The long-overdue Myanmar Companies Law (MCL), which the government passed in December 2017, was put into practice in August 2018, together with the rollout of Myanmar Companies Online (MyCO) and the issuance of the Myanmar Companies Regulations. Among the most notable changes of the MCL are:

• The reduction of the minimum number of shareholders from two to one, and directors from two to one, in the case of private companies;

• The requirement of resident directors and/or resident authorised officers to be ordinarily resident in Myanmar for at least 183 days out of each relevant 12-month period;

• The introduction of minority shareholder protections, such as the ability to bring derivative suits on behalf of the corporation; and

• Expanded director’s duties, including the duty to act with care and diligence, and the duty to avoid reckless trading. Furthermore, the Ministry of Commerce (MoC) issued Directive No. 25 of 2018 that allows 100% foreign-owned companies and joint ventures between local and foreign investors to carry out wholesale and retail business that covers 24 general product categories. There have also been many additional updates to various laws and regulations in Myanmar, which, taken together, constitute an ever-evolving legal environment that is increasingly hospitable to foreign investors.

Foreign Investment

The foreign investment framework in Myanmar remains largely unchanged, and comprises the MCL, the Myanmar Investment Law (MIL) of 2016, the Myanmar Investment Rules (MIR) and the Special Economic Zone (SEZ) Law of 2014. Which of these laws will apply to a given foreign investor depends on the specific business activities he or she intends to undertake. Under these laws, foreign investors can opt to register an overseas company in Myanmar or incorporate a private limited company; obtain a permit or endorsement from the Myanmar Investment Commission (MIC); or obtain an investment permit, also known as an SEZ permit, from the relevant Myanmar SEZ Management Committee.

On November 19, 2018 the President’s Office issued Order No. 40 of 2018 and Notification No. 87 of 2018, thereby creating the Ministry of Investment and Foreign Economic Relations, which is composed of the Directorate of Investment and Company Administration (DICA), and the Foreign Economic Relations Department, which was previously under the Ministry of Planning and Finance.

While the benefits of this new ministry remain to be seen, ideally it would help streamline the functions of the two departments, and improve investment promotion and economic cooperation with other countries, as well as with the regional associations that Myanmar is a part of.

Implementation of the MCL & MYCO

The MCL, which replaced the Companies Act of 1914, was at last implemented in August 2018 and the related electronic platform, MyCO, has now gone live.

MyCO is the public registry, maintained by DICA, of all the companies and entities registered under the MCL of 2017. MyCO, as an electronic database, is accessible 24 hours per day.

MyCO allows for the online submission of applications for the incorporation of entities, as well as the online filing of required company information, which eliminates the previous manual filing done with DICA through the Companies Registration Office (CRO). Furthermore, MyCO will allow third parties to view and purchase specific company information. In limited circumstances, the CRO and DICA still allow manual filing, although online filing through MyCO is the preferred option.

Foreign Companies

Aside from the new procedural developments brought about by the MCL, there are several substantive changes which are now being implemented. Perhaps the most notable change for foreign investors is the definition of a “foreign company.” Under the MCL, a company will only be considered a foreign company if (i) it is a body corporate incorporated outside Myanmar; or (ii) it is a body corporate incorporated in Myanmar, but foreigners directly or indirectly own more than 35% of its issued share capital.

As such, it should now be possible for a foreigner to obtain shares in a Myanmar company without changing its nature as Myanmar-owned, provided that this 35% threshold is not exceeded.

Under the MCL, the pre-requisite that a company have both articles of association and a memorandum of association has been dispensed with. In its place, the company shall have a constitution, which serves as a single guiding document for the business.

The 1914 Companies Act states that a branch office of a foreign company is considered an extension of that company and is thus a non-resident entity for the purposes of Myanmar taxation. However, the MCL no longer includes the term “branch office”. Instead, the designation “overseas corporation” is introduced, which refers to a body corporate that may be registered under the MCL yet is incorporated outside Myanmar. The MCL further sets out a range of detailed requirements and specifications applying to overseas corporations. The processes covered by these include the registration of the overseas corporation, the use of the overseas corporation’s name, the preparation and submission of annual filings, and the process by which an overseas corporation may cease to conduct business in Myanmar.

