I. Advantages of investing in Myanmar
1. Economic Growth
Myanmar’s economy has continuously grown at approximately 6 – 8% since 2012. To encourage economic growth, three Special Economic Zones – in Thilawa, Kyaukphyu and Dawei – have been set-up by the Myanmar government. These provide investment incentives and simplified processes for investors, with the hope that these international-standard industrial facilities will become growth engines of the new Myanmar.
Myanmar is the largest country in mainland Southeast Asia and has – beyond its domestic market of more than 50 million citizens – direct access to China, India, ASEAN and other international markets through ports along the Bay of Bengal and Andaman Sea.
3. Government Reforms
The Government of Myanmar is highly committed to encouraging investments with a positive impact on society and environment. Investment activities in certain sectors are therefore prohibited or restricted – or may require specific approvals, processes, joint venturing or Environmental and Social Impact Assessments to avoid adverse impacts on communities and their livelihoods, the environment as well as the progress in peace and national reconciliation.
4. Society and Culture
Myanmar not only offers natural resources and arable land in abundance – importantly, the country also possesses a skilled, motivated and young population. In the previous years of political and economic reform, Myanmar society has shown to be capable of driving change.
Myanmar’s citizens have demonstrated flexibility in adapting to the availability of new opportunities and in dealing with new technology (the ‘digital leapfrogging of Myanmar’), while acquiring new skills and competencies in a learning society.
II. Policy and Law
The Myanmar Investment Law, enacted in 2016, vastly simplified the process for investment applications and offers a number of tax breaks, incentives, guarantees, rights and protections for business ventures. The Myanmar Investment Commission (MIC) is a government-appointed body formed under the Myanmar Investment Law.
1. Investments Requiring a MIC Permit
Investors are required to submit a proposal to the MIC, if the investments are:
Essential to the national strategy
Large and capital-intensive projects
Likely to cause a large impact on the environment and the local community
Using state-owned land and buildings
Designated by the Government to require the submission of a proposal to the MIC
2. Investment activities which are strategic for the state
Information, communication, medical, bio or similar technologies, logistics/energy infrastructure, urban development, new cities, natural resources, media etc. (investment value exceeding US$20 million)
Cooperation with a government organization (investment value exceeding US$20 million)
Investment made in a border region or conflict affected area
Investment made across the national border
Investment made across states and regions
Occupying or using more than 1,000 acres of land for agricultural related purposes
Occupying or using more than 100 acres of land for non-agricultural related purposes
3. Promoted Sectors
Agriculture and its related services (except cultivation and production of tobacco)
Plantations and conservation of forests, and other businesses with forests
Livestock production, breeding and production of fishery products, and related services
Manufacturing (except manufacturing of cigarettes, liquor, beer, and other harmful products to health)
Establishment of industrial zones
Establishment of new urban areas
City development activities
Construction of roads, bridges and railway lines
Construction of seaports, river ports and dry ports
Management, operation and maintenance of airports
Maintenance of aircrafts
Supply and transport services
Power generation, transmission and distribution
Production of renewable energy
Information technology services
Hotels and tourism
Science research development business
3. Restricted Investment Activities
|Allowed to be carried out only by the Union
||Security and defence, arms and ammunition, national postage stamps, air traffic services, pilotage services, natural forest and forest area, radioactive metals, control of electric power system and inspection of electrical business
|Not allowed for foreign investors
||Publishing and distribution of periodicals in ethnic languages, fresh water fisheries, establishment of quarantine station for export and import of animals, pet care services, forest products, prospecting, exploration, feasibility study and production of mineral for small and medium scale, tour-guide service, mini-market, convenient store
|Allowed for JV
||Research activities related with fishery, manufacturing and domestic distribution of all kind of confectionary including those of sweet, cocoa and chocolate, development, sale and lease of residential apartments and condominiums, local tour services
|To be carried out with the approval of the relevant Ministry
||Publishing of periodical newspaper in foreign languages, cable TV, laboratory services for the animal diseases diagnosis, aircraft repair and maintenance, wood-based industries, private hospital services, 100 acres and above urban development projects
4. Tax Incentive Application Assessment Procedure
III. Exemptions and Reliefs
The Myanmar Investment Law provides foreign investors with a number of tax holidays. Below is the list of the most significant exemptions and reliefs:
1. Income tax exemption is granted for a period of 3 to 7 consecutive years starting from the year of commencement depending upon the level of development of specific areas. The income tax exemptions are only available for the businesses that invest in one of the promoted sectors.
