games) and 2014 Asian Summit will be held in
Myanmar, the demand for hotel and land has started rising in cities such as Yangon in
preparation for the anticipated influx of foreign investors and tourists to the country. As a
result, the contribution from tourism will be significant to the Myanmar commercial
construction activity.
19 The institutional construction market recorded a CAGR of 11.44%. Since the start
of democratic reform in 2011, the government has focused on developing several
industries, such as the education and healthcare industry, which received higher budget
allocations in 2012. As a result, the educational and healthcare building categories are
the largest in this market, where they accounted 82.4% of the total institutional
construction market value in 2011 and are anticipated to increase in value at a CAGR of
7.42% [11].
20 Presently, the construction sector is not organised. There is no registration
system that categorises contractors and builders. In addition, work site safety is lacking,
where workers are not using proper personal protection equipment, and there is no
authority to enforce work site safety. It takes approximately eight to nine months for the
Yangon City Development Committee (YCDC) to process and approve building plans
and designs. Some of the leading contractors in Yangon include Shwe Taung, Naing
Group, A1 Construction, Shine Group, Max Myanmar Group and Fatherland
Construction. Presently, contractors and architects are using the US or British Building
codes. The Myanmar National Building Code is expected to be ready very soon, which
will include the fire code as well.
13
SWOT
Strengths Weaknesses
- Myanmar people are
entrepreneurial and eager to learn
- Urban redevelopment is taking
place at a steady and consistent
pace
- Low labour cost
- Strong commitment to reform
- Large youthful population,
providing low-cost labor force
attractive to foreign investments
- Rich supply of natural resources -
land, water, gas, minerals
- Abundant agricultural resources
- Tourism potentials
- Government is dependent on
foreign advice and inputs
- Lack of financial resources
- Unskilled labour force
- Bureaucracy & red tape prevalent
- No proper guidelines, policies and
legal framework
- Weak macroeconomic
management and lack of
experience with market
mechanisms
- Underdeveloped financial sector
- Inadequate infrastructure,
particularly in transport, electricity
and telecommunications
- Limited economic diversification
- Lack of institutional capability to
regulate the construction industry
- The building construction
standards/codes not standardized
- Shortage of skilled workers.
- Heavy equipments is limited
- Access to capital and appropriate
partners could be difficult
14
Opportunities Threats
- Myanmar needs to upgrade its
infrastructure
- Strong demand for hotels, office
and residential units
- Strategic geographical location
- Potential for renewable energy
- Potential for investment in a wide
range of sectors
- Countries such as Japanese,
Korea and China are making a
strong presence in Myanmar
- Competition from other emerging
markets in IndoChina and South
East Asia are competing for FDI
- Risk of political changes ahead of
2015 general elections
- Risks from economic reform and
liberalization
- Risks from climate change
- Pollution from economic activities
- Tensions from different ethnic
groups
Source: Asian Development Bank
Fig. 8 – SWOT Analysis
III The Construction Industry
Construction Share of GDP and Growth
Source: Ministry of National Planning & Economic Development
Fig. 9 – Construction Share of GDP in Myanmar at Different Time Periods [12]
2.1
3.1
3.84.0
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2001-2002 2005-2006 2006-2007 2007-2008
% Construction share of GDP
15
21 Figure 8 shows that the contribution of the construction industry to Myanmar’s
GDP has been increasing from 2001 to 2008.
22 According to a recent report by the Economic Intelligence Unit, the construction
sector reflects the broader trend of decades of underinvestment for an economy that is
underdeveloped and small. Many local construction companies lack the technical
expertise and experience in undertaking large and complex construction projects.
23 The Myanmar construction industry increased in value at a CAGR of 11.48%
from 2007 to 2011. This growth was supported by the country’s improving political
stability, increasing number of investment opportunities in energy and public
infrastructure projects, and rapid inflow of FDI from Vietnam, Thailand, China,
Singapore and Malaysia. In particular, large rail, pipeline and hydropower projects have
attracted US$20 billion in FDI in 2011.
