Efforts to improve Myanmar's investment environment

Myanmar continues to rank low on the World Bank’s annual “Doing Business” report, which measures the investment attractiveness of countries across 10 indicators. However, recent legislation, including the 2017 Investment Law, 2016 Arbitration Law and new anti-corruption measures, have paved the way for a sharp improvement, with the government targeting an improvement in the rankings in the coming years.

Enacting subsidiary regulations to enable key legal reforms will be a priority, as will removing red tape and regulatory bottlenecks for investors, while the upcoming establishment of the country’s first credit bureau, combined with new soft loans aimed at boosting family and small business credit, should help the country boost its ranking.

Doing Business

In the World Bank’s “Doing Business 2018” report, Myanmar ranked lowest among its neighbours and fellow ASEAN members in 171st place out of 190 countries. The survey is conducted by assigning a distance-to-frontier (DTF) score for the country across indicators measuring the time and expense it takes to carry out various procedures. A DTF score measures how far each economy surveyed is from the “frontier”, or best possible performance in each category. Although Myanmar’s original comprehensive DTF score was 44.56% in the 2017 survey, against 44.01% in 2016, the World Bank revised its data for the 2018 survey, reporting that the country’s overall DTF score was 44.21% in 2018, against 43.21% in 2017.

Despite its lower headline score, Myanmar’s performance did not deteriorate across any of the survey’s 10 indicators, rising marginally across seven categories and remaining unchanged in three. However, its numerical ranking across many key indicators declined in 2018. The country scored highest in dealing with construction permits, where it ranked 73rd; paying taxes, ranking 125th; and registering property, ranking 134th. It scored lowest in getting credit (177th), protecting minority investors (183rd) and enforcing contracts (188th).

In the dealing with construction permits, the country’s DTF score rose from 69.98% in 2017 to 70.33% in 2018. Myanmar performs well compared to its regional peers, ranking 13th in the East Asia and Pacific (EAP) region, ahead of the Philippines (17th), Indonesia (18th) and China (24th). According to the 2018 survey, it takes 15 procedures and 95 days to build a warehouse in Myanmar, against the EAP average of 15.2 procedures and 138.2 days. However, in its most recent Article IV Consultation for Myanmar, carried out in November 2017, the IMF warned that temporary suspension of some construction projects was expected to have pushed annual GDP growth to a lower-than-expected 5.9% in FY 2016/17, with international media reporting that delays in construction permitting remain a concern.

2017 Reforms

The government hopes to boost the country’s ranking to 100th place in the coming years, according to an August 2017 report published by the ASEAN Economic Community Strategy Centre, and several reforms have already been undertaken to improve the business climate.

For example, Myanmar began reducing the cost incurred to register a company in 2016 and has removed minimum capital requirements for domestic businesses. This means that the paid-in minimum capital required to register a company was zero in the 2018 survey, against 15.1% of income per capita in the EAP region. This saw Myanmar rank 20th in the EAP in the starting a business category, ahead of the Philippines, Laos and Cambodia.

Investment Law

Although the country had already passed a Foreign Investment Law in 2012, foreign direct investment (FDI) inflows did not maintain their momentum in the years that followed, prompting the Directorate of Investment and Company Administration to partner with the International Finance Corporation to roll out a new investment law, which took effect in April 2017. Changes included reducing the time required for the Myanmar Investment Commission to approve a new project from six months to three, as well as reducing the number of firms required to obtain approval for a new investment.

Myanmar’s DTF score in the starting a business category in the 2018 survey rose from 75.29% in 2017 to 75.42%, although it continues to rank low, at 155th place, down from 146th in 2017. Although Myanmar has enacted a series of investment and financial reforms, some regulatory restrictions constraining investment and finance remain in place.


The same is true for enforcement of contracts and protecting minority investors, where Myanmar’s DTF score was 24.53% and 25%, respectively, in the 2018 survey. Although reforms have been undertaken, their effect has yet to be felt. For example, the 2017 Investment Law established an innovative mechanism for addressing investor grievances prior to the point of becoming a legal dispute, which should have helped the country improve its ranking. However, as the Global Arbitration Review wrote in May 2017, despite the Investment Law’s key introduction of a dispute resolution mechanism, the law fails to expressly reference arbitration as a possible dispute resolution mechanism, or the enforceability of foreign awards in Myanmar, as stipulated by the New York Convention, to which Myanmar is a signatory. The review noted that while a new arbitration law was passed in 2016, its subsidiary regulations have yet to be approved.


A country’s enforcement of contracts can often be correlated with corruption, which remains a challenge despite gradual improvement. In April 2016, for example, the President’s Office Guidelines on Accepting Gifts was introduced, banning civil servants from accepting gifts, while the Parliament also passed an amendment to the Anti-Corruption Law in July 2016 in an effort to strengthen Myanmar’s Anti-Corruption Commission. Although the country ranks low on Transparency International’s corruption perception index, at 136th place out of 176 countries in 2016, its baseline corruption score has improved in recent years, rising from 15 in 2012 to 28 in 2016.

2018 Reforms

In the registering property category, Myanmar’s DTF score rose by 1.68 percentage points, the highest improvement in any category, to 52.3%. At the same time, its numerical ranking rose from 143rd in 2017 to 134th in 2018, supported by reforms to stamp duties carried out in 2017, which reduced the cost of registering property.

Improved credit access has also been cited as a critical priority, and here, too, the country is beginning to make progress. The Central Bank of Myanmar announced in August 2017 that the country’s first credit bureau was scheduled to launch within the next year. Still, firms are limited to local sourcing options. “Myanmar companies need better debt financing. While they have access to capital from domestic banks, the challenge is in borrowing from overseas,” Ma Cherry Trivedi, managing director of Ayuroma Advisory International, told OBG. “With no credit history and a tradition of overdraft lending, local companies are not ready to take on debt from international lenders to grow their businesses.” New lending programmes for small firms could also see the situation improve, supporting gradual doing business improvements, as well as new FDI inflows.


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The Report: Myanmar 2018

Economy chapter from The Report: Myanmar 2018

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