Invest Asia Group in Myanmar
Last Update: 3rd October 2020
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Fishing in Inle Lake, Myanmar
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Myanmar, also known as Burma, is one of Asia's last frontier markets and has only recently embarked upon a number of economic and political reforms in the 21st century. Between 1885 to 1948 (when the British controlled Burma as a colony), the country was Asia's second richest country (behind The Philippines). However, post independence, a policy of nationalization was pursued, before a military coup in the early 1960s. Thereafter, the Burmese government embarked upon the 'Burmese Way to Socialism', resulting in disastrous consequences for the country as Burma become one of Asia's most impoverished.
However, following economic liberalization that commenced in 2011, sanctions have been removed and Myanmar has emerged as a high growth, developing country located in a strategic area of South East Asia. With a diverse range of natural resources and future opportunities available within the extractive and high tech industries, Myanmar's economic future looks positive.
However, following economic liberalization that commenced in 2011, sanctions have been removed and Myanmar has emerged as a high growth, developing country located in a strategic area of South East Asia. With a diverse range of natural resources and future opportunities available within the extractive and high tech industries, Myanmar's economic future looks positive.
Myanmar: Overview
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Myanmar is a diverse country in South East Asia, bordering Laos & Thailand to the East, China to the Northeast and India & Bangladesh to the west. Previously run by a military junta, Myanmar has been undertaking numerous economic reforms, providing investor opportunities across various sectors.
Whilst there is a significant difference in living standards (in terms of income gap) between certain segments of the population, the economy has been growing strongly. Moreover, being one of Asia's poorest nations with an undeveloped economy, the upside prospects over the coming decades are significant. Economists predict a bright economic future, provided drug production is halted/reduced and the government stops its wars with ethnic minority groups. |
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Myanmar States & Regions
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The country of Myanmar is divided into 7 x states and 7 x regions whereby states are normally home to a particular ethnic minority whilst regions are predominantly Bamar (native Burmese).
Aside from these subtle differences, there's no major technical difference between states and regions. Details of the different states in Myanmar are as follows:
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The regions of Myanmar, which were originally called divisions, are predominantly more centralized and developed areas of Myanmar. Details of these seven regions are outlined below.
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Myanmar Cities
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Myanmar only has two cities with over 1 million people and a number of smaller regional towns throughout the country. For the purposes of this article, we've outlined the top 5 cities within Myanmar and for more details or information, please contact the Invest Asia Group team directly. Details of the top 5 Cities in Myanmar (by population) are as follows:
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Business Operations in Myanmar
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Operating a business in Myanmar presents an array of opportunities as well as numerous challenges. Aside from obvious business related risks, understanding and working within a foreign system presents various challenges to investors, especially since Myanmar is a frontier market.
However, with a relevant strategy, professional advice and local team, these risks can be somewhat mitigated. Whilst details are quite complex and unforeseen risks can occur, we’ve summarized accordingly so readers can gain an understanding of the different options and processes involved in operating a business in Myanmar. |
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Forming a Company in Myanmar
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Establishing a company in Myanmar is not a simple process (although it has become much easier compared to in previous years) and depending upon your specific business objectives would determine the most appropriate company structure.
Within Myanmar, investors can incorporate as any of the following types of company:
For further details about forming a company in Myanmar, please contact the Invest Asia Group team directly. |
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Company Formation Procedure
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According to the Directorate of Investment and Company Administration (DICA), the required process for establishing a Myanmar Limited Liability Company is outlined below. There are minor differences between company structure types but for the purposes of this article (and because it’s the most common foreign investment structure), we’ve outlined the LLC procedures.
Check the availability of the proposed company name at DICA:
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Aside from the above standard procedures to form a company, there are also might be additional steps required depending upon industry specific requirements.
Invest Asia Group strongly advises investors to engage either an experienced local consulting company or an international law firm to navigate these processes.
Invest Asia Group strongly advises investors to engage either an experienced local consulting company or an international law firm to navigate these processes.
