Guide to Open a Company in Myanmar
Companies wishing to take full advantage of emerging mega projects in Ayeyarwaddy, Mandalay, Muse, Shan State or Yangon in Myanmar may wish to set up a separate legal entity in the country.
Several large corporations have recently expanded to Myanmar, allowing their regional brands to gain traction in the country. With a growing young population and increase in job opportunities in its major cities, it is a prime location perfectly situated between India and Asia to expand business.
Additionally, Myanmar has loosened restrictions from foreign investors on over the last several years, making it a more accessible market to foreign investors. Some of the most common kinds of entities that you may consider establishing are discussed below.
Benefits of Incorporating a Company in Myanmar
Myanmar is a developing nation that offers extensive opportunities for those willing to invest in the growing economy. Myanmar’s population exceeds 50 million, many of whom are under the age of 40.
It offers an educated labor force and low wages. It is conveniently located in Asia and is accessible via sea and air. The country boasts many natural resources that have not been fully explored up until now.
Before getting started on the types of businesses you may wish to consider, you must be aware of the restricted activities in Myanmar.
Like many countries in Asia, 100% foreign ownership in companies is not possible in certain industries. In Myanmar, restricted activities for foreign investors include:
- Manufacturing of arms and ammunition
- Convenience stores and mini-markets
- Tour guide services
- Air traffic and pilotage services
- Management of natural forests
- Production of radioactive metals
- Inspection of electrical works
Myanmar law regulates ownership by foreigners in these sectors and others. Some of these activities are completely prohibited for foreign investors to be involved in while others require a local joint venture partner.
Limited Liability Company
The limited liability company is the most popular option for foreign investment, although it can also be used by a local company. Companies that are comprised with up to 35% of foreign ownership are still considered local companies in Myanmar.
To set up a limited liability company in Myanmar, you need at least 1 shareholder who can be a natural person or a corporation. There must also be at least 1 resident director. The director is required to who live in Myanmar for the majority of the year.
Additionally, you must have approval from the Myanmar Investment Commission before setting up this type of business. $50,000 for service industries or $150,000 for manufacturing industries is required for minimum paid-up capital.
Various types of service businesses can be set up with this type of structure, such as:
- Hotel service
- Restaurant services
Joint ventures are particularly suitable for companies that want to take advantage of the expertise or knowledge of a local partner or wish to invest in an industry that requires it be majority held by a local business. Your business can engage in all business activities permitted by law when you have a joint venture.
Myanmar joint venture companies are considered limited liability companies and must comply with all regulations related to them. To form a joint venture in Myanmar, you must have at least two shareholders, one of whom must be a local shareholder.
You must prepare and provide Memorandum of Association and Articles of Association for your business which set out voting powers, powers of the managing director and other critical information.
Joint Stock Company
Joint stock companies or public limited companies require that you have a minimum of 7 shareholders and minimum capital investment of USD $50,000. While joint stock companies do not have to list on the Yangon Stock Exchange, if you do list, you must have a minimum capital amount of USD $500,000.
The company’s financial statements are subject to audit.
If you have a parent company overseas, another entity that you may consider establishing is a branch office. The parent company remains liable for all debts and obligations of the branch. You must have at least one shareholder. You must also have an authorized company representative.
To set up a branch office, you must have USD $50,000 minimum capital. Your branch office will be required to pay 35% in corporate taxes.
Foreign companies may opt to set up a representative office that is fully foreign-owned. This type of business is not permitted to engage in profit-generating activity. They can conduct market research, collect data or conduct feasibility studies. Representative offices cannot earn any income or issue invoices.
At least one shareholder and an authorized company representative are necessary to establish a representative office in Myanmar. Furthermore, the company must inject USD $50,000 of minimum capital.
It can be helpful to set up a representative office to establish a local presence in Myanmar.
Steps to Incorporate a Company in Myanmar
While there are slightly different processes depending on which type of entity you select, some of the common steps to incorporate a company in Myanmar include:
- Request a business name in Myanmar at the Company Registration Office under the Directorate of Investment and Company Administration (DICA).
- Obtain a local registered business address, which can be a physical office or a virtual office. Foreign-owned businesses can rent a physical office for up to two years.
- Apply for a business incorporation certificate from DICA and submit necessary documentation, including Memorandum and Articles of Association, application, estimated local expenditures for your first year of operations, financial documentation and intended activities to be performed.
- Obtain temporary permit to trade with DICA.
- Register your company by submitting your declaration of registration, copies of your memorandum and articles of association, declaration of the official translated version of documents, list of directors, name of authorized representative, and incorporation application signed by all shareholders in front of a certified lawyer or accountant in Myanmar.
- Open a corporate account and deposit the minimum capital amount in it.
- Obtain an official company seal.
- Register with the tax authority for social security.
- Register your company for commercial tax with the Internal Revenue Department, if necessary.
There may be additional requirements based upon the type of business you are establishing or the region where you are opening it. You may need to provide a detailed business plan and prepare additional registration forms.
Timeline for Incorporating a Business in Myanmar
The typical process to incorporate a business in Myanmar may be completed in as little as two weeks. However, the process may take longer if your business involves a larger capital investment, may significantly impact the environment or the local community or if it is included in part of the restricted categories.
It may take approximately three to six months to receive all necessary approvals from the Myanmar Investment Commission and to become operational. The process to register a company in Myanmar is often complicated for foreigners and if not completed properly, can result in greater delays. New Horizons can assist you with the incorporation process to ensure a seamless registration.
Outsourcing While Waiting for Approval
Myanmar foreign businesses may be ready to launch operations before the registration process is finalized. These companies may choose to outsource in order to rapidly deploy a local workforce or to test the market.
By using a Professional Employer Organization, you can see how the market responds to your business, product or service before making a major investment in the country. This alternative also allows you to plan better. During this phase, you can earn revenue in Myanmar, invoice clients and provide products and services.
A PEO allows you to hire employees in Myanmar with or without setting up a separate legal entity.
If you are ready to expand your company to Myanmar, the local experts at New Horizons can help you select the best entity for your business. New Horizons is a one-stop solution that helps foreign businesses set up their business operations in Myanmar, meet the necessary legal formalities, set up a temporary workforce through a PEO arrangement, recruit key staff and provide ongoing support. We specialize in incorporation services, registration, licensing and other important business functions.
Our exports have a robust understanding of local laws and various industries. Tap into our breadth of knowledge by contacting us today to learn more about our experience and how we can help.