Supply Chains: Myanmar
In February 2021, political unrest brought on by a military coup and subsequent crackdowns on protestors have set the economy back into an uncertain future. As a result, foreign direct investment (FDI) levels are expected to decline and, for some investors, lead to the withdrawal of existing investments. Myanmar had been implementing reforms since 2011 to transition into a more market-driven system, though state-owned enterprises remain prevalent. Although Myanmar is actively attracting FDI, its investment climate remains one of the most challenging in ASEAN. In 2020, it received US$1.8 billion of inbound FDI versus US$2.8 billion five years earlier, a decrease of 36 percent. In 2020, Myanmar’s real GDP grew by 3.2 percent despite COVID-19 headwinds, making it one of the few economies in the Asia-Pacific region to register positive economic growth.
As Myanmar is rich in natural resources and features a comparatively young labor force and a strategic location in Southeast Asia, foreign investors have understood the case for investing there. But challenges remain, including poor infrastructure, a weak legal system, and political instability. Given Myanmar’s large agricultural sector, it is not a particularly complex economy and ranks 120 out of 146 in the world for economic complexity.
Until recently, Myanmar had been implementing additional FDI-friendly policies and streamlining its business registration process. Financial reforms were introduced in 2019 to make processing payments and accessing capital easier for investors by relaxing some capital controls and improving convertibility of the kyat into foreign currencies. In 2020, Myanmar also introduced tax holidays for investment in priority sectors including agriculture, tourism, and infrastructure, though the specific terms vary depending on investment location. In recent years, top sources of inbound FDI have included Singapore, China, and Japan.
Recent Investment/Supply Chain Policies
- On August 1, 2018, the Myanmar Companies Act, approved by the president on December 6, 2017, came into effect. Among other measures, the act allows foreign investors to hold up to 35 percent of shares in a domestic company without the company losing its status as a "Myanmar Company."
- On May 9, 2018, the Ministry of Commerce issued Notification 25/2018, which allows foreigners to gain 100 percent ownership of businesses in the wholesale and retail sectors, provided that they meet the initial investment requirements.
On June 26, 2019, the Ministry of Investment and Foreign Economic Relations launched the Investment Promotion Committee to create "a fair and prosperous society by promoting quality investment."
On November 19, 2018, the Union Parliament announced the formation of a new ministry, the Ministry of Investment and Foreign Economic Relations, to help boost local and foreign investment in a sustainable and socially responsible way.
- On March 6, 2020, the Securities and Exchange Commission of Myanmar (SECM) announced an “Instruction for Allowing Foreign Participation in Daily Share Trading of Listed Companies in Yangon Stock Exchange (YSX),” which began allowing resident and non-resident foreigners to invest in the YSX for the first time. Local securities companies are expected to “establish internal policy regarding securities account opening” and the commission lists specific procedures for securities companies to adhere to after foreigners submit their applications for account opening and trading.
- On July 12, 2019, the Securities and Exchange Commission of Myanmar issued Notification No. 1/2019 allowing joint ventures or companies registered in other countries to participate in daily share trading of listed companies in the Yangon Stock Exchange.
- On November 8, 2018, the Central Bank of Myanmar issued Notification No.6/2018, which enables branches of foreign banks to extend banking services to local business entities.
- On April 20, 2018, the Myanmar Investment Commission (MIC) issued Notification 7/2018, which enables foreigners to make full capital investments in the following types of education services: (1) basic education school; (2) technical, vocational, and training school; (3) higher education school; (4) subject-based school; (5) private school designated by the government.