Minimum Capital Requirements in Myanmar
Foreign investors doing business in Myanmar should note that foreign companies and their branches of all business are subject to minimum capital requirements in Myanmar. Historically the Ministry of National Planning and Economic Development was responsible for regulating minimum foreign capital requirements for foreign companies on a sector by sector basis.
Pursuant to the 2012 Myanmar Foreign Investment Law, capital requirements will be determined by the Myanmar Investment Commission (MIC) on a case-by-case basis depending on the business sector of the proposed investment, and subject to government approval. Both the Permit to Trade and the MIC Investment Permit have a requirement to import into Myanmar a certain amount of capital.
A Capital Structure Committee, Chaired by the Director General of the Directorate of Trade , and responsible to the Ministry of National Planning and Development, reviews applications in Form A, and submits its recommendation in relation to minimal capital requirements on a case by case basis. The working procedure of the Capital Structure Committee, including the technical guidelines for determining and fixing the amount of capital to be brought into Myanmar by a foreign company, or a foreign branch, have been prescribed. According to this procedure and guidelines, applications will be scrutinised in line with the following basic principles which are not contrary to existing laws, regulations etc.:
- compatibility with the economic policies and objectives of Myanmar;
- exploitation of natural resources and promotion of exports;
- compatibility with existing laws in force especially the Union of Myanmar Foreign Investment Law;
- supporting and assisting economic development;
- supporting and assisting export and import business;
- development of production and commercial technology;
- opening up of more employment opportunities; and
- earning of more foreign exchange.
The capital to be physically brought in as determined by the Ministry of Trade would be:-
- The “Issued and Paid Up Capital” (in the case of a foreign company incorporated in Myanmar).
- The “Head Office Fixed Capital Account” (in the case of a branch of a foreign company incorporated outside Myanmar).
The methodology for fixation of capital will be tailored to and made by reference to the following:-
In the case of a foreign company incorporated in Myanmar, the “Issued and Paid Up Capital” would be based on:
- the scope of economic activities to be carried out in Myanmar;
- the objects as defined in the Memorandum of Association;
- the types of business contracts, i.e., either direct by the parent company with customers in Myanmar, or direct by the company in Myanmar. Total shareholders’ equity, which includes Issued and Paid Up Share Capital Revenue Reserves and Retained Earnings.In the case of a branch of a foreign company incorporated outside Myanmar, the “Head Office Fixed Capital Account” would be based on:
- the scope of economic activities to be carried out;
- the accounting system;
- types of business contracts, i.e. either direct by Head Office with customers in Myanmar, or direct by the branch office; financial status of the Head Office; and status of the branch office, i.e. whether it is still in business, or restricted from carrying on business, or in the process of liquidation.
50% of the imported capital must be deposited in the Myanmar Foreign Trade Bank or the Myanmar Investment and Commercial Bank in Yangon when the company submits its registration application. The remainder must be imported within one year and may be held in US$ accounts and exchanged at market rates:
Minimum Capital Requirements in Myanmar | Myanmar Investment Commission Investment Permit
- US$500,000 for an industrial company; and
- US$300,000 for a service company,
Minimum Capital Requirements in Myanmar | Permit to Trade
- 1,000,000 Kyat (approx. US$166,607) for an industrial company; and
- 300,000 Kyat (approx US$50,000) for a service company
Public companies that want to list on the Yangon Stock Exchange (from 2015) will need to make at least 10% of their shares public. A minimum capital requirment of 500 million Kyats (US $500,000 million) will also apply.
Rules on Myanmar Foreign Exchange
Myanmar Foreign Exchange is regulated by the Foreign Exchange Management Law (10 Aug 2012), which supersedes the Foreign Exchange Regulation Act (1 Aug 1947) and is the governing law on foreign exchange controls. As the implementation of the new law is an ongoing work for the Central Bank of Myanmar (CBM), some aspects of the old law may still be observed in practice until details of the new law are announced.
Currently, the Myanmar Kyat is non-convertible and non-negotiable outside Myanmar. Myanmar follows a managed floating rate for foreign exchange comparison. Remittance of foreign currency into the country should present no problems. Most outward remittances of foreign currency are restricted and require approval from the CBM. Authorisation should be forthcoming provided that there is sufficient documentation to support legitimate expenditures.
Repatriation of Profits from Myanmar
Notification no. 40/2011 and the Investment Rules regulate the use of foreign currencies in investments under the Foreign Investment Law. The remittance or repatriation of funds, profit and capital are subject to prior approval of the MIC and are also subject to the Myanmar Foreign Exchange Regulations.
The required supporting documentation for income repatriation includes:-
- CBM application form
- Audited financial statement
- Bank balance certificate
- Tax clearance certificate
- Directors’ resolution authorising payment of dividend
- Auditors certificate certifying capital/loan principal
- Auditors certificate certifying interest details
- Documentation evidencing remittance of capital or loan into Myanmar
- CBM approval
Repatriation of profits from Myanmar includes the right to repatriate net annual profits, net salaries, any amount of foreign currency permitted by the MIC to be repatriated; and any amount receivable after termination of the investment.