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Doing Business in Myanmar

Export Policy 

Myanmar's export policy is to export all exportable surplus and diversify foreign markets by using of natural and human resources. Increasing and diversifying exports and improving the quality of products are among the main objectives of the export promotion policy.

We give top priority for the development of agriculture as the base and all - round development of the economy as well. A number of new items in the manufacturing and processing sectors have been introduced in the past few years. Main export items include agricultural products, forest products, fishery products, metals & minerials, precious stones and industrial products. 

The registered exporter / importer has the right to do trading business. The registered exporters / importers are allowed to enjoy 100 percent export retention money for the import of goods. There exists no export quota nor ceiling for any exportable product or any individual or organization. 

Import Policy 

Regarding the import policy, import is allowed against the export earnings with a view to promote export and to overcome the balance of trade deficit problems. 

The private businessmen are encouraged to import capital goods, industrial machineries including raw materials and other essential items while the consumer choices can be fulfilled equally at the same time.

Licence should be applied for any export or import. The authority to issue export/import licences and permits is dedicated to Directorate of Trade and Department of Border Trade under the Ministry of Commerce. Directorate of Trade is authorised to issue export/import licences and permits for conventional export/import by overseas. The Department of Border Trade is authorised to issue export/import licences for overland trade with the neighbouring countries.

The validity of export / import licence / permit issued by the Directorate of Trade is three months from the date of issue, and it cannot be extendable.

Export licence fee is not payable on export of any commodity including agricultural crops. All the imports are subject to pay the licence fees, customs duty and commercial tax.

Customs duty together with the commercial tax are collected at the point of entry and the time of clearance of imported goods. Raw materials and other essential imports are taxed at very low rates, while the highest rate is applied to luxury items.

Commercial tax is levied according to the Schedules appended to the Commercial Tax Act 1991, and the rates vary depending on the types of goods and services. For the items not exempted from commercial tax, the rates of tax on imported goods are 5%, 10%, 20% 25% according to the respective schedule of goods. Another schedule represents specific types of foods such as cigarettee, liquor, etc. carrying rates above 25%.

Assessment of Import Duty is based on the assessable value, which is the sum of CIF value and the landing charge (0.5 % of the CIF value) for the goods imported. The commercial tax together with the custom duty are collected at the point of entry and the time of clearance of imported goods.

There are three state banks namely Myanma Foreign Trade Bank - MFTB, Myanma Investment and Commercial Bank -MICB and Myanma Economic Bank - MEB, conducting foreign trade transactions of the Union of Myanmar. MEB opens branch offices at the border checkpoints for the commercial transactions of overland trade with the neighbouring countries.

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Investment Environment 

Since the adoption of the market-oriented economic system, the Union of Myanmar Foreign Investment Law (FIL) was enacted on 30 November 1988, to induce foreign direct investment together with technology and also to mobilize its natural resources.

Policy objective underlyiung foreign investment are for:-

(a) promotion and expansion of exports;

(b) exploitation of natrual resources, which; require heavy investment;

(c) acquisition of high technology;

(d) supporting and assisting production and services involving large capital;

(e) opening up of more employment opportunities;

(f) development of works which would save enerby consumption; and

(g) regional development.

Formation of Myanmar Investment Commission

In order to oversee and administer the Foreign Investment Law (FIL) and Myanmar Citizen's Investment Law ( MCIL); the Myanmar Investment Commisssion (MIC) was formed with the Government jof the Union of Myanmar Notification No ( 7/94) on 3 August 1994. The commission was reformed with the Notification No.(59/99) on 3 December 1999. The Commission consistss of five full time members and five part time members. All of the members are Ministers.

The Myanmar Inkvestment Commission (MIC) is an initial apporving authority for fireign investment proposals just llike Board of Investment (BOI) of Thailand and Economic Developmkent Board (EDB) of Singapore. It kundertakes the responsibility to Trade Council and Cabnet.

Allowable Economic Activities

In order to j provide more specific guidance to foreign investors; a notification listing the types of economic activities allowed for foreign investment kh as been issued. It i s not an exhaustied list but it covers most aactivities with the exception of those reserved kunder the STate-owned Economic Enterprises Law ( SEE Law). However, if a foreign investor is inbte3rested in abn activity not speacified in the notification or an activity defined in the SEE Law, he can apply to MIC stating his ibnterest and resons as to why it will be mutuallky beneficial to the State and to himself for the activity to be undertaken. If MIC is satisfied that the proposed activity will indeed be in the interest of our Nation, it may put up the application for apporval from Trade Council and Cabinet.

