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Myanmar Business Guide
Third edition July 2015
1. Foreword 4
2. The economy 8
2.1 Economic prospects 9
2.2 Regulatory environment surrounding foreign investment 11
2.3 Major foreign investors in Myanmar 12
2.4 Key sectors for foreign investment 13
2.5 Domestic investments 14
2.6 Major deals in Myanmar 16
2.7 Special Economic Zones 18
3. Conducting business in Myanmar 19
3.1 Form of business 19
3.2 Foreign investment restrictions 22
3.3 Investment incentives 23
3.4 Investment guarantee and protection 26
3.5 New laws in pipeline 26
4. Accounting and audit regulations in Myanmar 27
4.1 Statutory requirements 27
4.2 Myanmar financial reporting standards 28
4.3 Books and records 29
5. Taxation in Myanmar 30
5.1 Corporate income tax 30
5.2 Personal income tax 36
5.3 Commercial tax 38
5.4 Other taxes 40
Table of Contents
Myanmar Business Guide 3
6. Human resources and employment law 41
6.1 Employment of foreigners 41
6.2 Work permit processing and requirements (Managerial, supervisor, expertise)
6.3 Labour Laws in Myanmar 42
6.4 Permanent residency in Myanmar 42
7. Other considerations 43
7.1 Commercial registration and licensing requirements 43
7.2 Exchange control 44
7.3 Foreign exchange 44
7.4 Foreign ownership of land and property 45
7.5 Arbitration law 45
7.6 Economic and trade 46
8. Banking in Myanmar 48
8.1 Financial structure of Myanmar 48
8.2 Capital markets 55
8.3 Foreign exchange rates 57
9. Country overview 58
9.1 Country snapshot 58
9.2 Brief history 60
9.3 Demographics 61
9.4 Political system and governance structure 62
Table of Contents
This is our third edition of the Myanmar Business Guide. Since our last Guide in early 2014, Myanmar has progressed quickly and we are pleased to incorporate both economic and political developments in our update.
Interested investors are heartened to note that great strides have been made on the economic front. Key initiatives include banking reforms which allow foreign banks to enter the market (albeit within a restricted capacity); drafting the new Myanmar Companies Act, which will modernise company structures (in particular foreign shareholdings in Myanmar companies); the new Myanmar Investment Law, which will merge the current Foreign Investment Law with the Myanmar Citizens Investment Law (to create a much more transparent investment environment and allow for a significant improvement in the investment incentives regime); and the planned opening of a national stock exchange in November 2015 (with the expectation of listing 5–10 qualifying companies). Taken in totality, these initiatives represent significantly improvements in the investment proposition for international investors since the re-opening of the economy in 2011 and compliments other investment infrastucture initiatives such as the Thilawa, Dawei and Kyaukphyu special economic zones.
On the political front, 2015 could be another watershed year for Myanmar. All signs point to a first free and fair election in over half a century. The election date has been scheduled for 8 November 2015. It will also be the first election after major political, economic and social reforms which transformed the country were undertaken in early 2011, and will be a litmus test of widespread support for these reforms going forward. The negotiation of lasting peace agreements with ethnic groups will also be a key political issue.
On a balanced note, substantial challenges remain. The country needs immediate investments in infrastructure in order to facilitate business investments. This will in turn create jobs for its people. In particular, power and commercial real estate are in critical short supply. Banking reform, slated in 2015, have quickened as both local businesses and foreign investors are hampered by the lack of local credit to finance their growth. Finally, besides the hard infrastructure, the country needs to invest in the soft infrastructure of human capital development and building of civil service competencies and institutions. These changes will go a long way to grow the country’s economy and to fulfill maximise its enormous potential.
We trust that this updated Guide will continue to guide you on your business ventures in Myanmar.