24 The growth in the construction industry is expected to remain strong, driven by
the government’s increasing expenditure on improving Myanmar’s public infrastructure,
and the rising interest of domestic and foreign real estate developers on constructing
residential units to meet the population’s huge housing demand. The industry is
expected to grow a CAGR of 7.8% over the next five years and the infrastructure market
is expected to experience the fastest growth due to the government’s focus on
developing the infrastructure to support the nation’s growth [10].
25 Furthermore, the commercial construction market consisting of leisure, hospitality
and office buildings recorded a CAGR of 8.1% between 2007 and 2011. This segment
of the market accounts for 67.2% of the commercial construction market value in
Myanmar. Since the 2013 Southeast Asian Games and 2014 Asian Summit in
Myanmar, demand for hotels in cities such as Yangon will be high.
Cost of Materials
26 It is common for building owners and developers to source for construction
materials such as titles, and fixture and fittings directly from manufacturers. In this case,
the contractor will only supply the manpower to complete the project. Most of the
16
construction materials and equipment are being imported from China. However, sand,
cement, and granite are locally available.
27 The average building construction cost is as follows:
Structure only – US$30 per sq ft
Basic finishing including M&E – US$40 – US$60 per sq ft
Materials Cost/ US$
Sand 14 per 100 cubic ft
Cement 5.8 per bag
Rebar 730 per ton
Aggregate 70 per 100 cubic ft
Ready Mix Concrete (Including Pump)
Grade 15K 64,000/ cubic metre 75 per cubic metre
Grade 25K 67,000/ cubic metre 79 per cubic metre
Grade 30K 73,000/ cubic metre 85.8 per cubic metre
Fig. 10 – Cost of Construction Materials
Labour Cost
28 Myanmar has an active workforce of 17.96 million, who are fairly well-trained and
skilled [13]. In appointing skilled citizen workers, technicians and staff for skilled jobs,
citizens shall have been appointed at least 25% within the first two‐year, at least 50
percent within the second two‐year and at least 75% within the third two‐year from the
year of commencement of the business.
17
Myanmar Thailand Vietnam Cambodia Minimum Wage per Month/ US$
32 253 96 66
Source: http://www.forbes.com/sites/connorconnect/2012/10/18/can-manufacturing-succeed-in-myanmar/
Fig. 11 – Minimum Wage per Month in Different Countries in 2012 [14]
29 Figure 11 shows that the minimum wages, not including allowances and overtime
pay, in Myanmar is comparatively low when compared with other countries in the region
in 2012. However, the country’s workforce is becoming increasingly dissatisfied with the
low wages and working conditions.
30 The 2011-2012 reforms, which involved the relaxing of government controls and
the right for labour to unionise and strike, have caused strikes to occur more commonly.
As a result, the government responded by setting a temporary minimum wage of US$32
per month, with a bill to make this wage a new minimum wage. Consequently, as this is
implemented throughout the region, the cost of labour in Myanmar will start to increase [14].
Workforce Wage/ US$ Blue Collar Unskilled Worker 100 Semi-skilled Workers 150 Supervisors/ Team Leaders 200-300 University Graduates with knowledge of computers & English
300-500
Source: http://www.investmyanmar.biz/MyanmarInvestments.php?PageId=555
Fig. 12 – Wages of Individuals with Different Qualifications in 2012 [15]
31 The wages of individuals with different qualifications vary, with blue collar
unskilled worker being paid US$100 per month while university graduates with
knowledge of computers and English getting US$300 to US$500 monthly. Generally,
unskilled labour receives US$3 per day, while skilled labour gets twice this amount.