Form of Organization

The FIL allows that foreign investment activities can be undertaken either in the form of wholly foreign - owned or a uoint venture with any Myanamr partner, either kan individual, a private company, a co-operative society or a State-owned enterprise. In all joint vnetures, the minimum share of the foreign party is 35 percent of the total equity capital. BOT ( Built Operate and TRansfer ) system is allowed for hotel and real estate project, while PSC ( Production Sharing Contract ) system is allowed for exploration and extraction of the natural resources.

Minimum Amount of Foreign Investment

Minimum foreign capital to be brought into Myanmar has been notified by MIC. It is US$ 500,000 for manufacturing and US$ 300,000 for services and it can be in kind and in cash. Duration of investment is at present, permitted by MIC according to the volume of investment.

Land Utilization

According to the existing land laws of Myanmar, a foreigner of foreign company cannot own land , but can lease for long-term period from the State for investment activities. Tkhe land lease rate is US$ 3 per qu.m per annum at the State-owned industry Zone.

Application Procedure

The potential investors shall submit a proposal to MIC in a prescribed form. The porposal has to be supported by the following documents:

(a) business profile and documents supporting financial credibility suchg as the lasted audited accounts of the person(s) or the firm intending to make the investment,

(b) bank reference and recommendation regardinjg the potential foreign investor's business standing;

(c) detailed calculation relating to t eh eaconomic justification of the proposed project;

(d) a draft contract to bed executed with a State organization that is responsible for the smooth operation of enterprise in the respecxtive fiedl if the poject is wholly foreign - kowned venture;

(e) a draft contract between the partners if the project is joint-venture;

(f) a draft land lease agreement ( if required )

(g) draft Memoradum and Articles of Association if the proposed joint-venture is in the form of a limitted company and

(h) an application for exembtions and releifs defined under Section 21 of the FIL.

Approval Process

The MIC Office makes a preliminary appraisal of the proposal. The proposal is kthen forwarded together with the views and comment to the MIC. Then MIC will scrutinize the proposal from the technical, financial, commercial, economic, social and j environment aspect within kthe framework of the policy objectives of t he FIL. After getting the approval from the Cabinet, MIC will issue the Permit with specified terms and conditions as required according to the type of business.

Incentives andf Guarantees

As the FIL is aimed at bringing in more foreign capital into the country, it j offers investment incentives and j guarantees to foreign investers. An enterprise permitted by the FIL shall enjoy a tax holiday period of three years inclusive of the year the enterprise commences its commercial operatio and also to resasonable period upon application. MIC may grant one or all of the following exemption and releifs:-

(a) exemption or releif from imcome-tax on reinvested profits within one year;

(b) accelerated depreciation rates approved by the Commission;

(c) fifty per cent relief from income - tax on profits accrues from exports;

(d) the right to pay income - tax on behalf of foreign experts and technicians employed in the business, and the right to deduct such payment from assessable income

(e) right to pay income - tax on the income of foreign employees at the rate applicable to Myanmar nationals,

(f) right to deduct Research and Development expen ditures from the assessable income

(g) the right to carry forward and set off losses up to three consecutive years from the year the loss is sustained;

(h) exemption or relilef from customs duty or other internal taxes or both on import of machinery, equipment, instruments machinery components spare parts and materials used in the business during the period of construction and

(i) exemption or relief on customs duty or other internal taxes or both on imported raw materials fro the first three years of commercial operation after completion of construction

The FIL provides an irrevocable State guarantee that an enterprose permitted by MIC

under the FIL shall not be nationalized during the permitted period or the extended period ( if

any). It also provides repatriation of profit ( after all deduction of all taxes and the prescribed

funds) as well as legitimate balance of salary and lawful income of foreign personal ( after payment

of living expenses and taxes). In the case of termination or dissolution of the business, repatriation

of foreign capital an also be allowed.

Priority Area for Foreign Investment

Resource-based heavy investment, resource-based export-oriented value added projects, labour intensive export-oriented projects are being given priority for foreign investment in Myanmar

Foreign Investment Inducement

Since the time FIL has been enacted, MIC has permitted 400 projects from 29 countries up to the end of September 2006. The leading sectors are Power, Oil & Gas Manufacturing, Real Estate, Hotel and Tolursim. Total amount of foreign direct inversment in these projects is US$ 13.85 billion

Major investors are ASEAN countries with the amount of almost half of the total investment. Thailand ranks first with the amount of US$ 7375.623 million, UK ranks second with US$ 1587.974 million, Singapore ranks third with US$ 1341.223 million, Malaysia ranks fourth with US$ 660.747 million and Hong Kong ranks fifth with the amount of US$ 504.218 million.

Among the ASEAN countries, Singapore, Thailand, Malaysia, Indonesia, Philippine and Brunei Darussalam and + 3 members, such as, Japan, China and Republic of Korea are doing investments in Myanmar. Among the BIMST-EC countries, Thailand, India, Bangladesh and Sri Lanka are doing investment in Myanmar.