2. Income tax exemption and relief is granted on the profit obtained from the investment that has obtained a Permit or an Endorsement is re-invested in such investment or in any similar type of investment or in any similar type of investment activities within one year.
3. The right to deduct depreciation for the purpose of income tax assessment, after computing such depreciation from the year of commencement of commercial operation based on a depreciation rate which is less than the stipulated lifetime of the machinery, equipment, building or capital assets, can be used in the investment.
4. The right to deduct expenses for research and development activities carried out in Myanmar. The activities must be both relevant and necessary to the business objective.
5. Exemption and relief for custom duty or other internal taxes (or both) on imported machineries and equipment, instrument, machinery components, spare parts, construction materials not available locally, and material used in business during the construction period.
6. Exemption and relief for custom duty or other internal taxes (or both) on the importation of the raw materials and partially manufactured goods conducted by an export-oriented investment business for the purposes of the manufacture of products for export and reimbursement of customs duty or other internal taxes or both on imported raw materials and partially manufactured goods which are used to manufacture products for export.
7. Exemption and relief for custom duty or other internal taxes (or both) investors who supply all of their finished goods and semi-finished goods manufactured locally to investment business which are 100% export-oriented without supplying the domestic market can apply for exemption and relief for custom duty or other internal taxes (or both) on the importation of the raw materials and partially manufactured goods conducted by an export-oriented investment business for the purposes of the manufacture of products for export and reimbursement of customs duty or other internal taxes or both on imported raw materials and partially manufactured goods. Detailed information would be described in the Myanmar Investment Law Section 75(a), 77 (a), 77(b), 78 (a), 78(b),78(c) and Notifcation no. 87/2017.
1. Mode of foreign investment in infrastructure
Owing to short of financial funds and limited ways of financing, large-scale infrastructure construction projects cannot be developed depending on equity fund. Therefore, funds of project come from foreign governments’ assistance, concessional loan of bilateral or international financing institutions, local or foreign investment, etc. Foreign investors or project contracting enterprises can participate in infrastructure construction via BOT (build-operate-transfer) or EPC+F (engineering procurement construction+finance)
In recent years, Myanmar’s road traffic has been improved. According to the statistics released by the Highway Bureau of Ministry of Construction, by the end of 2017-2018 fiscal year, the total road mileage is 41.9 thousand km, including 25.9 thousand km asphalt road, 3011km gravel road, 4491km unsurfaced road. The cargo volume reaches 1139 thousand tones.
Myanmar borders on China, Laos, Thailand, India and Bangladesh. The road connecting Teng Chong in China and Myitkyina in Myanmar is sponsored by China. Indian government provided financial aid of 500 million USD, part of which is for building the road connecting India, Myanmar and Thailand, expected to accomplish in April of 2021.
Railway in Myanmar is poor in infrastructure with old road network. The major routes include Yangon-Mandalay, Yangon-Bago, Yangon-Moulmein, Yangon-Prome, Mandalay-Myitkyina. By the end of 2017-2018 fiscal year, the total mileage of Myanmar’s railway reached 6112.29km with 960 stops. Most of them were narrow gauge. The passenger volume hit 46.53 million people and cargo volume hit 1.799 million tones.
Myanmar is planning to promote the connectivity projects of China-Myanmar, Myanmar-Thailand and Myanmar-India. China-Myanmar railway project from Muse to Mandalay will be planned to build recently with feasibility research completed. In the future, this railway will be extended from Chinese Ruili to Myanmar’s kyaukpyu.
There is a round-city railway in Yangon, linking urban area and the countryside. The whole trip takes about 3 hours. There is still no metro in the city.
4. Air transport
There are over 70 airports in Myanmar. The international airports in Myanmar include Yangon Airport, Naypyidaw Airport and Mandalay Airport. By the end of 2018, Myanmar has established direct flights with over 20 countries and regions.
Myanmar’s big cities and main tourist attractions have been opened to flight,
Yangon Port, Pathein Port and Moulmein Port are three major ports in Myanmar. Yangon Port is the largest one.
According to the National Electricity Project made in 2014, Myanmar planned to realize off-grid power generation initially via solar panel and electricity full coverage for long term through increasing electricity generation, building power transmission and transformation circuit and improving distribution network in 2030. Restricted by demands of environmental protection, residents’ willingness and cost of electricity generation, the electricity construction projects are slow to develop.
Reference: 1. Chinese Ministry of Commerce Department of Outward Investment and Economic Cooperation
2. Directorate of Investment and Company Administration