Estimated Construction Cost and Trends
32 The estimated construction cost for residential buildings is between S$600 to S$800 per square meter.
18
33 Given the interest in Myanmar, it can be projected that the construction cost would be an upward trend.
Types of Available Projects
No. Type of Project Description Deadline
(a) Infrastructure – Roads &
Highways
Greater Mekong Sub-region
East-West Economic Corridor
Eindu to Kawkareik Road
Improvement
(b) Infrastructure – Roads &
Highways
Developing the Asset
Management Programme for
Myanmar Roads
© Infrastructure – Buildings Meeting facilities
(d) Energy, Power & Electrical,
Infrastructure & Construction
Mai Khot Power Station
(e) Energy, Power & Electrical,
Infrastructure & Construction
Dawei Power Station
(f) Energy, Power & Electrical,
Infrastructure & Construction
Htantabin Power Station
(g) Energy, Power & Electrical,
Infrastructure & Construction
Kalewa Power Station
(h) Infrastructure – Roads &
Highways
Greater Mekong Sub-region
East-West Economic Corridor
Extension into Myanmar
(i) Infrastructure & Construction Myanmar National Community
Driven Development Project
(j) Transportation – Ports,
Waterways & Shipping,
Infrastructure & Construction
Kaladan Multi-Modal Transit
Transport Project to link sea
route in Myanmar with
Mizoram
(k) Transportation – Ports,
Waterways & Shipping,
Construction of Sittwe Port
19
Infrastructure & Construction Project
(l) Infrastructure – Building,
Infrastructure – Bridges, Water
& Sanitation, Infrastructure &
Construction, Infrastructure –
Roads & Highways, Energy,
Power & Electrical,
Consultancy, Environment &
Pollution, Consultancy –
Engineering, Industry – Fire
Safety & Securities, Services
National Community Driven
Development Project
8 November
2013
(m) Infrastructure & Construction E| Large Grants
Source:
http://www.cwctenders.com/search.php?notice_type_new%5B%5D=1%2C2%2C3%2C7%2C10%2C11%
2C16%2C9%2C4%2C8%2C5§or=0®ion_name%5B%5D=MM&day=0&mon=0&year=0&t=&deadli
ne=select
Fig. 13 – Types of Available Projects in Myanmar [16]
34 Types of services provided by the Ministry of Transport:
(a) Airport Construction Investment & Terminal Operation Services
(b) Civil Aviation Training Services
(c) Aircraft Repair & Maintenance Services
(d) Selling & Marketing of Air Transport Services
(e) Computer Reservation System (CRS) Services
(f) Aircraft Leasing without Crew Services
(g) Aircraft Leasing with Crew Services
(h) Air Freight Forwarding Services
(i) Cargo Handling Services
(j) Aircraft Catering Services
(k) Refueling Services
(l) Aircraft Line Maintenance Services
(m)Ramp Handling Services
(n) Baggage Handling Services
(o) Passenger Handling Services
(p) Ground Handling Services
(q) Airport Hotel Services
(r) Aircraft Spare Parts Selling & Marketing Services
(s) Nautical Institute & Training School
20
(t) Shipping Agency Services for Foreign-Owned Ships
(u) Dockyard Services
(v) Water Transport related Services
(w) Construction of Buildings & other related business
35 Types of services provided by the Ministry of Construction:
(a) Establishment & Lease of Office/Commercial Buildings
(b) Building Design & Construction & other related Consultancy Services
(c) Construction of Factories, Installation of Machinery & Equipment &Test Run
(d) Mass Production of Building Materials to support Urban & Housing Sector
(e) Production of High Technology Prefabricated Building Materials
(f) Construction of Natural Disaster Resistant Buildings & related Infrastructure
using High/Modern Technology
Business Culture [17]
36 Myanmar society has traditionally been built on order, respect for elders and an
overarching respect for the Buddhist religion and the monks who represent it. The
people of Myanmar can be very friendly and helpful to visitors but they expect foreigners
to adapt to their codes of conduct. Politeness and respect should be the watchwords for
anyone visiting Myanmar, and discussion of politics should be avoided
37 The official language is Burmese but there are more than 100 different regional
dialects. Business meetings are usually conducted in English although it is advisable to
print a Burmese translation of your business card on the reverse as it will help to gain
respect from the business associate.
38 When introduced to people in Myanmar it is considered polite to refer to them by their full title and full name. Although Myanmar names can be long, they should never be shortened in address. There are many different honorific titles in the Burmese language, but the most commonly used among business associates are “U” which is the equivalent of “Mr,” and “Daw”, which can be interpreted as “Mrs”, “Ms” or “Madam”.
