1. Country Profile Presentation: MyanmarBackgroundVarious ethnic Burmese and ethnic minority city-states or kingdoms occupied the present bordersthrough the 19th century. Over a period of 62 years (1824-1886), Britain conquered Burma andincorporated the country into its Indian Empire. Burma was administered as a province of India until1937 when it became a separate, self-governing colony; in 1948, Burma attained independence from theCommonwealth. Gen. NE WIN dominated the government from 1962 to 1988, first as military ruler,then as self-appointed president, and later as political kingpin. In September 1988, the military deposedNE WIN and established a new ruling junta. Multiparty legislative elections in 1990 resulted in the mainopposition party - the National League for Democracy (NLD) - winning a landslide victory. Instead ofhanding over power, the junta placed NLD leader (and Nobel Peace Prize recipient) AUNG SAN SUU KYI(ASSK) under house arrest from 1989 to 1995, 2000 to 2002, and from May 2003 to November 2010. Inlate September 2007, the ruling junta brutally suppressed protests over increased fuel prices led byprodemocracy activists and Buddhist monks, killing at least 13 people and arresting thousands forparticipating in the demonstrations. In early May 2008, Burma was struck by Cyclone Nargis, which leftover 138,000 dead and tens of thousands injured and homeless. Despite this tragedy, the juntaproceeded with its May constitutional referendum, the first vote in Burma since 1990. Parliamentaryelections held in November 2010, considered flawed by many in the international community, saw theruling Union Solidarity and Development Party garnering over 75% of the seats. Parliament convened inJanuary 2011 and selected former Prime Minister THEIN SEIN as president. Although the vast majority ofnational-level appointees named by THEIN SEIN are former or current military officers, the governmenthas initiated a series of political and economic reforms leading to a substantial opening of the long-isolated country. These reforms have included a senior-level dialogue with ASSK, re-registering the NLDas a political party, enabling party members, including ASSK, to contest parliamentary by-elections on 1April 2012, the release of many (but not all) political prisoners, preliminary peace agreements with somearmed ethnic groups, a reduction in media censorship, and an increasingly open debate in theParliament.Geographical LocationsSoutheastern Asia, bordering the Andaman Sea and the Bay of Bengal, between Bangladesh andThailand Total Area: 676,578 sq km where Land: 653,508 sq km Water: 23,070 sq km Climate Tropical monsoon; Cloudy, rainy, hot, humid summers (southwest monsoon, June to September); Less cloudy, scant rainfall, mild temperatures, lower humidity during winter (northeast monsoon, December to April)
2. Environmental Issues Deforestation; Industrial pollution of air, soil, and water; Inadequate sanitation and water treatment contribute to disease.Demographic StatisticsNationality : BurmeseTotal Population : 54,584,650 (July 2012 est.)Language : Burmese (official)Religion : Buddhist 89%, Christian 4% (Baptist 3%, Roman Catholic 1%), Muslim 4%, animist 1%, other 2%Age Structure : 0-14 years: 27.1% (male 7,534,762/ female 7,250,582) 15-64 years: 67.8% (male 18,385,523/ female 18,627,115) 65 years and over: 5.1% (male 1,213,487/ female 1,573,181) (2012 est.)Urbanization : urban population: 34% of total population (2010 est.)Literacy : Definition: age 15 and over can read and write Total population: 89.9% Male: 93.9% Female: 86.4% (2006 est.)Economic IndicatorsBurma, a resource-rich country, suffers from pervasive government controls, inefficient economicpolicies, corruption, and rural poverty. Despite Burmas emergence as a natural gas exporter, socio-economic conditions have deteriorated under the mismanagement of the previous regime.Approximately 32% of the population lives in poverty and Burma is the poorest country in SoutheastAsia. The business climate is widely perceived as opaque, corrupt, and highly inefficient. Wealth fromcountrys ample natural resources is concentrated in the hands of an elite group of military leaders andbusiness associates. In 2010-11, the transfer of state assets - especially real estate - to military familiesunder the guise of a privatization policy further widened the gap between the economic elite and thepublic. The economy suffers from serious macroeconomic imbalances - including multiple officialexchange rates that overvalue the Burmese kyat, fiscal deficits and lack of commercial credit