Doing business in Myanmar involves navigating a complex and evolving legal and regulatory environment. While the country offers market potential, it is crucial for investors to be aware of the operational challenges, political risks, and the recent tightening of economic controls and foreign exchange restrictions.
Disclaimer: The business environment in Myanmar has faced significant challenges and instability in recent years, including increased economic mismanagement and a decline in the rule of law following the 2021 military coup. Many foreign companies have suspended operations or withdrawn. Enhanced due diligence and caution are essential, and consulting with local legal and financial advisors is highly recommended before undertaking any business activity.
Here is a general guide on how to approach doing business in Myanmar:
1. Understand the Business and Investment Environment
Before beginning, it is critical to:
- Acknowledge Risks: Be fully aware of the political instability, foreign exchange restrictions imposed by the Central Bank of Myanmar (CBM) that limit access to US dollars, and the overall difficulties for businesses in terms of energy and infrastructure constraints.
- Seek Local Expertise: Engage with local lawyers, consultants, and tax advisors to navigate the complexities, ensure compliance with local regulations, and understand the cultural context.
2. Company Registration and Structure
The primary government body for company registration is the Directorate of Investment and Company Administration (DICA).
A. Choose a Business Structure
The main options for business vehicles include:
- Private Company Limited by Shares: The most common structure. The Myanmar Companies Law (MCL) allows for a single shareholder and a single director.
- Foreign Branch: A foreign company can register a branch.
- Representative Office: A non-income generating office to promote the parent company’s business. Requires approval from the Myanmar Investment Commission (MIC).
- Other options: Public Company Limited by Shares, Company Limited by Guarantee, and Unlimited Company.
B. Company Incorporation
- Online Registration (MyCO): Company incorporation is primarily done online through the Myanmar Companies Online (MyCO) registry managed by DICA.
C. Director Requirements
- All companies must appoint at least one director who is “ordinarily resident” in Myanmar.
- An “ordinarily resident” person is one who holds permanent residency or is resident in Myanmar for at least 183 days in each 12-month period.
3. Foreign Investment Approval (MIC Permit/Endorsement)
Foreign investors may need approval from the Myanmar Investment Commission (MIC), as governed by the Myanmar Investment Law (MIL).
- MIC Permit: This is required for specific, high-priority, or sensitive investments, such as those that are:
- Strategic to the Union.
- Have large capital investments (over USD 5 million or MMK 600 million).
- Involve state-owned land.
- Are on a “negative list” of restricted sectors.
- MIC Endorsement: This is a streamlined, “fast-track” approval method for certain investment proposals that don’t meet the permit criteria but still seek the benefits and protections of the MIL (e.g., long-term leases).
4. Taxation and Compliance
- Tax Registration: After incorporation, you must register with the relevant Tax Office to obtain a Taxpayer Identification Number (TIN) and a General Index Registration Number (GIR), where applicable.
- Corporate Income Tax: Myanmar operates a one-tier corporate tax system.
- Commercial Tax (CT): Required for both resident and non-resident companies engaging in commercial activities.
- Financial Year: The mandatory financial year for all businesses is April 1 to March 31 (as of FY2022-2023).
- Filings: Companies must file corporate income tax returns and audited financial statements with the Inland Revenue Department (IRD).
5. Employee and Visa Procedures
- Labor Registration: Employees must be registered with the Labor Office in the relevant township.
- Foreign Employee Visas: Foreign employees require a Business Visa to work in Myanmar, with options for single or multiple entry and varying durations (e.g., 70 days, 3 months, 6 months, 1 year). Stay extensions can be applied for according to regulations.
6. Key Sectors for Investment
Before proceeding, any investment should be checked against the MIL’s negative list of prohibited/restricted sectors. Historically promising sectors include:
- Manufacturing: Particularly the Garment sector, which is a major job creator and export driver.
- Infrastructure & Construction: Significant needs exist across roads, railways, ports, airports, and residential sectors.
- Energy & Resources: High demand for electricity and a focus on expanding power capacity through natural gas, hydropower, and renewable energy.
- Agriculture & Agro-Based Industries: The sector is a major part of the GDP. Opportunities exist for value-added manufacturing, food processing, and high-yield cultivation.
- Telecommunications & Digital Services: Rapidly increasing mobile connectivity and internet penetration are driving growth in the digital financial services and ICT sectors.
- Healthcare: A largely untapped market with growing private sector expenditure and a need for private hospitals, clinics, and medical devices.