Myanmar Business Guide 5
PwC Myanmar is located at:
PricewaterhouseCoopers Myanmar Co., Ltd Room 9A, 9th Floor, Centrepoint Towers, No. 65, Corner of Sule Pagoda Road and Merchant Road, Kyauktada Township, Yangon, Myanmar
Jovi Seet Senior Executive Director PwC Myanmar Office: +959 440230 341 email@example.com
Jasmine Thazin Aung Director PwC Myanmar Mobile: +959 450023 688 firstname.lastname@example.org
Chris Woo Managing Director Tax Services PwC Myanmar (based in Singapore) Office: +65 6236 3688 email@example.com
Ong Chao Choon Managing Director Advisory Services PwC Myanmar (based in Singapore) Office: +65 6236 3018 firstname.lastname@example.org
Myanmar Business Guide 7
Commonly used acronyms Acronyms Definitions AEC ASEAN Economic Community CA Myanmar Companies Act CBM Central Bank of Myanmar CCTO Company Circle Tax Office CEPT Common Effective Preferential Tariff CRO Companies Registration Office DICA Directorate of Investment and Company Administration FEMB Foreign Exchange Management Board FEML Foreign Exchange Management Law FERA Foreign Exchange Regulation Act 1947 IFRS International Financial Reporting Standards ILO International Labour Organisation IRD Inland Revenue Department ITL Income Tax Law LTO Large Taxpayers’ Office MAC Myanmar Accounting Council MEB Myanmar Economic Bank MFIL Myanmar Foreign Investment Law MFRS Myanmar Financial Reporting Standards MFTB Myanmar Foreign Trade Bank MIC Myanmar Investment Commission MIL Myanmar Investment Law MMK Myanmar Kyat SCB State Commercial Bank SEE State-Owned Economic Enterprise SEZ Special Economic Zone YSX Yangon Stock Exchange
PwC service offerings: 1 Mergers and acquisitions advisory
2 Capital projects and infrastructure advisory
3 Market entry strategy and advisory
4 Initial public offer and other capital market services
5 Corporate governance and risk advisory services
6 Taxation, customs and excise duties advisory services
7 Assurance services
8 Business and technology consulting services
9 Human resources advisory and international assignment services
10 Incorporation and corporate secretarial services
11 Anti-corruption and corporate restructuring services
2. The Economy
Myanmar stands at a pivotal juncture amidst a slew of social, political and economic reforms. Since the era of civilian rule which began in 2011, the government has launched a series of progressive reforms, focusing on both on the political system as well as economic and social programmes.
The results are highly promising, with a general improvement in most economic and some social indicators. Myanmar’s well-known advantages— its huge growth potential as the last frontier economy in Asia, a youthful workforce, and ample natural resources—hold promise for the country to become one of the region’s major successes in time to come.
Myanmar is rich in natural resources, arable land, forestry, minerals, as well as freshwater and marine resources, gems and jade. In recent years, the country has also emerged as a natural gas exporter, with exports to neighbouring countries providing an increasingly important revenue stream.
There are visible signs of economic progress in Myanmar. For example, mobile phone services have never been more accessible. Myanmar has historically had the lowest mobile phone penetration in the region (with only under 10% of the population having access to mobile services). With the entry of Ooredoo and Telenor, telephone penetration is expected to grow to approximately 40% by 20171. Automated teller machines, which did not exist a few years ago, are starting to dot the major cities as well.
The economy is expected to grow by about 6.4% a year in the fiscal year ending 31 March 2015 (FY14). The economy continues to perform well: tourist arrivals were up by nearly 50% in 2014, foreign investment is poised to more than double in FY14 (compared with the previous FY) and two-way merchandise trade was up by more than 30% year on year in January- August 20142.
Myanmar Business Guide 9
2.1. Economic prospects
Growth is expected to accelerate to an expected 7.3% per year over the next 5 years, which will be driven mainly by foreign investment in large projects, particularly in heavy industries such as oil and gas, power and infrastructure. Despite the significant fall in global energy prices, recent oil and gas deals suggest that the medium- term prospects of Myanmar’s upstream oil and gas sector remain positive. The rapid growth of the telecommunications sector, with mobile network coverage of the population expected to grow from the current level of 12% to 70% by 2017, will also boost