There is no separate legal concept of a representative office under Myanmar law except in relation to foreign banks and insurance companies.

The MCL contains a detailed list of activities that, when conducted in isolation, are insufficient for an overseas corporation or another body corporate to be deemed to be carrying out business in Myanmar – thereby dispensing with the requirement of registration under the MCL. These include

• Holding meetings of directors or shareholders, or carrying out other activities concerning the management of the corporation’s internal affairs;

• Maintaining a bank account; or

• Investing funds or holding property in Myanmar. In addition, a company under the MCL may now have a sole director and a single shareholder unless it is a public company, in which case it must have at least three directors. It is also a requirement that any company registered under the MCL have at least one director who is ordinarily resident in Myanmar, which means a resident for 183 days out of each relevant 12-month period.

In the past, branch offices and private limited companies were required to secure a form of permit. A completed form of permit describes the scope of a branch office or private limited company’s business activities, and is considered to be the business licence of the branch or company. Under the MCL, it is no longer an express requirement that a foreign company obtain a form of permit whether in respect of an overseas corporation or otherwise.

Share Matters

The MCL introduces detailed provisions relating to various classes of shares and share issues. Notably, shares are no longer deemed to have a nominal or par value. This means that the share capital of a company is determined according to the amount to which a shareholder subscribes.

Contributions in kind for share capital and other securities are now also expressly permitted. There are detailed requirements that must be met by a company that accepts non-cash consideration for the issue of shares or other securities. This includes determining the present cash value of the consideration and recording the basis for assessing that cash value. The present cash value must not be less than the amount to be credited for the issue of shares, as resolved by the board of directors.

Another update under the MCL is that a shareholder is now entitled to bring a derivative action on behalf of a company, as long as the court determines, among other things, that the company was unlikely to bring the action itself, and that the shareholder is acting in good faith. There are also more expansive responsibilities of directors, including the duty to act with care and diligence, the duty to act in good faith in the company’s best interest and the duty to avoid reckless trading.

The MCL also introduces a solvency threshold that a company must prospectively determine and meet immediately after one of the following actions is taken: redeeming redeemable preference shares, paying dividends, undertaking a reduction in share capital, undertaking a share buy-back or providing financial assistance. The solvency test requires that, at the time of assessment, a company be able to pay its debts as they become due and payable, and that the company’s total liabilities do not exceed its total assets.

Mortgages & Charges

Moreover, the MCL bestows on companies the ability to grant mortgages and charges, which may be over immovable property. The Transfer of Immovable Property Restriction Act (TIPRA) of 1987 generally prohibits the sale, transfer or exchange of land to a foreigner or foreign company. However, under the MCL, TIPRA neither applies any restriction, nor is breached, by the granting of a mortgage or charge under these provisions.

The exception to TIPRA applies in the exercise of any rights of the mortgagee or chargee to realise the value of the property that is secured by the mortgage or charge. It should be noted, however, that the MCL also states that its provisions “relating to foreign companies shall not affect the operation of any provision of [TIPRA]”.

Considering that TIPRA restrictions on foreign companies also include the exercise of any rights of the mortgagee or chargee to realise the value of the property secured by the mortgage or charge, it was unclear as of the end of 2018 how the relevant authorities will implement these provisions.


Company extracts and historical company extracts of businesses registered on MyCO have recently been made available for purchase, allowing for independent verification of matters such as incorporation status. This facility provides interested investors with more information on companies that could previously only be sourced through the cooperation of the companies. That is to say that prior to MyCO making specific information available online to third parties, in order to access such corporate details, a third party would have to either obtain the information directly from the company ( leaving some question as to whether the document is accurate and/or up to date), or obtain permission from the company to allow the third party to inspect documents in possession of the CRO.

However, even after obtaining such permission, in some cases employees of the CRO were reluctant to share requested information with third parties.