furtherdistorted by a non-market interest rate regime, unpredictable inflation, unreliable economic data, andan inability to reconcile national accounts. Burmas poor investment climate - including weak rule of law- hampers the inflow of foreign investment; in recent years, foreign investors have shied away fromnearly every sector except for natural gas, power generation, timber, and mining. The exploitation ofnatural resources does not benefit the population at large. The most productive sectors will continue tobe in extractive industries - especially oil and gas, mining, and timber - with the latter two causingsignificant environmental degradation. Other areas, such as manufacturing, tourism, and services,struggle in the face of poor infrastructure, unpredictable trade policies, undeveloped human resources(the result of neglected health and education systems), endemic corruption, and inadequate access tocapital for investment. Private Banks still operate under tight domestic and international restrictions,limiting the private sectors access to credit. The United States, the European Union, and Canada haveimposed financial and economic sanctions on Burma. US sanctions, prohibiting most financialtransactions with Burmese entities, impose travel bans on senior Burmese military and civilian leadersand others connected to the ruling regime, and ban imports of Burmese products. These sanctions affectthe countrys fledgling garment industry, isolate the struggling banking sector, and raise the costs of
3. doing business with Burmese companies, particularly firms tied to Burmese regime leaders. Remittancesfrom overseas Burmese workers - who had provided significant financial support for their families - havedriven the Ministry of Finance to license domestic banks to carry out overseas operations. In 2011 thegovernment took initial steps toward reforming and opening up the economy by lowering export taxes,easing restrictions on its financial sector, and reaching out to international organizations for assistance.Although the Burmese government has good economic relations with its neighbors, significantimprovements in economic governance, the business climate, and the political situation are needed topromote serious foreign investment.GDP (Purchasing power parity)BDT 6,800 billion (2011 est.)BDT6,442 billion (2010 est.)BDT6,116 billion (2009 est.)GDP Per CapitaUS$880GDP Growth6.0% (2012)5.5% (2011)Inflation5.8% (2012 - 2013)4.2% (2011 - 2012)FDIUS$20 billion (pledged, 2010 – 2011)US$329 million (2009 – 2010)US$984 million (2008 – 2009)ImportsExportsUS$9.5 billion (2011)US$8.1 billion (2010)Largest export itemNatural Gas, US$2.94 billionUnemployment5.5% (2011)CurrencyMMK- Burmese Kyat
4. Business and Investment OpportunitiesUp to 2012 China is the top investing country and then Thailand, Hong Kong and Korea arebecome top investing countries in the countries that investing in Myanmar.In the total 31 of investing country, China is investing with 13.947 billion USD and got 34.4 %of total investment, Thailand got second with 9.568 billion USD, Hong Kong with 6.308 billionUSD, South Korea with 2.938 billion USD, British with 2.659 billion USD and Singapore with1.818 billion USD.Up to March, 2012, the total foreign investment in Myanmar is 40.699 billion USD.According to new law, the company which joint venture with foreign company will get 5 yearsfree of tax and 70 years permission to do company business.INTRODUCTIONMyanmar adopted the market oriented economic system in the year 1988 after adopting thecentralized planning economic system for more than two decades. Substantial stabilization andreform measures had been undertaken to be in line with the new economic system. The initialstep taken towards a more liberalized economy is to allow foreign direct investment and toencourage the private sector development. In the area of legal framework one of the first laws oninvestment promulgated by the State Law and Order Restoration Council is the Union ofMyanmar Foreign Investment Law (FIL), promulgated on 30th November 1988 to induceforeign investment and to boost investment particularly in the private sector.FOREIGN INVESTMENT ENVIRONMENT 1. Foreign Direct Investment Policy Myanmar foreign direct investment policy is a component of the overall restructuring anddevelopment policy of the Government. The main components of the policy are: (a) Adoption of market oriented system for the allocation of resources. (b) Encouragement of private investment and entrepreneurial activity. (c) Opening of the economy for foreign trade and investment.
