The primary laws governing and imposing restrictions on foreign investment in Myanmar are:

• Myanmar Investment Law 2016 (“MIL”) and its regulations, which restrict certain business activities;
• Myanmar Companies Law 2017 (“MCL”) and its regulations, which determine foreign investment by means of shareholding; and
• Export-Import Law 2012 (“EIL”) and its regulations, which pertain to the trading of certain goods by foreign investors.

The regulations under the MIL provide a list of business activities that are reserved for Myanmar nationals, limit the investment activities of foreign nationals, and stipulate the businesses for which joint-ventures are permitted between Myanmar nationals and foreign investors. Myanmar Investment Commission Notification No. 15/2017 classifies reserved business activities into four categories:

(a) Investment activities permitted exclusively by the Government of Myanmar, related to (i) manufacturing of products for security and defense, arms and ammunition for national defense, and radioactive metals; (ii) issuing national postage stamps and other post office activities; (iii) air traffic services and pilotage services; (iv) managing natural forests; (v) control of electric power systems; and (vi) inspection of electrical businesses.

(b) Investment activities that are prohibited for foreign investors. There are 12 restricted activities, including (i) publishing and distributing periodicals in Myanmar and ethnic languages; (ii) freshwater fisheries and relevant services; (iii) establishing quarantine stations for exporting and importing animals; (iv) pet care services,  (v) manufacturing of forest products; (vi) prospecting, exploration, feasibility studies, production, (vii) refinement of minerals for small- and medium-scale businesses; (viii) performing drilling operations for shallow oil wells; (ix) printing and issuing stickers for visas and stay permits for foreign nationals; (x) prospecting, exploration, and production of jade/gem stones; (xi) tour-guide services; and (xii) mini-markets and convenience stores (floor area must be below 100 ft x 100 ft, i.e., 10,000 square feet or 929 square meters).

(c) Investment activities that are only permitted in the form of joint ventures between a citizen-owned entity or a Myanmar national and foreign investor. In such a joint venture business, the minimum share ratio that must be held by Myanmar nationals is 20% of the investment amount.

• Investment activities to be carried out with the approval of the relevant ministries. Any foreign investor wishing to engage in these business activities requires prior approval from the relevant ministries. At the time of applying for the permit/endorsement for the investment at the Myanmar Investment Commission (“MIC”), the MIC will seek approval from the respective Ministry through its internal procedures.

Apart from the MIL, foreign investors may also be subject to specific laws regulating certain sectors, for example, laws on banking, trading, insurance, and/or telecommunications.

Except for the above-mentioned activities, all other business activities are permissible for foreign investors either in the form of 100% ownership or through joint ventures.

Additionally, foreign investors should take note of the Transfer of Immoveable Properties Restriction Act 1987 (“TIPRA”), which governs the transfer, sale, purchase, gifting, pawning, exchange, or lease for a term exceeding one year of immoveable property, including housing, land, and property rights. There are also restrictions on foreign investors engaging in long-term projects that involve leasing immovable property in Myanmar. An MIC permit/endorsement can grant foreign investors permission for long-term land lease beyond the provisions of the TIPRA.

Myanmar’s regime focuses on a combination of both economic protectionism and national security.

No specific countries are restricted or prohibited from investing in Myanmar. All foreign investors eligible for investments in Myanmar have equal rights to invest in the country under the MCL and MIL.

Pursuant to the MIL, a foreign investor is defined as “a person who invests in the Union and is not a citizen.” In this expression, foreign companies, branch offices, and other enterprises established and registered in accordance with the Myanmar Companies Law, and enterprises that are formed in accordance with the laws of any other country are also included.

As described in response to Question 1 above, foreign nationals are restricted from engaging in reserved business activities under the MIL, EIL, and other specific laws, unless the operation of the activity falls within an exemption. Under these laws, the reserved businesses are not categorized based on sectors, but rather, they are categorized in accordance with the types of business activities.  In other words, any sector could be subject to the provisions of the MIL if the activities that will be carried out are reserved business activities. Therefore, Foreign Investment Restrictions screening is determined by the respective business activities to be conducted.