39 Business attire should be conservative and formal. As Myanmar has a hot, equatorial climate, lightweight suits for men would be acceptable, if worn with a tie. Women should wear either a skirt suit or a blouse and skirt. Ensure that the skirt is of a conservative length, usually below the knee is preferred, and avoid bright colors. Most businessmen in Myanmar will dress similarly when dealing with foreigners, but some may still wear the traditional sarong-type garment with a western shirt or blouse.
40 There are certain aspects of body language which, while perhaps not usually an issue in business meetings, is worth to pay special attention. For example, never point
21
at any image of the Buddha, and do not use the feet to point at anyone or anything as this is a serious insult. Indeed, the people of Myanmar consider the upper part of the body more sacred than the lower part, so a foreigner should not mix up things that are used for different parts of the body, such as towels or water basins. Do NOT touch anyone on the head or face as this is considered the height of rudeness.
FDI by Sectors
Source: http://www.oecd.org/investment/investmentfordevelopment/49972522.pdf
Fig. 14 – FDI Inflow by Sectors in Myanmar in 2012 [18]
41 Figure 14 shows that the power, oil and gas sectors attracted most of the FDI
inflow to Myanmar in 2012, where they made up about 80% of the total FDI inflow.
However, the construction industry contributed only small percentage of the total FDI.
46.68
34.17
6.91
4.35
2.63
2.61
0.8
0.78
0.48
0.43 0.090.06
FDI Inflow by Sectors
Power
Oil & Gas
Mining
Manufacturing
Hotel & Tourism
Real Estate
Livestock & Fisheries
Transport & Communication
Industrial Estate
Agriculture
Construction
Other Services
22
Setting up Business or a Company
42 According to the Foreign Investment Law, a foreign entity may establish its
presence in Myanmar as a limited liability company (private or public), a registered
branch and a representative office of a company incorporated outside Myanmar.
i) Limited liability company
- Basic Fundamental
43 A limited liability company may be 100% owned by foreign investors except
certain industries that are closed to private investment, where they can only be carried
out by the government. The government will 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.
44 There are two types of limited liability companies in Myanmar, namely a private
limited liability company and a public limited liability company. A private limited liability
company is required to have at least two shareholders and the number is limited to 50.
The transfer of shares to a foreigner is restricted. On the other hand, a public limited
liability company is required to have at least seven shareholders.
- Registration of foreign investment
45 Foreign investors may register their companies under the Myanmar Companies
Act (CA) or in conjunction with the Union of Myanmar Foreign Investment Law (MFIL).
46 Companies registered under the MFIL are eligible for tax incentives while those
registered under the CA are not. Both companies registered under the CA and MFIL are
allowed to undertake manufacturing activities and provide services. However, the
minimum foreign share capital for companies registered under the MFIL is US$500,000
for manufacturing and US$300,000 for service companies while for those registered
under the CA, it is only US$150,000 for manufacturing and US$50,000 for service
companies.
- Registration procedure of foreign investment under the MFIL
(a) Obtain a permit from the Myanmar Investment Commission (MIC)
(b) Apply for a permit to trade from the Directorate of Investment and Company
Administration (DICA)
(c) Apply for registration with the Companies Registration Office (CRO)
23
- Registration procedure of foreign investment under CA
47 A foreign company formed under the CA does not need to obtain a MIC permit,
and is only required to apply for a permit to trade and register with the CRO.
- Corporate structure
48 A minimum of two shareholders and two directors are required. There is no
requirement for the shareholders to be natural persons and directors to be residents in
Myanmar.
- Minimum share capital requirements
MFIL CA Manufacturing company US$500,000 US$150,000 Service company US$300,000 US$50,000 Source: http://www.pwc.com/sg/en/assets/document/myanmar_business_guide.pdf
Fig. 15 – Minimum share capital requirements for different companies formed under the MFIL and CA [19]
49 The registration fee of the incorporation of a company in Myanmar is US $2,500
ii) Branch of a company incorporated outside Myanmar
50 A foreign company can set up its branch in Myanmar. A foreign branch formed
under the CA does not need to obtain a MIC permit, and is only required to apply for a
permit to trade and for registration. The branch can be a manufacturing or a service
company.