Therefore, this more transparent online registry, coupled with the MCL allowing up to 35% of the issued share capital of Myanmar-owned companies to be held directly or indirectly by foreigners without such company being deemed a foreign company, should encourage investors looking to dip their toes into Myanmar business, since it is now possible to get a more transparent and accurate picture of companies being targeted for acquisition.

By abiding by the 35% threshold, foreign companies investing in these Myanmar companies will be able to enjoy the same privileges as if the company were wholly Myanmar-owned, including participation in certain nationalised sectors.

Moreover, the forms used under the Companies Act – e.g., Shareholding Details (Form 6), Directors List (Form 26) and Annual Return (Form E) – are no longer used under the MCL. The various government ministries have been informed of the key changes and procedures of the MCL, and they are transitioning to using MyCO to obtain certain requested information instead. Now that government ministries can themselves view the corporate information of companies with business before them, it is hoped that this will speed up those processes which, in the past, were often held up due to issues with forms used under the Companies Act.

Investment Permits

Under the MIL, if the investment activity corresponds with one of five restricted categories, both local and foreign investors must apply for a permit from the MIC. These categories are detailed in the MIR and outlined below. The first restricted category is business activities that are strategic for Myanmar, and includes:

• Investments with an expected investment value exceeding $20m in the areas of communication and information technology, pharmaceutical technology, biotechnology, similar technologies and logistics infrastructure, energy infrastructure, urban development, extraction of natural resources and media;

• Investments with an expected investment value exceeding $20m made in technology, transport infrastructure, energy infrastructure, urban development infrastructure and new cities, extractive/ natural resources or the media sector, or otherwise made pursuant to the grant of a concession, agreement or similar authorisation by a government authority;

• Investments in a border region, in an area affected by conflict or conducted across the national borders if they are made by a foreign investor or a Myanmar citizen with an expected investment value exceeding $1m;

• Cross-border investments made by a foreign investor or a Myanmar citizen with an expected investment value exceeding $1m;

• Investments that will be conducted across the states or regions of Myanmar;

• Investments in agriculture that include the right to occupy or use more than 405 ha of land; and

• Investments to carry out other business except for agriculture on more than 40.5 ha of land. The second restricted category requiring a MIC permit is any large capital investment having an investment value of over $100m.

The third category is any investment taken to have a large potential impact on the environment and local community; for example, if the investment:

• Has been or is likely to be classified as a type of project that requires an environmental impact assessment;

• Is located in a designated or proposed protected or reserved area, a key biodiversity area, or any other area specified to support the ecosystem and cultural and natural heritage; or

• Is a cultural monument or unspoiled natural area proposed or specified as protected under existing laws, procedures and notifications, including the Environmental Conservation Law. There is also a range of considerations relating to the size of the land to be used or occupied, land subject to a claim, or land likely to require expropriation.

The fourth category relates to business activities that will use state-owned land and buildings. The fifth covers activities designated by the government to require the submission of a proposal to the MIC.

In Notification No. 15 of 2017, the MIC provides a further list of investment activities that are either prohibited or otherwise restricted. These activities are divided into the same categories of restricted investment as specified in the MIL:

• Investment activities allowed to be carried out only by the Union;

• Investment activities not allowed to be carried out by foreign investors;

• Investment activities only allowed in the form of a joint venture with any citizen-owned entity or any Myanmar citizen; and

• Investment activities to be carried out with the approval of the relevant ministries.

Investment Endorsement

The MIL provides an alternative investment permit for a foreign investor who is not required to apply for an MIC permit, but would like to enter into a long-term land lease, or enjoy tax benefits and exemptions. This form of approval is called an MIC endorsement, the procedural details of which are set out in the MIR. A grantee of an MIC endorsement may apply for land use rights and/or tax benefits or exemptions.