There are two main thresholds relating to Foreign Investment Restrictions.

With reference to the MCL, the shareholding structure is a relevant threshold in determining whether the investor is considered a foreign investor  (i.e. more than 35% of an entity’s shares are held by foreign investors) and thus, is subject to the relevant Foreign Investment Restrictions. 

In addition to the shareholding structure, relevant thresholds are determined based on the business activities that are restricted or allowed by the regulations under the MIL.

Yes, notifications under the Foreign Investment Restrictions Rules are mandatory. Therefore, the operation of reserved business activities under the MIL requires a Permit or an Endorsement certificate from the MIC.

However, there are exceptions for certain types of service activities, such as consultancy services (e.g., legal and accounting activities, activities related to head offices, management consultancy activities, advertising and market research, office administrative activities, office support and other business support activities, activities in relation to human resources and information technology). These services are not listed as restricted business activities by specific laws.

Yes. The relevant authority’s approval is required before foreign investors acquiring an existing business or dissolution of a business. With respect to the acquiring of an existing business, approval from the Directorate of Investment and Company Administration and/or the Myanmar Investment Commission/State or Region Investment Commission is required. For the dissolution of a business, the required approval is the same as for local investors complying with Myanmar’s Insolvency Law 2020.

COVID-19 significantly impacted the foreign investment regime in Myanmar. Due to the restrictions set by the Ministry of Health in Myanmar and the World Health Organization globally to prevent the spread of COVID-19, almost all foreign management of existing investment projects in Myanmar left when these restrictions were imposed. Consequently, operations for existing foreign investments came to a halt. Additionally, new foreign investments were not feasible in many countries, including Myanmar, during the peak of the pandemic and in its aftermath. The impact on Myanmar is evident from the statistics announced by DICA. In 2020-2021 and 2021-2022 fiscal years, foreign investment notably decreased from USD 3,791.398 million to USD 642.084 million.    

The Directorate of Investment and Company Administration (“DICA”) also released the requirements for residential directors, which specified that they had to reside in the country for at least 183 days in every 12-month period. This came into effect during the COVID-19 pandemic and remains in place.

In Myanmar, the agency does conduct reviews of the rules relating to foreign investments, based on feedback received from investors. However, past practice seems to show that the agency, rather than delaying or blocking, is encouraging more foreign investment by relaxing business restrictions over the past few years. For example, in 2021, the agency announced that certain investment sectors, inclusive of both local and foreign investors, would be designated as prioritized business activities for national development. These sectors include the manufacturing of fertilizer, cement, iron and steel, valued added foodstuffs, electric vehicles, pharmaceuticals and medical devices, agricultural and livestock farming and related industries, and public transportation services.

The MIC has also focused its attention on stimulating economic investment and attracting new foreign investors by offering both tax and non-tax incentives to eligible investors.  

Similarly, the Central Bank of Myanmar ("CBM") actively adjusts foreign exchange regulations by continuously reviewing the foreign exchange and import/export market in the country. In line with the CBM’s efforts, the Ministry of Commerce frequently updates regulations to control imports and exports by reviewing the import volume of the country.

Please refer to the response to Question 9 above. In this regard, there have been no precedent cases over the past 6 months in which foreign investment into Myanmar has been blocked, except in instances where investors have failed to meet the required criteria set out under the MIL and its respective regulations.

Since Myanmar is under a State of Emergency, it is difficult to predict regulatory developments for the next 6 months. However, over the past 6 months, numerous regulations have been issued by two active government agencies, the CBM and MOC, particularly related to foreign exchange and import/export. As a result, it is expected that additional regulations concerning foreign investment in Myanmar will be forthcoming.