5. The objectives of the Union of Myanmar Foreign Investment Law are: (a) Promotion and expansion of exports, (b) Exploitation of natural 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 energy consumption and (g) Regional development. In order to oversee and administer the FIL, the Myanmar Investment Commission (MIC) wasformed and it acts as initial approving authority for investment proposals. The Directorate ofInvestment and Company Administration (DICA) serves as the Secretariat of MIC. 2. Forms of Investment Foreign investors can set up their business either in the form of a wholly foreign-owned or ajoint venture with any partner (an individual, a private company, a cooperative society or a state-owned enterprise). In all joint ventures, the minimum share of the foreign party is 35 percent ofthe total equity capital. 3. Minimum Capital Requirement The minimum amount of foreign capital required to be eligible under the Foreign InvestmentLaw is: For an industry US $500,000 For a services organization US $300,000
6. 4. Eligible Economic Activities Economic activities allowed under the Foreign Investment Law cover almost all sectors of theeconomy. It has been notified by the Myanmar Investment Commission (MIC). Any economic activity not included in the notificationcan be considered individually. 5. Restricted Activities The State-owned Economic Enterprises Law defines 12 economic activities in which privateinvestment is restricted and are reserved to be carried out solely by the State. However,according to Section 4 of the said law, the Government may in the interest of the State, permit bynotification to carry out such activities. 6. Tax Incentives under the Foreign Investment Law i. Exemption from income tax for 3 consecutive years beginning with the year in which theoperation commences and a further tax exemption or relief for considered beneficial for theState. ii. The Commission may also grant:- - exemptioa or relief from income tax on profit which is reinvested within one year. - relief from income tax up to 50 percent on the profit from exports. - right to pay income tax on behalf of the foreign employees and to deduct the same from theassessable income of the enterprise. - right to pay income tax of the foreign employees at the rate applicable to the citizens ofMyanmar. - right to deduct the research and development expenditure. - right to accelerate depreciation. - right to carry forward and set off losses up to 3 consecutive years, from the year the loss issustained. - exemption orreliqf from customs duty and other taxes on:- (a) imported machinery and equipment for use during the construction period.
7. (b) imported raw materials for the first 3 years commercial production following thecompletion of construction. 7. Application Procedures for Foreign Investment A promoter for foreign investment must submit a proposal in prescribed form to the MyanmarInvestment Commission for consideration of issuing a permit. With the Proposal the followingmust be attached. i. Documents supporting financial credibility. (audited final accounts of a most recent year ofthe person or the firm that intends to make investment). ii. Bank recommendation regarding the business standing. iii. Detailed calculation relating to the economic justification of the proposed projectindicating inter aila:- - estimated annual net profit. - estimated annual foreign exchange earnings or savings and foreign exchange requirement forthe operation. - recoupment period. - prospects of creating employment. - prospects of increase in national income. - local and foreign market conditions and the requirement, if ariy, for local consumption. iv. If it is a hundred percent foreign investment, a draft contract to be executed with anorganization determined by the Ministry concerned.
