Myanmar economy reforms

A timeline of Myanmar’s key economic reforms

With the National Project Bank launch at the Invest Myanmar Summit 2019, there is no time like the present for international investors to educate themselves on how the face of investment in Myanmar has improved since the National League for Democracy-led government took office in April 2016.

There have been a number of important reforms aimed at making it easier for investors to do business in Myanmar. Here’s a brief timeline:

2016

 

The number of government ministries is cut from 36 to 21 and the ministerial headcount is reduced by 75 percent. This is aimed at cutting costs to reduce the budget deficit. The government commits to empowering state and regional governments by decentralising the approvals process for investment.

The Central Bank of Myanmar issues a long-awaited regulation enabling mobile network operators and non-bank financial institutions to provide mobile financial services.

The Ministry of Commerce opens the construction materials market to international joint-venture companies, with the aim of supplying higher quality materials to the domestic construction industry.

The United States announces that it will lift its economic sanctions against Myanmar. Myanmar’s eligibility for the US Generalised System of Preferences program is reinstated, reducing tariffs for trade.

The Myanmar Investment Law is enacted, replacing the Myanmar Citizens Investment Law and the Foreign Investment Law. The new law simplifies investment processes, removes the requirement for smaller and non-strategic investments to gain Myanmar Investment Commission approval and brings Myanmar’s investment framework in line with international norms.

2017

 

DICA implements the first transfer of shares in a Myanmar-owned company to a foreigner without incorporating a new legal entity, paving the way for foreigners to acquire shares in domestic companies and publishes a survey on the cost of doing business in Myanmar.

Myanmar Investment Commission permits states and regions to approve investments of up to K6 billion (US$5 million).

The Insurance Business Regulatory Board permits foreign insurance companies to operate in Special Economic Zones. The Ministry of Planning and Finance presents a plan to liberalise the market further and allow foreign insurers to underwrite and sell policies in Myanmar.

The Central Bank enacts a regulatory framework under which credit rating agencies can be established, a first step in developing an inclusive financial system and improving access to capital.

Puma Energy Asia Sun, a joint venture company, opens a storage facility in the Thilawa Special Economic Zone, marking the opening of the wholesale and retail trade in petroleum to foreign investment.

The Ministry of Commerce permits foreign companies to import and sell fertilisers, seeds, pesticides, and hospital equipment.

The Myanmar Investment Commission cuts the list of 92 investment activities requiring a local partner to 22. Foreign retailers, petroleum product suppliers, private clinics, real estate developers, media and manufacturers all benefit.

The Central Bank issues a set of modern prudential regulations under the new Financial Institutions Law. This aims to shift bank lending away from short-term loans with immovable assets as collateral, to medium-term loans that are issued based on cash flow and business plans.

Parliament enacts a new Petroleum and Petroleum Products Law, aimed at regulating enterprises, protecting the environment, promoting competition, providing energy security and obtaining appropriate taxation.

The Myanmar Investment Commission publishes a list of 10 priority sectors for investment: agriculture, livestock and fisheries, export promotion, import substitution, power, logistics, education, healthcare, affordable housing, and industrial estates.

Parliament approves the Myanmar Companies Law, replacing the century-old Myanmar Companies Act, improving transparency and corporate governance while easing the burden on small and medium enterprises. The law removes makes it easier to form companies and contains clear rules on related-party transactions and minority shareholder rights.

The new law also makes it easier for Myanmar companies to attract investment by enabling foreign investors to hold up to 35 percent in local companies. Under the old law companies with a single foreign share were regarded as being foreign and were subject to a number of restrictions including being unable to own land.

Two new ministries, the Ministry of the Office of the Union Government and the Ministry for International Cooperation, are formed to ease the workload of the administration.

The Ministry of Construction publishes the Condominium Law rules making it possible for foreign entities to legally invest in condominiums.

The Central Bank allows foreign bank branches to provide export financing and related services to domestic exporters, filling a gap in the market and promoting trade.

2018

 

The Ministry of Electricity and Energy issues ‘notices to proceed’ to four major electricity projects which together would double Myanmar’s electricity production capacity.

The private education sector is opened to local and foreign investment, in the first of a raft of changes for the sector, with a planned Private School Law set to introduce government licensing for teachers and the vetting of international school curricula.

The Ministry of Commerce opens retail and wholesale trading to foreign-owned companies and local-foreign joint ventures, creating new opportunities in a sector that for decades was tightly restricted.

Myanmar Credit Bureau Limited receives a Central Bank license to become the country’s first credit agency and will promote financial inclusion by helping banks to make better lending decisions.

The Ministry of Planning and Finance abolishes a 2 percent withholding tax for private sector transactions and publishes details of tax exemptions for projects financed by grants and overseas development assistance loans.

The Central Bank permits foreign bank branches to provide banking services to local companies, including financing and related services. The change applies to foreign banks that have been licensed to run branches since 2015 but whose lending was formerly restricted to foreign-owned companies and joint ventures.

A new Ministry for Investment and Foreign Economic Relations is created, led by Union Minister for Investment and Foreign Economic Relations and Myanmar Investment Commission chair H.E. U Thaung Tun. The new ministry will oversee DICA and the Foreign Economic Relations Department.

Photo by Teza Hlaing | Frontier

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