In Myanmar, a “foreign investor” comprises either a foreign individual, or a corporate entity with a greater than 35% foreign shareholding. A foreign investor will also include any local branch office of a foreign corporation, and any entity incorporated under the laws of a country other than Myanmar.
As with many other developing markets, Myanmar’s government publishes a list of investment activities which are in certain cases prohibited to foreign investors[1], and in other cases are restricted[2].
Of the restricted investment activities, certain activities are not open to foreign investors, and certain others are permitted to foreign investors, but in certain specified cases only in joint venture with a Myanmar citizen, or a business entity owned by a Myanmar citizen, and in certain other specified cases, only with the approval of the appropriate governmental Ministry.
Certain other kinds of investment activity are conversely, deemed to be “promoted investment activities”[3].
A specified list of types of business activity requires the investor to obtain a prior investment permit from the relevant governmental authority[4].
As further special cases, investors in the banking sector are required to obtain an investment permit from the Central Bank of Myanmar, and investors in the insurance sector must obtain a permit from the Insurance Business Regulatory Board.
The would-be foreign investor should note that the government of Myanmar has a seemingly broad discretion to prohibit an investment application on grounds of “national interest”. There is a special process available to the would-be investor to ascertain whether the kind of activity being proposed may need national interest clearance[5].
As regards activities requiring an investment permit, where the activity is deemed to be “a non-strategic investment activity”, or for investments of up to US$5 Million, permits are issued by the relevant local government or local investment committee.
On the other hand, any “strategic investment” would fall under the permitting powers of the Myanmar Investment Commission itself.
So, what would a strategic investment comprise?
Large-scale capital intensive investments with an anticipated or expected investment value of over US$100 Million, would fall under this category.
As would investments which have a likely significant impact on the environment or on the relevant local community[6].
Any investment activity which is located in a “designated” or “protected” area, would also fall into the category of strategic investments.
A strategic investment will also include activities where the proposed investment amount exceeds US$20 Million, and is in a specified business sector, including energy infrastructure and urban development; biotechnology; extraction and exploitation of natural resources; pharmaceuticals; and information and communication technology.
Certain forms of land-use, of agricultural and non-agricultural kinds, can also comprise strategic investments.
This is a snapshot of some of the key investment-related issues arising in Myanmar. The opportunities for foreign investment appear to be plentiful[7], but there is a continuing need for the investor to be careful and thorough in their pre-feasibility and feasibility studies, as well as their due diligence, before taking the plunge.
This post is for information purposes only. It is not intended to constitute legal advice. The reader should obtain formal legal advice before entering into business negotiations in Myanmar.
DECEMBER 29, 2020
[1] Business activities which are prohibited to foreign investment include, the manufacture of military/defence and/or security products, air traffic and pilotage services, publishing and distribution of periodicals in the local languages of Myanmar (including Burmese), and certain types of mineral and mining prospecting activity.
[2] The responsible governmental authority for this is the Myanmar Investment Commission, acting pursuant to the Myanmar Investment Law.
[3] Promoted for both foreign and local investment activities.
[4] The Myanmar Investment Law sets out the kinds of investment activity requiring a permit, and these include projects which are likely to have significant environmental impact, or significant impact of the relevant local community; major capital intensive projects; and investment activities which require the investor to submit an investment proposal to the Myanmar Investment Commission.
[5] An investment screening application made to the Myanmar Investment Commission.
[6] Which will in any case require an EIA, or environmental impact assessment as a pre-requisite to being considered for an investment permit.
[7] Note, for example, that as yet Myanmar is one of the least ‘electrified’ countries in Asia, and demand continues to grow; so electric power generation, and the necessary infrastructure including fuel supply, is a key area of future growth.
Emerging Markets Law and Business 