8. v. If it is a joint venture, a draA contract to be entered into between the foreign investor andlocal counterpart. vi. If it is a joint venture in the form of a limited company, draft Memorandum and Articles ofAssociation and also a draft contract between the foreign and local investors. vii. Other related draft contracts are also to be submitted together with the proposal. viii. The promoter may apply for the exemptions and reliefs from taxes stated in Chapter 10Section 21 of the Union of Myanmar Foreign Investment Law 8. Guarantee Right to Transfer Foreign Currency i. A persvn who has brought in foreign capital can transfer the following:- - foreign currency entitlement of him. - net profit after deducting all taxes and provisions. - foreign currency permitted for withdrawal by the Commission which may include thevalue of assets on the winding up of business. ii. A foreign employee can transfer his salary and lawful income after deducting taxes andother living expenses incurred domestically. Guarantee Enterprises operating under the Foreign Investment Law shall have the State guarantee againstnationalization and expropriation.9. Importing and Exporting An enterprise permitted under the FIL has to be registered as exporter/importer upon businessrequirement with the Export Import Registration Office under the Directorate of Trade, Ministryof Commerce.The following persons or enterprises can be registered as exporters/importers:-
9. (a) A citizen or an associate citizen or a nationalized citizen of the Union of Myanmar if theapplicant is a sole proprietor. (b) Partnership firms (c) Limited companies, inclusive of foreign companies and branches or joint venturesformed under the Meaner Companies Act 1914 and Special Company Act 1950. (d) Co-operative societies, registered under the Co-operative Society Law 1992.Myanmar products can be exported with the exception of some selected items or restricted itemsunder the export licencse. All goods which are not prohibited by the respective Gover�nmentdepartments can be imported under the import licencse. Permitted foreign investment enterprisescan import the following without import licencses. (a) Capital investment items imported as foreign capital during the construction and initialinvestment period. (b) Raw materials required for the first three years� commercial productionInvestment SectorsSince the time FIL has been enacted, MIC has permitted 400 projects from 29 countries up to theend of September 2006. The leading sectors are Power, Oil & Gas Manufacturing, Real Estate,Hotel and Tourism. Total amount of foreign direct investment in these projects is US$13.85billion.Major investors are ASEAN countries with the amount of almost half of the total investment.Thailand ranks first with the amount of US$ 7375.623 million, UK ranks second with US$1587.974 million, Singapore ranks third with US$ 1341.223 million, Malaysia ranks fourth withUS$ 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 BruneiDarussalam and +3 members, such as, Japan, China and Republic of Korea are doinginvestments in Myanmar. Among the BIMST-EC countries, Thailand, India, Bangladesh and SriLanka are doing investment in Myanmar.
10. III. EMPLOYMENT 1. Labour Force Myanmar has an active labour force of 17.96 million. Fairly well trained manpower andskilled labour are available. 2. Labour Cost The labour cost in Myanmar is quite low compared to other neighbouring countries. In theprivate sector it is usually fixed on mutual agreement between the employer and employee. 3. Working Hours Companies, trading centres, factories 48 hrs a week Oil field and mines 44 hrs a week Underground mines 40 hrs a week 4. Social Security BenefitPrivate enterprises employing at least 5 persons are covered by the Social Security Act 1954. Thecontribution to the scheme is approximately 4 percent of the insured wage and the ratio ofcontribution is employer 2.5: employee 1.5. The workers insured under the Act are entitled tofree medical care, cash benefit for sickman, maternity and disability, funeral grants and survivorspension. 5. Recruitment Required manpower can be recruited through Township Labour Offices. 6. Employment of Foreign NationalStarting Business1. Registration of Business OrganizationsOperation in Myanmar can be carried out through one of the following business organizations. 1. Sole proprietorship 2. Partnerships
11. 3. Companies limited by shares. i.e. joint venture companies; local companies; foreigncompanies. 4. Branch or Representative offices of a foreign company 5. Associations not for profit2. Sole ProprietorshipA sole proprietorship is a business owned by an individual which usually operates under thename of the owner. Establishment and operation is simple. It is not required to register. Capitalformation and withdrawal can be performed at one�s will. However, the proprietor�s liabilityis unlimited.3. PartnershipsA group of individuals may enter into partnerships in order to carry on a business. Thepartnership�s rights and obligations are based on the agreements between the partners and thePartnership Act of 1932. In accordance with the Act, the number of partners is limited to twenty.A partnership firm may be registered, but registration is not compulsory. All partnerships formedin Myanmar are of unlimited type. When no provision is made for the period of time, thepartnership will be dissolved when all partners are willing to do so.4. Companies Limited by SharesA company limited by shares is required to register. For foreign enterprises, the most normalmethod of doing business in Myanmar is through a limited company. Such a company could be aforeign company registered in Myanmar or by means of a branch office or representative officeformed outside Myanmar. If one share is owned by a foreign partner, the company shall comeunder the definition of a foreign company, and shall apply and obtain a Permit beforeregistration.There are two main types of companies: a private limited liability company and a public limitedliability company.