In Notification No. 84 of 2017, the MIC stated that existing businesses that have not previously sought a permit may apply for an endorsement. Although such companies may not be eligible for an income tax holiday, they are permitted to apply for the following benefits conferred under an MIC endorsement:

• Exemption or relief from Customs duty or internal taxes on the importation of raw materials or partially manufactured goods conducted by export-oriented business for the purposes of the manufacture of products for export;

• Reimbursement of Customs duty or other internal taxes on imported raw materials and partially manufactured goods that are used to produce products for exportation; and

• Exemption or relief from Customs duty or other internal taxes on machinery, equipment, instruments, spare parts, and other materials and parts that are imported as part of an investment that is increasing in volume, with the approval of the MIC.

Further Provisions

The MIR clarifies the rules and assessment procedure for applying for tax incentives. Notably, investments in a promoted sector are eligible for an income tax exemption. The MIC has issued, by Notification No. 13 of 2017, the list of promoted sectors, which include agriculture, livestock, city development, construction, power generation, production of renewable energy, telecommunications, education, health care, IT, and hotels and tourism. The extent of the exemption depends on the location of the investment, with remote and rural regions subject to a longer income tax holiday.

The MIC has, by issue of Notification No. 10 of 2017, designated three zone classifications for the country. These range from less-developed regions in Zone 1, to regions that have been designated as moderately developed in Zone 2 and developed areas in Zone 3. The available income tax exemption periods are seven, five and three years, respectively.

The MIR also offers some useful clarifications. For example, if an investor makes an investment in another business entity or investment vehicle that already holds an investment permit, that investor is not required to obtain an additional permit.

The MIR sets out detailed annual reporting requirements and mandatory insurance requirements for investors holding an MIC permit or who are otherwise subject to tax incentives under an MIC endorsement. The insurance policies that need to be taken out, where relevant to the nature of the business being conducted, include property and business interruption insurance, engineering insurance, professional liability insurance, professional accident insurance, marine insurance and workers’ compensation insurance.

Special Economic Zones

Foreign investors may also find it advantageous to position their operations within an SEZ, which requires an SEZ permit, as this can entitle foreign investors to certain benefits and guarantees. This topic is governed by the SEZ Law, and the entitlement of a foreign investor to benefits and guarantees hinges upon whether the foreign investment is within a free zone area, is categorised as a free zone business, is located within a promotion zone area, or is categorised as a promotion zone business. Presently, however, there is only one existing SEZ operating in Myanmar, the Thilawa SEZ (TSEZ).

The SEZ Law defines “free zone” as an area deemed to be outside the country that is entitled to exemptions from Customs duty and other taxes relating to goods in, and imported into, the SEZ. Free zone businesses are entitled to benefits that include an exemption from income tax for the first seven years from commencing commercial operations, the ability to lease and develop land for a period of up to 50 years (renewable for an additional 25 years), permission to engage in import and export activities in Myanmar, and a mechanism for repatriating profits and capital to the home country.

A “promotion zone” is defined as the internal taxation area situated within an SEZ and includes other activities that are not the activities of a free zone. Promotion zone businesses are exempt from income tax for the first five years from commencing commercial operations and are permitted to lease land within the SEZ, also for a period of up to 50 years (renewable for an additional 25 years). There are additional benefits, such as a limited exemption from Customs duties and other taxes, and the profit and capital repatriation mechanism.

As of March 2018 the Insurance Business Regulatory Board can, under Notification No. 2 of 2017 of the Ministry of Planning and Finance, issue provisional permits to foreign insurance companies, allowing them to operate within SEZs. However, there is a relatively high threshold for foreign insurance companies seeking a provisional permit. Such companies must have been operational for at least 10 years and must have total assets or paid-up capital of a minimum of $1bn.

Relaxation of Trading Restrictions

Even upon the registration of a private limited company, or the receipt of an MIC permit or endorsement, foreigners are, generally, restricted from engaging in any trading activity. While a specific definition of “trading activity” is not provided under Myanmar law, it is understood to include the importation of goods for the purposes of resale and the procurement of local goods for the purposes of resale.