International Investors
Whilst there are certain restrictions, international investors/companies can operate businesses in Myanmar. Typically, joint venture companies are required for ‘restricted industries’, which offers opportunities for foreign investors to inject capital and bring expertise. Moreover with ongoing reforms, the number of restricted industries that foreign investors are able to operate is continually being reduced on an annual basis.
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Corporate Taxes
There are a number of different corporate taxes within Myanmar as outlined below:
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Where to establish in Myanmar
This depends upon your business type and goals for doing business in Myanmar. Yangon is the cultural and economic heart of the country whilst Myanmar has implemented a number of different free trade zones to attract foreign direct investment. Extractive industries provide various opportunities throughout the country. Please advise your business type and specific goals for China when contacting our team.
Tax-Friendly Policies
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Within Myanmar, there are two primary laws (MIL & Special Economic Zone Laws) that provide tax friendly policies to foreign investors. Under the MIL, tax incentives depend upon the industry sector and state/region specific and corporate income tax ‘holidays’ can be between 3 to 7 years with other incentives available too.
Moreover, some of the Special Economic Zone tax friendly policies include:
Regarding further details relating to tax friendly policies in Myanmar, please contact the Invest Asia Group team directly. |
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Financial Markets in Myanmar
Myanmar's stock markets are very young, especially compared to regional peers with the Yangon Stock Exchange first opening in 2015 to assist with reform and opening up of the Myanmar economy. There is only one stock exchange operating within the country and overall, the financial markets are very undeveloped. Myanmar is one of Asia's few remaining frontier markets, presenting a range of opportunities and risks. A brief overview of financial markets in Myanmar is outlined below.
Yangon Stock Exchange
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The Yangon Stock Exchange is Myanmar's only stock exchange and was first opened in October 2015. Originally, the Rangoon Stock Exchange was established in the 1930s as a secondary exchange for the Bombay and Calcutta exchanges during the British colonial rule. It was closed during World War 2, reopened in the 1950s post war and permanently closed in 1962 as the Military Junta took control of Myanmar.
As at October 2020, there are only six different companies listed on the Yangon Stock Exchange including the following companies:
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Other ways to get exposure to Myanmar Stocks
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Aside from the aforementioned ways to gain exposure to Myanmar companies, investors also have options to invest indirectly into Index Funds and Myanmar stocks listing in international markets.
Being an undeveloped frontier market, Myanmar doesn't have any specific ETFs, however, some exposure can be gained via Thailand ETFs and some of the larger individual Myanmar stocks listing on international stock exchanges. These internationally listed stocks include Yoma Strategic Holdings (Singapore), Singapore Myanmar Investco (Singapore) and Myanmar Metals (Australia). The Solactive Myanmar-Focused Asia Index focuses on companies with direct exposure to Myanmar or neighboring, relevant countries. Despite an array of different in a frontier market, Myanmar's economic growth and future will provide a number of attractive investment options for investors. |
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Foreign Exchange
The Burmese Kyat (MMK) is the official currency of Myanmar whilst USD is also a commonly used currency due to the stability offered. Commodities including gold and silver are also commonly used throughout the country.
As a managed currency with capital controls, Myanmar has actually implemented a range of foreign exchange reforms since 2011 to encourage international investment. Through the Foreign Exchange Management Law (FEML), companies registered under this law are guaranteed to be able to repatriate investment & profits in foreign currency, subject to approval by the Myanmar Investment Commission (MIC). |
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Commodities
Being a developing country rich in natural resources, Myanmar's extractive industries are a significant input in GDP. However, due to limited infrastructure, manufactured goods are imported from neighboring China and Thailand as well as the Yangon port.
Some of the main industries within Myanmar include the following:
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As an export oriented economy, Myanmar's top exports include the following:
In regards to oil and gas, Myanmar is in a strategic location within Asia and has established pipelines to supply to both China and Thailand. Through the Kyaukphyu Port on the Coast of Western Myanmar, within the Bay of Bengal, a Sino-Myanmar pipeline has been established linking Kunming, the capital city of Yunnan Province. This allows crude oil from the Middle East to be supplied directly to China without the need to transit the Strait of Malacca/South China Sea. Aside from the pipelines, Myanmar also has a number of offshore oil fields. |
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As for gemstones - Myanmar supplies approximately 90% of the world's rubies whilst other precious stones include sapphires, pearls and jade. Precious and industrial metal resources are plentiful and unexplored due to international isolation throughout the 20th century.
