Foreigners Investing in Myanmar
A foreign investor may incorporate in Myanmar a 100% foreign owned company, establish and operate as a registered branch of a company incorporated outside Myanmar; establish and operate as a sole proprietor; and establish and operate as a 100% foreign owned partnership.
The incorporation of a foreign Myanmar company and registration of a Myanmar branch of a foreign company is subject to the procedures and requirements set out in the Myanmar Companies Act and by the Directorate of Investment and Company Administration (“DICA”).
The new FIL defines three types of foreign investment which are eligible to obtain investment privileges: 1) a 100% foreign owned company; 2) a joint venture with a Myanmar investor; and (3) a foreign investor operating in a contractual relationship with a local investor. The minimum required foreign investment capital will depend on the business sector and as decided by the Myanmar Investment Commission (“MIC”).
The Foreign Investment Rules (Notification No. 11/2013 of the Ministry of National and Economic Development) and a notification of the MIC providing details on the terms and restrictions on making certain kinds of foreign investment (Notification No. 1/2013 of the MIC) were issued on 31 January 2013. Of particular interest is the MIC notification as it advises foreign investors of what industries they can expect to be allowed to invest in and what conditions they can expect to be subject to. The following are examples of industry sectors:
- Mining: Foreign investors may only participate in large scale mining operations with a local joint venture partner.
- Real estate: Development of commercial and residential real-estate requires a local joint venture partner.
- Oil and Gas: Drilling for oil and gas from shallow wells of less than 1000 feet is generally not permitted for foreign investors
- Telecommunications: There are no restrictions on foreign investment in the Foreign Investment Law for the telecommunications sector. However, the telecommunications sector is a restricted sector under the State Owned Economic Enterprises Law, allowing the Government to impose additional restrictions and requirements. A new Telecommunications Law is expected in the coming months to regulate the sector. On 27 June 2013, the Myanmar government approved two 15-year telecommunication licenses for the development of nationwide cellular service subject to closing conditions.
- Power: Hydro and coal power plants will only be permitted through a joint venture with the Government or on a build, operate, and transfer basis.
Foreigners who invest in “local” companies through nominees have no legal standing to enforce their rights. Foreigners considering investment in Myanmar should only invest through a Myanmar incorporated company in which they are shareholders and have their directors duly registered at the Companies Registration Office in accordance with the Myanmar Companies Act (1914).On 27 February 2012, the MIC passed an Order relating to nominee investments carried out by Myanmar Citizens. The order requires foreign investors to invest in accordance with the Foreign Investment Law, not through the use of a local nominee. Upon failure to do so, the concerned company will be blacklisted.
Foreigners may not currently purchase land or condominiums in Myanmar. However, pursuant to MIC Notification No. 1/2013, Category (3) Sr No. 11 (1) establishment of lease of office or commercial building can be implemented with 100% Foreign Investment if it is established by Build, Operate & Transfer (BOT) system under a MIC permit.
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