The Myanmar authorities have, however, routinely provided policy exceptions that permit a foreigner to engage in trading activity under certain circumstances. Such policies are separately issued and applied by the MIC in relation to entities operating under an MIC permit or endorsement, or by the TSEZ Management Committee for entities operating in the TSEZ, or by the MoC for foreign investment companies registered under the Companies Act but without any other additional investment approvals. The MIC, generally speaking, permits foreign companies operating with an MIC permit or endorsement to both sell and distribute products that they have wholly or partially manufactured in Myanmar.

After the MoC allowed foreigners to trade pesticides, seed, chemical fertilisers, medical equipment and construction materials, the ministry’s issuance of Notification No. 25 of 2018 on May 9, 2018 has provided a clearer path towards the conduct of trading activity by foreigners across a wider range of goods. This paves the way for 100% foreign-owned companies and joint ventures to register as wholesale and retail businesses, and conduct trading activities.

While Notification No. 25 of 2018 states that 100% foreign-owned firms and joint ventures between local and foreign investors, as well as between local investors, would be able to conduct wholesale and retail trading of all types of commodities (except prohibited items), the MoC nonetheless issued a list of 24 general product categories that may be traded by 100% foreign-owned companies and joint ventures:

• Consumer goods (clothing, watches and cosmetics);

• Foodstuff, including agricultural products (except as prohibited elsewhere), marine products, animal products, ready-made goods, non-alcoholic beverages and domestically manufactured alcoholic beverages;

• Household goods, including lacquerware and glassware;

• Kitchenware;

• Pharmaceuticals and hospital equipment;

• Animal feed and veterinary medicine;

• Stationery;

• Furniture;

• Sports equipment;

• Telecommunications equipment;

• Electronics;

• Construction materials and equipment;

• Electrical records;

• Chemicals for industrial productions;

• Seeds, agricultural inputs and equipment for use in agriculture;

• Agricultural machinery;

• Machines and related equipment;

• Bicycles;

• Motorcycles and related equipment;

• Motor vehicle spare parts and machinery spare parts;

• Toys;

• Home decoration materials, including flowers and plants;

• Souvenirs and handmade goods; and

• Works of art, musical instruments and related equipment (excluding antiques).

Capital Requirements

In Notification No. 25 of 2018, the MoC specified the minimum capital requirements for 100% foreign-owned companies and joint ventures. Wholly foreign-owned firms need at least $3m to establish a retail company and $5m for wholesale, while a joint venture requires $700,000 for retail and $2m for wholesale. The notification also clarified the timing of required capital injection, as well as the detailed requirements and procedures for the registration of retail and wholesale trading businesses. Notably, the notification states that a joint venture with less than 20% Myanmar ownership is considered a 100% foreign-owned company and as such will have to comply with the minimum capital requirements of foreign-owned companies.

Newly incorporated 100% foreign-owned companies and joint ventures are required to inject 50% of the minimum capital requirement amount prior to registration within 30 days of the date of applying for the registration of the retail or wholesale business. Another 30% of the minimum capital requirement is to be made by the end of the second year of operation as a retail or wholesale business, and the final 20% must be made before the end of the third year.

For existing 100% foreign-owned companies and joint ventures wishing to conduct retail/ wholesale business, at least 20% of the minimum capital requirement should be injected prior to registration or within a month from the date of submission of the application for registration; 30% has to be made before the end of the first year of operation as a retail/wholesale business; 30% must be made before the end of the second year; and the final 20% has to be made before the end of the third year.

For existing 100% foreign-owned and joint venture companies that are already conducting trade in previously allowed commodities such as fertilisers, hospital equipment, pesticides, construction materials and seeds, they are required to submit evidence of investments made from the date of the commencement of operation to 30 days before the time of registration. They are allowed to remit additional capital within five years from the date of filing if their current invested capital is below the new prescribed minimum capital requirement under Notification No. 25 of 2018.

The MoC requires evidence of remittance to show that the minimum capital requirement has been met. Failure to do so will result in an eventual suspension of the exporter/importer registration required for the importation of goods, and suspension of the importation of goods by the company.