12. In a private limited company, the transfer of shares is restricted, the public cannot be called uponto subscribe for shares, and the number of members is limited to fifity. In a public limitedliability company, the number of shareholders must be at least seven. The company, afterregistration, must apply for a Certificate of Commencement of Business to enable start thebusiness operation.The governing law for the limited companies is the Myanmar Companies Act 1914. A companywith share contribution of the State shall be registered under the Special Company> Act 1950and the Myanmar Companies Act 1914.There are generally no minimum share capital requirements. However, minimum requirementsdo exist for banking and insurance companies and foreign companies and branches of allbusiness. For foreign companies and branches, the minimum capital to be brought in are asfollows: - Industrial company - foreign currency equivalent to K. 1,000,000. - Trading company - foreign currency equivalent to K. 500,000. - Services company - foreign currency equivalent to K. 300,000.5. Documents required for RegistrationUnder section 27A of the Myanmar Companies Act, a foreign company whether a hundredpercent owned or a joint-venture and a branch/representative office is required to obtain aPERMIT before registration. However, a joint-venture with the State equity joined under SpecialCompany Act 1950 is exempted from obtaining a PERMIT.The application for PERMIT is to be accompanied by the following documents: (1) Form A of the Myanmar Companies Regulation 1957
13. (2) Draft Memorandum and Articles of Association (3) Duly completed questionnaire form (4) Intended activities to be performed (5) Estimated expenditures to be incurred in Meaner for the first year operations (6) Financial credibility of the company / individual (7) Board of Directors� resolution, if the subscriber is a company.In the case of a foreign branch/representative office, the following shall be furnished in additionto the above mentioned documents.(1) Instead of the companys draft Memorandum and Articles of Association, a copy of the HeadOffifce�s Memorandum and Articles of Association or of the Charter, Statute or otherinstruments constituting or defining the constitution of the company, duly notarized andconsularized by the Myanmar Embassy concern in the country where the company isincorporated.(2) Copies of the Head Office Balance Sheet and Profit and Loss accounts for the last twofinancial years.(3) Where the original Memorandum and Articles of Association and other relevant documentsare not in English language, authentication of the translation into English.The application for registration is to be accompanied by the following documents. (I) Two sets of Memorandum and Articles of Association duly stamped and printed both inMyanmar and English
14. (2) Declaration of registration (3) Declaration of legal and official version of the documents (4) Declaration of the situation of registered office (5) Translation certificate by a competent translator (6) List of Directors (7) List of person(s) authorized to accept services of process and notice in Myanmar on behalfof the company (i.e. for a branch office of a foreign company.)For a Public company, the following additional documents shall be submitted beforecommencing the business (I) List of person to act as directors (2) List of Persons who have consented to act as director (3) Agreement to take qualification shares.6. Legislative requirements for CompaniesThe legal requirements for the companies to comply under the Myanmar Companies Act 1914are as follows:-
15. Name:The name of the company shall be painted or affixed on the outside of its registered office andevery place of business. It must also be ingraved in legible characters on its seal and mentionedin all letterheads, notices, advertisements and other official publications, etc.Registered Office:Every company must have a registered office in Myanmar to which all communications andnotices may be addressed. A notice of situation of the initial registered office must be furnishedto the CRO when filing the incorporation documents. If the address is subsequently changed,notice must be given to the CRO within 28 days of the change.Directors:Every private company is required to have at least 2 directors. A public company must have aminimum of 3 directors. An undischarged insolvent is not eligible to be a director. A rectun ofparticulars of Directors, Managers and Managing Agents and of any changes therein must belodged with the CRO within 14 days of the appointment or changes.BANKING 1. Types of BankCentral Bank of Myanmar (CBM) operates as a central bank and is the authority to oversee andregulate the financial institutions both State and private owned.Four major specialized banks; the Myanma Economic Bank (provides countrywide domesticbanking and saving services), the Myanma Investment and Commercial Bank (handles bothdomestic and foreign exchange transactions), the Myanma Foreign Trade Bank (deals in foreignexchange transactions) and the Myanma Agricultural and Rural Development Bank (providesseasonal and term loans for agriculture and livestock breeding) are the state owned financialinstitutions.Twenty domestic private banks are now operating banking services and forty six foreign bankshave opened representative o%offeces in Yangon.