51 However, a foreign branch formed under the MFIL is required to obtain a MIC
permit, in addition to a permit to trade and a registration certificate.
52 The registration fee payable on the registration of a branch in Myanmar is US
$2,500.
iii) Representative office of a company incorporated outside Myanmar
53 Foreign companies with business relations or investment projects in Myanmar
may apply to set up representative offices in the country. A representative office of a
company incorporated outside Myanmar is not allowed to perform direct commercial or
revenue generating activities in Myanmar. However, it is permitted to liaise with its head
office and collect data useful for the head office.
24
iv) Joint venture
54 Foreign investors can set up their business in the form of a joint venture, either
as partnerships or limited companies, with any Myanmar partner such as an individual,
a private company, a cooperative society or a state owned enterprise. In all joint
ventures, the minimum shareholding of the foreign party is 35% of the total equity
capital [18].
Registration of a Company in Myanmar
i) A step-by-step guide for starting a foreign-owned business in Myanmar
55 Myanmar offers two options to foreign investors who want to register a business
entity in a nation blessed with rich natural resources and famed for its inexpensive
skilled labour. Businesses that require substantial investment, such as manufacturing,
construction, mining, hotels & resorts, agriculture, transport, etc, need to be registered
under the Myanmar Foreign Investment Law (MFIL). However, foreign trading
companies and service providers can register under the Myanmar Companies Act
(MCA). Existing laws restrict trading activities by foreign companies.
ii) Registration under the Myanmar Foreign Investment Law (MFIL)
56 One hundred percent foreign-owned companies and joint ventures with the
Myanmar government or Myanmar nationals can be registered under the MFIL. For joint
ventures, the minimum foreign stake is 35 percent of the company’s share capital.
Despite the minimum specified capital requirement of US$ 500,000, in practice business
entities usually invest between US$ 1,000,000 to US$ 2,000,000, depending on the size
and nature of the investment project. In the case of joint ventures with the Myanmar
government, companies can opt for local company status under the Special Company
Act (1950).
57 The main stages for registering a company under MFIL are:
- Step-1: Applying for Myanmar Investment Commission’s (MIC’s) Permit
58 Companies under MFIL need to apply for a permit from the Myanmar Investment
Commission (MIC) before they are able to enjoy a three-year tax holiday (which is the
period of construction or the first three years of business). During this initial period,
qualifying companies are exempt from paying customs duty.
Essential documents required for this process are:
25
(A) Proposal to the Foreign Investment Commission in the prescribed form – Form I
(B) Draft contract or contracts, as the case may be (eg. JV Agreement)
(C) Draft Memorandum of Association and Articles of Association
(D) Feasibility Study and Profitability Projection Statement for the project period or first
ten years, including a “Cash Flow Statement”
(E) Bank reference regarding financial standing
(F) Lease of Land or Properties with maps etc.
(G) For a company, (i) last two years’ Annual Reports and (ii) Performance guarantee
- Step-2: Applying for ‘Permit to Trade’
59 Apart from joint ventures with the government, which are regarded as local
companies, every business entity needs a ‘Permit to Trade’, which is issued by the
Directorate of Investment and Company Registration (DICA).
60 The following documents are required for ‘Permit to Trade’ applications:
(a) A summary of intended business or economic activities
(b) Statement of estimated expenditure during the first year of operation
© Bank references that provide evidence of the financial standing of the subscribers to
the Memorandum & Articles of Association
(d) Power of Attorney in favour of the individual who signs the applications, if he or she
is not a subscriber to the proposed company’s Memorandum and Articles of Association
or one of its proposed directors
(e) If any of the parties is a company, a Board of Directors’ Resolution to incorporate a
Company in Myanmar
(f) If the Company will be incorporated as a subsidiary of an overseas company, signed
accounts of the parent company for last two years, authenticated and legalised. (If the
accounts are published and bound properly, notarization is not required)
26
61 On receipt of approval of the Permit to Trade application, ‘Conditions’ attached
must be agreed, signed and returned to DICA.