Furthermore, there is a minimum floor space stipulation of 929 sq metres for 100% foreign-owned companies and joint ventures wishing to conduct retail business. This minimum floor area is applicable for each location of the proposed retail operation, but warehouses and small office areas inside the building are included in the calculation of the minimum floor space area. However, parking spaces and offices and warehouses outside of the building where the retail operation will be conducted are excluded from the calculation. A retail business with a floor space of less than 929 sq metres is presently reserved for 100% Myanmar-owned companies.

Wholly foreign-owned companies and joint ventures are required to apply for wholesale and retail business registration in Naypyidaw, while 100% local companies are allowed to register in Naypyidaw, Yangon or Mandalay. Registration is valid for five years from the date of the issuance of the registration, and extensions are required to be applied for within two months from the expiry of the registration, together with the proposed operational plan for the next five years. As of October 2018, four joint ventures have been registered to conduct retail and wholesale trading under Notification No. 25 of 2018.

Education Services

The MIC issued Notification No. 7 of 2018 on April 20, 2018, providing for five types of private schools following either the curriculum stipulated by the Ministry of Education or other relevant ministries, or an international curriculum. Private schools are defined as schools other than those operated by the state. They include:

• Privately operated basic education schools;

• Privately operated technical, vocational and training schools;

• Privately operated higher education schools;

• Privately operated subject-based schools; and

• Other privately operated schools as designated by a relevant ministry. Private schools may be operated by 100% Myanmar-owned companies, joint ventures between Myanmar entities and foreign entities, or 100% foreign-owned companies. No minimum capital requirement was specified, nor is an MIC permit required.

This notification emerges alongside the Draft Basic Education Law, which is due to replace the Basic Education Law of 1973. It is intended to reform the system of basic education in Myanmar and lays out the principle objectives for basic education, including providing equal opportunities for students of all backgrounds; promoting literature, culture and traditions of all ethnicities; and decentralising the education system. Notably, this includes reform to K-12 across private schools, monastic schools and special education programmes.

Land Laws

Land law reform remains on the agenda in Myanmar. There is, as of yet, no centralised legislation governing land ownership and use. Instead, there is a collage of generally land-specific laws. This includes laws relating to farmland; forest land; vacant, fallow and virgin land; and industrial land, among others. The concept of freehold land is recognised in Myanmar; however, such land is reserved for citizens and there is a relative paucity of it. Freehold rights apply only to “ancestral lands”, a concept which is a holdover from colonial times.

Freehold rights are no longer granted by the government, and much of the landholding of private individuals is by grant from the state or from other private persons. Most grant land is concentrated in the larger cities and towns of Myanmar, such as Yangon and Mandalay. Under the grant, the grantee is permitted use of the land for a specified time period. The majority of grants have a term of 60 to 90 years. Rights in grant land are transferable and may be divested. An interest in grant land may also be repeatedly renewed.

From a foreign investment perspective, a key restriction comes in the form of TIPRA. TIPRA prohibits the sale, transfer or exchange of land to a foreigner, including foreign companies. Furthermore, foreigners are prohibited from leasing land for a period greater than one year. TIPRA does permit exemptions to these restrictions if they are granted by the relevant government ministry. These exemptions apply when extended to foreign governments, diplomatic missions or other organisations of individuals. With respect to foreign investment, such exemptions may be secured through the grant of land use rights to an MIC permit or endorsement holder under the MIL, or through an SEZ permit under the SEZ Law, each of which give foreign investors the right to lease land for a term of at least 50 years for the initial term.

Sectors Reserved for Government

Certain sectors remain off-limits to investors, as they are traditionally reserved for the Myanmar government and state-owned enterprises. Such sectors include the exploration, extraction and sale of petroleum and natural gas; postal and telecoms services; piloting and air navigation services; power generation and distribution; and the cultivation and conservation of forest plantations.

However, the government has the discretion to allow non-government parties, including foreigners, to take part in some of these otherwise reserved sectors. This may be permitted through a joint venture with the government, or under certain requirements and conditions specified by the government. Foreign engagement in reserved sectors is usually set in motion by a recommendation by the relevant ministry or state-owned entity that has jurisdiction over the sector, as well as through an investment permit granted by the MIC.

