DOING BUSINESS IN MYANMAR IN 2020
Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Myanmar business registration ii) business licensing iii) Myanmar corporate banking solutions iv) visa options and staff recruitment strategies and v) workspace rent.
Summary table of Myanmar company registration
|Summary||Tax resident LLC||Nominee LLC||Free zone company||MIC company||Representative office|
|Also known as||Private limited company||Fast solution LLC||Special economic zone company||Myanmar Investment Commission company||Liaison office|
|Best use of company?||All products and services||Closing a deal now||Manufacturing and export trading||Manufacturing||Marketing & research|
|How soon can you invoice Clients/sign sales contracts?||3 months||2 weeks||3 months||3 months||Cannot trade|
|How soon can you hire staff?||3 months||2 weeks||3 months||3 months||3 months|
|How soon can you sign a lease agreement?||2 weeks||2 weeks||2 weeks||2 weeks||2 weeks|
|How long to supply corporate bank account numbers?||4 months||3 weeks||2 months||2 months||2 months|
|How long to supply company registration/tax numbers?||3 months||2 weeks||3 months||3 months||3 months|
|Corporate tax rate on annual net profits?||25%||25%||0%||25%||None|
|Limited liability entity?||Yes||Yes||Yes||Yes||No|
|Government grants and tax exemptions available?||Yes||Yes||Yes||Yes||No|
|Government approval required for foreign owners?||No||No||No||Yes||No|
|Resident director/partner/manager/legal representative required?||Yes||Yes||Yes||Yes||Yes|
|Minimum paid up share capital?||US$50,000||US$1||US$50,000||US$300,000||US$ 1|
|Can bid for Government contracts?||Yes||Yes||Yes||Yes||No|
|Corporate bank account location?||Myanma Investment and Commercial Bank||Myanma Economic Bank||Myanma Foreign Trade Bank||Kanbawza Bank||Ayeyarwady Bank|
|Can secure trade finance?||Yes||Yes||Yes||Yes||No|
|VAT payable on sales to local customers?||5%||5%||0%||5%||Cannot trade|
|Average total business set up engagement costs?||US$20,825||Request a proposal||Request a proposal||Request a proposal||US$21,500|
|Average total engagement period?||4 months||3 months||3 months||3 months||3 months|
Myanmar business setup summary
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Advantages and Disadvantages
Advantages of Myanmar company registration
- Myanmar offers the following opportunities for foreign entrepreneurs:
- Myanmar is a large market of 51 million inhabitants. Its population is also one of the youngest amongst Southeast Asian countries and is expected to grow by over 2 million by 2020;
- Myanmar is the fastest growing market in Southeast Asia. The growth rate of its GDP was recorded at 7.7% in 2014 and is expected to reach 8% per year until 2020;
- The World Bank’s US$400m loan to Myanmar will fund infrastructure investment, improving the country’s business environment;
- Entrepreneurs starting a company manufacturing or importing products in Myanmar will find huge demand for them. The economy is currently too feeble to satisfy the basic needs of the local population, resulting in increase of imports (23% in 2014) since the liberalization of the currency regime in 2012. This trend is set to continue, as the IMF expects imports to grow at an average of 15% per year until 2020;
- In an effort to modernize the economy, the Myanmar government has recently granted concessions and licenses to foreign corporations. For instance, the telecommunication companies Telenor and Ooredoo were recently awarded licenses to equip the country with mobile phones;
- For all the reasons listed above, Myanmar is classified by Forbes and Barron’s as a promising frontier market.
- While many restrictions still apply to foreign investors, it is becoming easier to establish a company in Myanmar because:
- The European Union and the United States have recently lifted some of the sanctions against the country, hence reducing risks associated with investing in Myanmar;
- The Myanmar Government recently created a one-stop shop, in an effort to limit the amount of red tape associated with forming a company in Myanmar;
- Foreign entrepreneurs can also now invest in Myanmar’s special economic zones in order to benefit from i) tax holidays at least five years ii) exemption from custom duties on machinery, equipment and some raw materials and iii) carry forward company losses during up to five years;
- Myanmar is trying to develop into an export-oriented economy. As such, it has devised incentives such as tax relief of up to 50% on profits made from exports, provided that the company reinvests in its business within one year;
- Recent legislation has guaranteed that no nationalization of a foreign-owned company in Myanmar would happen for the duration of a company’s foreign investment license granted by the Myanmar Investment Commission.
- Myanmar does not levy withholding tax on dividends paid to nonresident companies. The country has also signed double taxation avoidance agreements with eight countries, namely: i) Bangladesh ii) India iii) Indonesia iv) Laos v) Malaysia vi) the United Kingdom vii) Vietnam and viii) Singapore.
