Doing Business in Myanmar

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Since 2011, the Government of Burma has undertaken reforms to open Burma’s economy to the global marketplace. The Government of Burma has adopted, among other changes, budgetary and tax reforms, monetary and financial sector regulatory changes, and liberalization of trade and investment in order to integrate its country in the international economy. 


Foreign trading partners have sharpened their focus on Burma and are considering the unique opportunities the country presents within a variety of different sectors. With a rich natural resources base, an estimated population of 60 million, a young labor force and a prime geographic location – strategically between India, China and linked with the countries that make up the Association of South East Asian Nations (ASEAN) – Burma is the subject of much interest from the international business community. The enactment of a new Foreign Investment Law in 2012, the easing of U.S. economic sanctions, and the complete lifting by the EU and Australia of their own sanctions (except for a ban on the sale of military goods and services), have encouraged foreign companies to consider investing on Burma. As a result, Burma’s trade and investment linkages to the outside world are growing rapidly, as is economic growth at home, which is estimated to reach 8.25 percent in 2014.

 

Although Burma has adopted widespread reforms, the government still has a long road ahead to create the foundation for a healthy investment and commercial environment that helps further the country’s development. The government has limited capacity, and a long list of competing priorities to consider as it decides which reforms to implement. The country still has numerous laws and regulations that are outdated and inadequate. Property rights are not well-established and land confiscation and contested land ownership remain concerns. Investor protection and the criteria for approving foreign investments are not well-defined, and Burma’s weak rule of law means that it does not have in place the proper mechanisms and instruments for enforcing contracts or property rights and for settling disputes. Physical infrastructure is poor, and electrical power is both unreliable and inadequate. Bureaucratic red tape is burdensome, and corruption is widespread. A lack of reliable data and information adds to the frustration that many foreign investors experience when attempting to look up market data, consumer base information and other capital and financial indicators.

Consequently, Burma's market presents investors and traders with unique opportunities and potentially tremendous gains, but requires patience and persistence. As noted, Burma still suffers from several market challenges and obstacles. For example, obtaining accurate and relevant market and financial data is onerous. Statistics for Burma’s economy are difficult to obtain and verify, making it difficult to accurately predict future performance. Demand for well-educated and trained workers outstrips supply. Government ministers and their staff are overwhelmed due to the spike in interest from foreign governments, NGOs, and multinational businesses. Real-estate prices in Rangoon have tripled, and Burma’s small number of hotels means that it can at times be extremely difficult to find accommodation - even with rates that verge on the exorbitant.

A sampling of the market challenges that Burma has begun to address, but needs to show significant progress on, includes:

  • An unpredictable legal and regulatory system that relies on practices and government discretion rather than written laws
  • Opaque economic policymaking, including laws and rules drafted without public consultation and frequent, unpublicized and unwritten policy changes
  • Investments approved on a case-by-case basis by the Myanmar Investment Commission
  • Weak rule of law and property rights; the judiciary is not independent and lacks experience with commercial litigation and arbitration
  • Corruption and cronyism, aided by lack of legal certainty
  • Weak or limited intellectual property laws
  • Arbitrary tax policies
  • A small and inexperienced financial sector and shallow domestic capital market
  • Continued unpredictability as well as limited supply of electricity , outside major urban areas
  • A weak educational system and unskilled work force
  • Poor infrastructure including communications and transportation network
  • Communication challenges resulting from the location of most government offices in the administrative capital, Nay Pyi Taw, 200 miles from the commercial capital of Rangoon

Credit: U.S. Department of State

 

 

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