Within Myanmar, the largest agricultural commodities exchange is Bayinnaung Market - which offers real time prices of beans & pulses in addition to a diverse range of other agricultural products. Other exchanges include the Myanmar International Commodity Exchange Limited (MICEX) and the Yangon Region Commodity Exchange but overall, Myanmar needs to develop these exchanges more. |
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Cryptocurrency in Myanmar
Myanmar has banned all cryptocurrency with the central bank of Myanmar noting that any form of cryptocurrency is illegal, not authorized and can result in substantial punishments including large fails and jail time. However, cryptocurrency users throughout the country have noted that there is no law that directly bans cryptocurrency whilst regulating or being able to block usage seems improbable. The Invest Asia Group team will keep updated regarding cryptocurrency within Myanmar but currently, there are other more appealing destinations for cryptocurrency across Asia.
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Property in Myanmar
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Following the economic liberalization policies and being removed from international sanctions, Myanmar property prices surged across a number of regions throughout the country. On some metrics, analysts advise that Myanmar is still considered 'cheap' for property whilst others advise it's overpriced. Moreover, with urbanization increasing and a small middle class that will inevitably gain in size as Myanmar further develops economically, Myanmar property might be one of the better long term property investments across Asia.
Due to the size of the country and differences in development across regions of, the property market in Myanmar is very fragmented. Pricing in central Yangon is not reflective of pricing in Shan State (or other regions for that matter), meaning, the best way to analyse the property market is on a local level as opposed to country-wide analysis. Understanding prospective future free trade zones and other important planned infrastructure, will further provide an advantage to on-the-ground, investors. |
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International Investors & Myanmar Property
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International investors are now legally able to invest within Myanmar property based upon the 2016 Myanmar Condominium Law. Based upon this new law, foreign investors can own up to 40% of the units within a condominium project, while each individual can buy up to 25% of the units. Ultimately, this means that units classified as 'condominium apartments' will be able to sell to foreigners - so as developers introduce new buildings into the market, the supply will inevitably increase. In addition, foreign investors will also own the land title - however, limitations to the 'duration of the life of the building' apply.
As Myanmar continues to reform and open up to foreign investment, the opportunities to purchase 'approved' condominiums will increase and likely provide a profitable ROI over the medium to long term based on yield and capital growth. For further details about purchasing a property in Myanmar as a foreign investor, please contact the Invest Asia Group team directly. |
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Property Taxes
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The property market in Myanmar is one of the major causes of wealth disparity within the economy. As urbanization increases within Myanmar and the economy develops, further demand for property in central/urbanized locations is highly likely. Currently there are a few costs associated with purchasing in Myanmar but compared to Asia as a whole, they're relatively low.
Fees for purchasing property with Myanmar include:
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Best Locations to Purchase Property in Myanmar
Due to the recent Condominium laws allowing foreign investors to purchase property, the best (and currently only area) of Myanmar to purchase property is in Yangon. In the future, possibly opportunities will arise in other cities within the country (such as Mandalay) but Invest Asia Group recommends Yangon as the best opportunity (and fact that it's likely the only option) to purchase property within Myanmar,
Venture Capital/Private Equity in Myanmar
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Venture Capital has started to become more accessible within Myanmar, post 2015 and amid the economic liberalization of the economy. This has resulted in a number of foreign and multinational companies establishing within the country and startup opportunities expanding. As one of Asia's last frontier markets and being in a strategic location between India and China, Myanmar is projected to benefit substantially over the next few decades as it embraces a free market system.
Some of the most successful startups within Myanmar include:
The Myanmar Private Equity and Venture Capital Association (MPE & VCA) is a group of institutional investors providing the development of private equity and companies within Myanmar. |
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