16. Apart from the above institutions, Myanma Insurance is the sole insurance organization andunderwrites various classes of insurance. 2. Exchange Arrangement The currency Myanmar Kyats is pegged to the SDR at K. B.50847=SDR 1. Both exportationand importation of the Kyat is prohibited. All external payments are subject to authorization. TheCBM has issued Foreign Exchange Certificates (FECs) which is equivalent in US dollar sinceFebruary 1993 for the convenience of tourists and to enhance the foreign exchange earningsTAXATION 1. General There are 15 types of taxes and duties under four main heads, they are: (1) Taxes levied on domestic production and public consumption - excise duty; licence feeson imported goods; state lottery; taxes on transport, commercial tax and sale proceeds of stamps. (2) Taxes levied on income and ownership - income tax and profit tax. (3) Customs duties. (4) Taxes levied on utility of State-owned properties - taxes on land; water tax, embankmenttax; taxes on extraction of forest products, minerals, rubber and fisheries. Income of tax payer is computed on the basis of one fiscal year (April 1 to March 31 of thefollowing year). The fiscal year in which income is received is expressed as "income year" andthe year following as "assessment year" A resident foreigner or a resident citizen is subject to tax on all income derived from sourceswithin the Union of Myanmar and on income from sources outside the Union of Myanmar. In thecase of an enterprise operating under the Union of Myanmar Foreign Investment Law, the tax ispayable only on income derived from sources within the Union of Myanmar. A non-resident foreigner is subject to tax on all income from sources in Myanmar.
17. A resident foreigner is (a) a foreigner who lives in Myanmar for not less than 183 days during the income year, (b) a company formed under the Myanmar Companies Act or any other existing MyanmarLaw wholly or partly with foreign share holders. (c) an Association of persons other than a company formed wholly or partly with foreignersand where control, management and decision making of its affairs are situated and exercisedwholly in the Union of Myanmar. A foreigner or a foreign organization who is not a resident in Myanmar is classified as a nonresident. A branch company is treated as a non-resident. However, this classification is irrelevantto an enterprise operating under the Union of Myanmar Foreign Investment Law. 2. Tax Rates A flat tax rate of 30%o is applicable to enterprises operating under the Union of MyanmarForeign Investment Law and those formed under the Myanmar Companies Act. For a non-resident foreigner (including a branch company), income tax is a payable at 35% orat graduated rates from 3 % to 5(%/a whichever is greater. The income from "salaries�* other than income of non-residentforeigner the tax is computedat progressive rates of 3% of 30%.Customs DutiesWith a few exceptions, all imported goods are liable to customs duties.As for exports, tax is levied on export of a few commodities namely: rice and rice flour, ricebran, rice dust, oil cakes, pulses and cereals, bamboo and raw hides and skins.6. Commercial TaxCommercial Tax is turnover tax levied on goods either domestically produced or imported. It isalso levied on services such as transport of passengers, entertainment, trading, operation ofhotels, lodging and enterprises engaged in sale of foods and drinks.
18. For goods and services supplied in Myanmar, commercial tax is imposed at the time of supply.For the import of goods, commercial tax is collected by the Customs Department at the point ofimportation in the same manner that customs duties are collected.The commercial tax rates for services are as follows:- - 5 per cent on trading; - 8 per cent on passenger transport fares, - 10 per cent on hotel, lodging and reataurant services; - 15 per cent on other forms of public entertainment; and - 30 per cent on movie or cinema shows.PortsThe Port of Yangon, which has long history, is the main port of Myanmar. In 1880, it was run byCommissioners for the Port of Rangoon. Then, in 19 54 - Board of Management for the Port ofRangoon took care the port operations. In 1972 Burma, Ports Corporation controlled the portuntil 1989. From then on Myanma Port Authority (MPA) governed the port operations.