62 The minimum capital, as specified in the ‘Conditions’, must be brought into
Myanmar in two installments: the initial half before issuance of the permit, and the
second half within twelve months of issuance. The initial capital should be remitted
either to the Myanmar Investment & Commercial Bank or to the Myanmar Foreign Trade
Bank. The DICA issues the ‘Permit to Trade’ after receiving the credit advice from the
bank.
- Step-3: Incorporation
63 The application for company incorporation should be submitted together with a
photocopy of the ‘Permit to Trade’.
64 The following documents are required:
(a) A list of authorized people who can accept official notices
(b) Particulars of each Director including their address, occupation and nationality
© Passport copies of directors
(d) List of the shareholders and their shareholdings
(e)Particulars of each shareholder including their address, occupation and nationality
65 The estimated time required for company incorporation under MFIL is 4-6
months.
iii) Registration under the Myanmar Companies Act (MCA)
66 The minimum investment required for a foreign company under the MCA is US$
50,000. The registration process under this act involves the last two steps of the MFIL
company incorporation process. Under the MCA, the ‘Permit to Trade’ is valid for three
years. Renewal of the ‘Permit to Trade’ requires submission of the same (up-to-date)
documents as in the original application.
67 The incorporation process under the MCA takes 2-3 months.
27
Sectors where Singapore can engage
68 The Ministry of Construction of Myanmar is looking for good partners with the
right expertise to achieve equitable growth as it transitions into a modern economy. It
outlined two areas of focus in urban development:
(a) Developing a comprehensive urban development plan and a legal and financial
framework to promote home ownership and investments in the real estate sector.
(b) Building satellite cities and low-cost housing, including hotels, serviced
apartments and housing ranging from high-end condominiums to low-cost
projects.
69 The Myanmar government recognises the need for sustainable urban and
industrial development. Singapore companies’ expertise and experiences in long-term
planning and attracting investments can provide comprehensive solutions to meet the
country’s needs. These include master planning, project management, building and
construction, hospitality management and investment, as well as real estate
development.
70 Development in downtown Yangon is moving out to surrounding regions, leading
to new satellite cities and townships. The provision of green and reliable water and
energy solutions will also help ensure the sustainable growth of the industrial sector [20].
71 Areas where Singapore companies can engage include the following:
• Hotels • Residential/service apartments to cater for expatriates and wealthy locals • Office buildings • Construction equipments and materials; • Education and vocational training • Business consultancy • Environmental treatment services for items such as water and sanitation
Green Building Standards
72 Myanmar has yet to propose its own Green Building standard and hence it would
be an opportune time for BCA Green Mark to enter this market as soon as possible.
However, Myanmar may take some time to settle itself in the many areas and therefore
its engagement of green standard could take slightly longer.
28
IV BCA, MND, Industry Engagements and Issues
Visits
73 Singapore and Myanmar have been enjoying close ties for the past decade and
hence the political leadership has been keeping in close communication with their
counterparts in Myanmar. Mutual visits have been very common in the past two to
three years. In addition, the private sector has expressed interest to do business with
Myanmar.
74 On the other hand, BCA has not been organising many mission to Myanmar.
This is partly due to the fact that it would be undesirable to give the wrong impression to
the counterparts that the Singapore Government agencies are moving in a big way to
help the newly opened economy. The Minister (ND) has appointed CEO HDB to co-
ordinate the public sector’s effort to help Myanmar and hence public agencies are
expected to keep the supervising Ministry and co-ordinator informed in their dealing with
Myanmar.
75 Nevertheless, Myanmar is a market with huge potential and stepping up of effort
to engage Myanmar would be a step in the right direction.