- Myanmar is endowed with a range of natural resources including i) oil and gas; ii) precious minerals like copper and gold; iii) timber and forest by-products; and iv) hydropower potential. These further enhance an entrepreneur’s confidence in investing in Myanmar due to the benefits below:
- Myanmar is known to be one of the world’s oldest oil and gas producers. The country has natural gas reserves of approximately 1,820 billion cubic feet and crude oil reserves of 139 million barrels;
- Major multinational oil and gas firms are readily investing in Myanmar to reap the benefits using their latest technologies of exploration;
- Myanmar’s mining industry has been recently re-opened to foreign entrepreneurs. The country has tremendous untapped potential for gold and copper mining;
- In accordance to ASEAN Connectivity 2025, the country has a potential hydropower capacity of 108GW. However, only 2.6% of the country’s potential has been met. By 2030, Myanmar aims to fully electrify the country. As a result, it has promising opportunities for foreign entrepreneurs in this sector.
Disadvantages of Myanmar company registration
- Our Clients should carefully consider the risks of investing of Myanmar: the country is still politically unstable, with large areas of the country not controlled by the Central Government and risks that progress made towards democracy and rule of law suddenly reverses;
- International banks are very reluctant to open and maintain corporate bank accounts to companies and entrepreneurs with subsidiaries in Myanmar;
- The Myanmar authorities still implement capital and foreign exchange controls, reducing the ability of foreign investors to repatriate their earnings. While the exchange rate of the local currency, the kyat, is not anymore fixed by the Government, it has depreciated by 32% since April 2012, creating risks over the value of our Clients’ assets in Myanmar;
- Registering a company in Myanmar is still expensive and time consuming for foreigners because:
- Not all sectors of the Myanmar economy are fully open for foreign investment in Myanmar. For example, setting up a foreign company in Myanmar to do business in agriculture, requires formation of a joint venture with a local partner. Our Client will be allowed to hold only up to 50% of the JV’s shares;
- Foreigners forming a company in Myanmar are required to invest at least i) US$50,000 in service industries and ii) US$150,000 in manufacturing;
- Foreign-owned companies are not automatically eligible to the Foreign Investment Law, which grant them protection against nationalizations, tax incentives and guarantees over the repatriation of their earnings. To benefit from these protections, it is necessary to obtain a permit approval from the Myanmar Investment Commission. Criteria reviewed by the MIC to approve the application include i) the number of jobs created ii) technology transfers and iii) the size of the investment, which must reach at least US$500,000, of which US$250,000 must be paid up;
- Completion of company registration is also long, requiring at least six months for a foreign-owned company. The administration is also corrupt: Myanmar is ranked as the most corrupt country in Asia-Pacific, according to Transparency International;
- Government agencies have a strong control over most industries in Myanmar including mining, media, and banking. This results in many bureaucratic and legal barriers for foreign investors interested in starting a Myanmar business.
- It is difficult to run a profitable and successful business in Myanmar because:
- Market opportunities are limited as i) the average purchasing power is below USD2,000 per year ii) close to 70% of the population lives in the country side and iii) the country receives less than 2 million tourists a year (to be compared with 2.5 million in Laos and 27 million in Thailand);
- Its takes at least four month to connect the company to electricity (when available). Companies record power outages an average of three times a week;
- Our Clients will also find that transportation infrastructure is disastrous: Myanmar is ranked as the 5th worst place in the world for the quality of roads and the 18th in the world for ports.
- The risks and responsibilities related to establishing a business in Myanmar has increasingly risen. This is due to the growing political controversies with regards to the “genocidal intent” of the military of the country towards the Rohingya Muslims. Moreover, US has imposed sanctions and the European Union and Canada has imposed 7 official sanctions against the Military of the country. Further, this puts risks of negative reputation and litigation on foreign entrepreneurs that seek to incorporate in the country.
- Myanmar offers the following opportunities for foreign entrepreneurs:
Best uses for a Myanmar companyThe country’s close proximity to the large markets of China and India make a Myanmar business a potential good vehicle to engage in trade with these two countries. Furthermore, upon completion of a new deep seaport, Myanmar is expected to be a hub of trade between Southeast Asia and economies surrounding the Indian Ocean.
- Time to incorporate: Twelve weeks
- Cost to set up: US$20,825
- Minimum capital: US$50,000
- Physical office required: No
- Shareholders: 2
- Directors: 2
- Company secretary: Yes
- Resident director: No
- Corporate tax rate: 25%
- Corporate tax base: Worldwide
- Shelf companies: Unavailable
- Main company type: Limited company
Useful links for Myanmar
Government and public authority websites:
- Myanmar government portal
- Myanmar Ministry of Finance and Revenue
- Office of the President
- Myanmar Tourism Promotion Board