Financial Rules & Regulations

The Central Bank of Myanmar (CBM) issued Instruction No. 6 of 2018, allowing foreign bank branches to provide financing and other banking services to local businesses. Previously, foreign bank branches were only allowed to provide banking services to foreign investors and joint ventures, as well as undertake export financing and its related banking services to give favour to local companies.

While “other banking services” have not yet been clearly defined, it is still a welcome move in the slow but steady liberalisation of Myanmar’s banking sector. This allows local investors access to more financing options to grow their businesses. This also has the effect of stimulating Myanmar’s financial markets by providing local banks competition in the form of foreign players that can offer alternatives to the services provided by local banks, and controlling kyat depreciation by allowing more currency inflow. The CBM is considering granting more licences to foreign banks to operate in Myanmar.

To build on the CBM’s Regulation on Credit Information Reporting Systems – which intended to provide for the establishment of credit reporting companies such as credit bureaux – the bank has granted a licence for a credit bureau, which is expected to be operational before 2020. Banks may be able to grant loans based on the information provided by the credit bureau instead of on collateral.

The recent Mobile Financial Services (MFS) Regulations should grant the populace wider access to financial services by providing an alternative platform where customers can deposit, withdraw or transfer money through their mobile accounts. These regulations allow both mobile network operators, duly licensed under the Telecommunications Law of 2013, and non-bank financial institutions to provide mobile financial services by obtaining the required registration from the CBM. Mobile money services are gaining popularity, with even state-owned Myanma Posts and Telecommunications hoping to provide such a service in the near future.

This follows Telenor’s Wave Money, which was the first company to obtain a licence under the MFS Regulations and was launched in 2016, and Ooredoo’s M-Pitesan, which launched in September 2017.

Non-bank financial institutions (NBFIs) and microfinance institutions (MFIs), licensed under the Financial Institutions Law of 2016 and the Microfinance Business Law of 2011, respectively, collectively provide services that range from small unsecured loans to motor vehicle financing, and are gaining wider acceptance and experiencing increased usage.

Start-ups, small and medium-sized enterprises (SMEs), and unbanked individuals thus are enjoying greater access to funds through NBFIs and MFIs for their business or personal needs.

However, it has become difficult to obtain a licence because of the large number of MFIs operating, and investors are exploring acquiring existing MFIs as opposed to starting from the ground up.

At the same time, foreigners have yet to formally receive licences from the CBM to directly engage in NBFI activities and, as such, have had to enter into alternative contractual arrangements with Myanmar-owned and licensed NBFIs pending a change in the CBM’s regulatory policies.

Tax Update 

The annual update of the Union Tax Law came into force on March 30, 2018, and the corporate tax rate remains at 25%. However, newly incorporated SMEs that have net profits under MMK10m ($7070) during the first three years of business, including the year of commencement, are exempt from income tax. Tax is assessed only on the income that SMEs earn in excess of that amount.

In addition, pursuant to the Internal Revenue Department’s Notification No. 47 of 2018 dated June 18, 2018, payments made by non-state-owned entities to Myanmar-resident companies and individuals for goods and services performed in Myanmar under a contract or agreement no longer need to account for 2% withholding tax. However, payments made to residents by Union-level organisations, ministries, the Naypyidaw Council, state and regional governments, state-owned enterprises and municipalities are still subject to 2% withholding tax, while payments to non-residents is subject to withholding tax of 2.5%. The payment by non-state-owned entities to non-residents is still subject to 2.5% withholding tax.

The payment of loan interest to non-residents is subject to a 15% withholding tax and the payment of royalties to non-residents likewise incurs a 15% withholding tax, subject to certain tax treaties between Myanmar and the country of residence of the payee.

The change to the Myanmar fiscal year previously approved by the Union Parliament was recently implemented for government agencies and state-owned enterprises. The new fiscal year runs from October 1 to the following September 30.

