By Eric C. Rose - Thai-American Business Magazine - Vol. 6 November 2013

Early this year, a new foreign investment framework came into effect in Myanmar providing more specific guidelines under the Foreign Investment Law (“FIL”) originally enacted in November, 2012. The legislative changes are discussed elsewhere in this issue; here, from the practioners on the ground, we suggest ten practical steps that should be considered by any American business interested in investment in Myanmar.  Specifically, we address considerations for the investor planning to take an ownership share in a Myanmar business, whether the share is 100% or a lesser interest.


The FIL has specific provisions which guarantee the safety of foreign investment from nationalization, and it also provides for repatriation of profits and invested capital. Similar provisions apply to investments made in the three Special Economic Zones (“SEZs - Dawei, Thilawa and Kyauk Phyu) that are covered by separate legislation.  Although Myanmar law applies to all foreign investment, the country has mutual investment guarantee treaties with only seven countries: Thailand, Laos, Vietnam, Philippines, China, Kuwait and India.  Furthermore, Myanmar has just become a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA).  OPIC and the U.S. Export-Import Bank, however, are not present in Myanmar. Thus an investment made in Myanmar from a non-treaty country increases the risk to the foreign investor.


Under the Myanmar Companies Act there are numerous types of incorporation one can select to operate in Myanmar. Without enumerating the possibilities here, we advise our clients to look first at what they are trying to achieve from a business standpoint, in the short and in the long term.  How will the Myanmar entity relate to your other investments?  Do you want to retain a 100% interest?  Do you want a local partner?

If you want to own 100% of the Myanmar entity, an application to the Myanmar Investment Commission (MIC) for a statutory exemption is necessary if the investment does not qualify forsuch percentage under the FIL. The MIC will consider each application on its merits, and an exemption may be granted if the application is not opposed by the relevant ministries.


If a local partner is required, due diligence is critical and complicated by Myanmar’s lack of public records from which the real condition of a business can be ascertained.  If the potential investor is an American investor, the potential Myanmar partner must be vetted through the US Treasury Department’s Office of Foreign Asset Control’s (OFAC) Specially Designated Nationals (SDN) process ( This is a crucial step, as there will be draconian restrictions imposed if a US party engages with a SDN-listed party without an OFAC license.  Recently, this US approval process has been somewhat streamlined, and we have been successful in obtaining an OFAC license in record time (five weeks).


On July 11th, 2012, OFAC issued Burma GL-16 ( authorizing financial services to Burma, with limitations (see explanation at: Subsequently, OFAC issued Burma GL-19, which permits certain financial transactions with an additional four SDN-listed banks.  Yet, many of the 10,000 or so U.S. banks seem not to be aware of these changes, erroneously informing their clients that they cannot offer financial services to/from Myanmar due to OFAC regulations.  As a result, before embarking on any investment activity in Myanmar, the US investor must ensure that its financial institution agrees to undertake transactions with Myanmar.  Furthermore, financial services to/from a Myanmar bank currently have to be undertaken through a corresponding bank in Thailand or Singapore.  Thus, the finance department of any American investor needs to be become keenly aware of the intricacies of sending money to, and taking money out of Myanmar.


Oddly enough most businesses (27,000 and 24 trade associations), and many of your competitors in Myanmar can be found in one place: the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).   Although formed in 1919, it recently has become the place where businesses can meet on matters of common interest.  While taking care to comply with US antitrust law, an American business should consider UMFCCI membership simply because the association can be a source of crucial information in a fast changing business environment. Furthermore, many foreign companies make contact with UMFCCI when they seek a potential domestic partner.


Once your investment exceeds $500,000, or your company has deals with the Myanma Oil and Gas Enterprise (MOGE), your company has an obligation to report under OFAC Burma GL-17 license (  Although onerous on small businesses, these requirements can easily be met if the proper reporting and internal audit system is set into place from the outset.  In our experience, proper training of local personnel will go a long way in facilitating the data flow required by these compliance mandates.


Reading the news, you hear of Yangon office space rentals upward of $22/square foot.  Our experience is quite different.  We have found first class office space in luxury condominiums in upscale neighborhoods at $0.80/square foot. The issue is logistics: choose a location along a major road, install whole office power inverters (reliably made in Myanmar!), secure redundant Internet systems (e.g. fiber-optics, ADSL, WIMAX or satellite are available, with speeds up to 4 Mbps), a sophisticated phone system with hunting multi-line service, a solid lease agreement, and a location easily reachable by your staff.  You can achieve similar results for industrial space, especially outside of Yangon.


Myanmar does not have specific trademark, patent or industrial design laws, and its copyright law dates from 1911. Yet, intellectual property protection can be obtained under the terms of the 2008 Constitution, the Penal Code (1861), the Specific Relief Act (1877), and another dozen or so statues. The country is expected to modernize its statutory framework by 2014.


Seeking legal, accounting and tax counsel in Myanmar is an art form. Regarding law firms, for example, in Myanmar there are a couple of small Western firms, one licensed American law firm, and a few Southeast Asia-based firms.  Before engaging any firm, your internal audit and legal representatives should ask: a) who established the firm (i.e. where are they based, who are their principals, have they ever been imprisoned, prosecuted for fraud, or disbarred); b) which ethical standards are they following (e.g. do they enforce the American Bar Association Model Rules); c) have their clients included “cronies” or others who are SDN-listed?; d) have their attorneys/professionals been government employees during former military regimes, and what was the nature of their work; d) do they have competent specialized counsel available elsewhere if the needed local skill set is not present; etc.  You will need lawyers covering corporate, compliance, intellectual property, real estate, litigation, labor and international law, at a minimum. Similar considerations should cover your accounting and tax advisors.


Myanmar’s labor laws are in transition, and so are the qualified workers available today.  Some are proficient in the English language, but lack other skills (e.g. computer, Western norms of business, compliance, etc.). Others lack a good command of English, but are superb practioners. And some are expats returning to help their country grow. Thus, the labor pool is both small and large, and almost always inexpensive by Western standards, but with relatively low productivity. The Ministry of Labour has issued standardized labor contract guidelines. They should be used to differentiate oneself from the competition in attracting top talent.

Despite the challenges, Myanmar is an exciting opportunity not to be missed.

Eric Rose is the Lead Director of Herzfeld Rubin Meyer and Rose Law Firm Limited, Yangon, Myanmar. He can be contacted at

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