Projects done by Singapore Companies
Companies Type of Engagement
Tiong Seng Overseas Training Centre (OTC)
Team Build OTC
Kian Heng Engineering Works OTC
Evan Lim Construction
Woh Hup Construction – Shangri La Development
SoilBuild Property Development
Ryobi-Kiso Piling Works
DP Architect Architecture Services
RSP Architect
Ong & Ong
29
HSL Marine Construction & Engineering
Top Global Engineering Construction & Property Development
Beca Carter Consultancy
Hexacon Construction Construction
Tham & Wong LLP Civil & Structural Consulting Services to the
Construction Industry
Tiong Woon Corporation Heavy Lifting Crane Rental
Sam Who Importing Sand
Fig. 16 – Singapore Companies involved in projects in Myanmar
V Conclusion
76 Development in Myanmar is progressing very rapidly to catch up on the lost time.
As Singapore political leadership has been widely accepted by the counterparts in
Myanmar as fiends due to the past support given to Myanmar during the earlier days, it
is relatively easier for Singapore companies to penetrate the market in Myanmar.
VI Embassy Information
Country Address Tel Fax Myanmar 15 St Martin’s Drive
Singapore 257996 6735 0209 6735 6236
30
VII Bibliography
Online Articles
Economy Watch Content. (2010). Myanmar Economic Structure. Retrieved from
http://www.economywatch.com/world_economy/myanmar/structure-of-economy.html [5]
The Irrawaddy. (2012). Burma’s GDP Growth to Rise to 6.25% Next Year, IMF Says.
Retrieved from
http://www.irrawaddy.org/archives/19519 [7]
Justin Kent. (2012). Can Manufacturing Succeed in Myanmar? Retrieved from
http://www.forbes.com/sites/connorconnect/2012/10/18/can-manufacturing-succeed-in-
myanmar/ [14]
Online Journals
Witada Anukoonwattaka & Mia Mikic & Martina Francesca Ferracane & Joana Maria
Tacken. (2012). Myanmar: Opening Up to its Trade and Foreign Direct Investment
Potential. 4, 5. Retrieved from
http://www.unescap.org/tid/publication/swp112.pdf [9]
Billy Selig & Fatin Mattar & James Leatham. (2012). Myanmar Research Series. 3, 4.
Retrieved from
http://newcrossroadsasia.com/main/images/myanmar%20macro%20-
%20infrastructure%20-%20preview.pdf [10]
Ong Chao Choon & Chris Woo & Jovi Seet & Lim Hwee Seng. (2012). Myanmar
Business Guide. 13, 14. Retrieved from
http://www.pwc.com/sg/en/assets/document/myanmar_business_guide.pdf [19]
International Enterprise Singapore. (2012). Myanmar Minister Welcomes Local
Companies’ Expertise at Business Dialogue by IE Singapore. 1, 2. Retrieved 4 March,
2013 from
http://www.news.gov.sg/public/sgpc/en/media_releases/agencies/ie%20singapore/press
_release/P-20120504-
1/AttachmentPar/0/file/MR01512_IE%20Myanmar%20Business%20Dialogue_2012%20
05%2004.pdf [20]
31
Websites
http://en.wikipedia.org/wiki/Thein_Sein [1]
http://en.wikipedia.org/wiki/Politics_of_Burma [2]
http://www.indexmundi.com/g/g.aspx?v=21&c=bm&l=en [3]
https://www.cia.gov/library/publications/the-world-factbook/geos/bm.html [4]
http://www.gfmag.com/gdp-data-country-reports/214-myanmar-gdp-country-
report.html#axzz2M9lrqng8 [6]
http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD [8]
http://marketpublishers.com/lists/13938/news.html [11]
http://www.interconsulting.com.sg/myanmar-business-opportunities.htm [12]
http://www.asean-china-center.org/english/2010-05/28/c_13321293.htm [13]
http://www.investmyanmar.biz/MyanmarInvestments.php?PageId=555 [15]
http://www.cwctenders.com/search.php?notice_type_new%5B%5D=1%2C2%2C3%2C
7%2C10%2C11%2C16%2C9%2C4%2C8%2C5§or=0®ion_name%5B%5D=MM
&day=0&mon=0&year=0&t=&deadline=select [16]
http://www.myanmars.net/myanmar-culture/index.htm[17]
http://www.oecd.org/investment/investmentfordevelopment/49972522.pdf [18]