Labour & Employment

The Ministry of Labour, Immigration and Population issued a revised Standard Employment Contract Template (SECT) through Notification No. 140 of 2017, superseding the previous template issued in 2015.

Based on the current policies of the relevant Township Labour Office (TLO), amendments to the SECT are permitted as an annex to the SECT, but must first be submitted for evaluation and approval. While not a law in itself, the SECT implements a provision of the Employment and Skills Development Law of 2013, which provides that employment contracts must be made and signed within 30 days from the appointment of an employee. The employment contracts are registered with the TLO that has jurisdiction over the workplace of the relevant employee.

The National Committee for Minimum Wage issued Notification No. 1 of 2018, proposing a minimum wage of MMK4800 ($3.40) per eight-hour working day, or MMK600 ($0.42) per hour – a 33.3% increase from the previous minimum set in 2015 of MMK3600 ($2.55) per eight-hour working day, or MMK450 ($0.32) per hour. This was approved in March 2018.

TLOs have recently been pushing companies to comply with the Settlement of Labour Disputes Law of 2012 by forming Workplace Conciliation Committees, which would consist of:

• Two employee representatives proposed by each labour organisation and employer representatives equal to the number of employee representatives, in the case of an existing labour organisation; or

• In the case that no labour organisation exists, two employee representatives and two employer representatives. The committees have a term of one year. It is expected that new regulations requiring three representatives, instead of two, will be issued soon.

Anti-Corruption Measures

The DICA recently issued an Anti-Corruption Code of Ethics for Companies and Bodies Corporate by way of an announcement dated August 3, 2018. The code is intended to cover firms and corporate bodies incorporated in Myanmar in their business dealings with the ministries concerned or with government organisations, as well as with companies or organisations in the private sector. The following are listed as prohibited activities:

• Making and offering gifts, entertainment and other preferential treatment, directly or indirectly;

• Providing a financial advantage to secure a business opportunity, whether directly or indirectly;

• Offering charitable donations, directly or indirectly;

• Conferring political contributions, directly or indirectly; and

• Providing assistance in exchange for employment in companies or organisations for personal interest, either directly or indirectly. This is likely to be used as a guide by government officials when dealing with private entities, as it does not appear to have the enforceability of the standing Anti-Corruption Law of 2013 and the Penal Code of 1860. The Anti-Corruption Code of Ethics only “encourages” all companies and bodies corporate incorporated in Myanmar to respect and abide by the anti-corruption guidelines.

Myanmar Competition Commission

The government, through Notification No. 106/2018 dated October 31, 2018, appointed the members of the Myanmar Competition Commission. This represents a long-awaited next step towards the active implementation and enforcement of the Competition Law of 2015 and its accompanying Competition Rules. Among those appointed was the minister of commerce as chair of the commission and the director-general of the Department of Trade as secretary.

With the formation of the Myanmar Competition Commission, the process of educating and training Myanmar businesses on the Competition Law and the Competition Rules, as well as developing regulations for mergers, filing procedures and other such processes, may finally begin.

Sector-specific laws like the Financial Institutions Law of 2016 and the Competition Rules for the Telecommunications Sector, which regulate mergers and acquisitions involving financial institutions and telecommunications companies, respectively, should also receive a boost, as the Competition Commission can provide some much-needed expertise.

All in all, this is a welcome step forwards in the adoption of standards and procedures in competition policy, which will help ensure that Myanmar is fair, safe and healthy for consumers and investors alike.


Despite some negative sentiment, the government in Myanmar has continued to pursue a reform agenda in 2018. As with the last few years, there has been a mixture of liberalisation and, as required, regulation. With Myanmar taking great strides in making investing in the country friendlier, the implementation of the MCL and rollout of MyCO should promote investor confidence in Myanmar. The effects of the MCL, while in their relative infancy, will be felt for years to come. Increased investor confidence would go a long way towards easing concerns with the coming elections in 2020.

OBG would like to thank Kelvin Chia Yangon for its contribution to THE REPORT Myanmar 2019