Copyright © Tractus Asia Ltd. 2017

Prepared for:

Date:

Myanmar in Brief

Restaurant Association of Singapore

March 21, 2017

2

Foreign investment and growing domestic consumption increasingly drive growth from a low base

52 Million people

676,578 km2, roughly 2x the size of

Vietnam or Malaysia

9.4 billion foreign investment in FY 2015-16

~5X Economy size increase in a decade

11 billion US$ exports in 2016

3

Myanmar’s relatively small economy has experienced high GDP growth and high inflation . . .

Source: IMF

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2011 2012 2013 2014 2015 2016*

ASEAN GDP growth rate

Vietnam Malaysia Indonesia

Thailand Myanmar Singapore

-2.0%

3.0%

8.0%

13.0%

18.0%

2011 2012 2013 2014 2015 2016*

Inflation rate

Vietnam Malaysia Indonesia

Thailand Myanmar Singapore

* 2016 is an estimate

4

…and still remains one of the most difficult countries for conducting business

Source: Trading Economic, World Bank

Myanmar

Lao

Cambodia

PhilippinesIndonesia

Vietnam

China

Thailand

Malaysia

1

51

101

151

201

0 20 40 60 80 100

Ea

se

of

Do

ing

Bu

sin

es

s (

20

16

)

Political Stability & Absence of Violence/Terrorism (max 100) in 2015

Bubble size reflects GDP per capita (PPP)

Singapore

5

Myanmar boasts a relatively young and productive population

5.47

6.69

15.33

29.90

51.49

67.73

90.73

99.14

254.45

Singapore

Lao PDR

Cambodia

Malaysia

Myanmar

Thailand

Vietnam

Philippines

Indonesia

Million people

Source: World Bank, Myanmar Census 2014 0123

0 - 4

10 - 14

20 - 24

30 - 34

40 - 44

50 - 54

60 - 64

70 - 74

80 - 84

90 +Male

0 1 2 3

0 - 4

5 - 9

10 - 14

15 - 19

20 - 24

25 - 29

30 - 34

35 - 39

40 - 44

45 - 49

50 - 54

55 - 59

60 - 64

65 - 69

70 - 74

75 - 79

80 - 84

85 - 89

90 + Female

Population (in millions) Population (in millions)Age Group

POPULATION FACTS

Myanmar has 51.49 million people, ranking 5th in

the Southeast Asia region behind Indonesia, the

Philippines, Vietnam and Thailand.

Annual population growth rate is 0.89%. Average population density is 76.1

persons/sq.km. The most populous cities are

Yangon and Mandalay.

Unemployment rate is approximately 4%.

DEMOGRAPHIC OVERVIEW The size of the young working age population has steadily increased and

the country’s literacy rate for individuals above the age of 15 is 89.5%. The

labor force participation rate is 67% for the age group between 15 and 64.

Approximately 100 languages are spoken in Myanmar, with Burmese

serving as the primary language and English being the secondary

language used by educated urbanites and the national government.

The main religion in Myanmar is Theravada Buddhism which is practiced

by 87.9% of the population, followed by Christianity (6.2%), Islam (4.3%),

Animist (0.8%), Hinduism (0.5%), Other Religion (0.2%) and No Religion

(0.1%).

COUNTRY POPULATION 2014 MYANMAR POPULATION 2014

6

While the political situation has improved, a significant gap remains

Source: Fund for Peace 2016

32.9

66.1

70.7

74.9

74.9

78.8

84.4

84.7

87.4

96.3

Singapore

Malaysia

Vietnam

Indonesia

China

Thailand

Lao PDR

Philippines

Cambodia

Myanmar

GOVERNMENT IMPACT ON ECONOMY

NLD government presented 12-point policy summary in 2016 with national

reconciliation at its forefront. Others include supporting competition and a

vibrant private sector, infrastructure development, job creation, welcoming

FDI, monetary and fiscal stability, reforming state-owned enterprises and

helping small and medium enterprises, among others.

Due to wide-ranging reform and expansionary fiscal and monetary policy,

ADB forecasted Myanmar to record solid growth overall although floods

have damaged agriculture again in 2016.

POLITICAL SYSTEM

Myanmar has a young democratic

system led by the National League

for Democracy after decades of

military rule.

Ruling power lies in the hands of

the President but the Commander-

in Chief holds a considerable

amount of power as well. Military

controls 25% of the parliament.

Upper and Lower Parliament of

Myanmar holds legislative power.Source: The World Banks Group 2015

10.48

15.71

20.95

24.76

27.14

43.81

48.57

54.29

60.48

93.33

Myanmar

Thailand

Philippines

Indonesia

China

Cambodia

Vietnam

Malaysia

Lao PDR

Singapore

Note: Higher Score= More Stable

Note: Higher Score= More Fragile

Political stability and state failure risk in

Myanmar are worse than in other Asian

countries.

The main contributing factor is the internal

conflict between ethnic groups and the

military, which has been described as one

of the world’s “longest running civil wars.”

With a national cease fire agreement and

on-going discussions, there is continued

hope for the end of the conflict.

FRAGILE STATE INDEX SCORE 2016 POLITICAL STABILITY AND ABSENCE

OF VIOLENCE / TERRORISM 2015

7

Myanmar’s economy remains highly agrarian, but this trend is slowly changing

Source: World Bank

GROWING MIDDLE CLASS

• In July 2015, World Bank reclassified Myanmar as a lower-middle

income country, whereas previously it was a low-income nation.

• It is projected that Myanmar’s middle and affluent class will grow

to about 15 percent of the population by 2020 if economic

reforms can sustain momentum.

• Land and labor productivity are much lower than in other Asian

countries despite low unemployment

• Myanmar has a shortage of skilled workers. Despite its high

literacy rate of over 90%, Myanmar’s education system failed to

provide a workforce with the appropriate skillset required by

companies.

CountryGDP per capita

US $

Thailand 5,815

China 8,028

Indonesia 3,347

Vietnam 2,111

Myanmar 1,162

Cambodia 1,159

GDP Per Capita (2015)

Source: World Bank

27%

63%

35%

12%

39%25%Service

Industry

Agriculture

Employment by SectorGDP by Sector

78.35

79.87

93.09

95.44

94.51

94.64

96.62

96.36

96.66

93.98

96.77

Cambodia

Lao PDR

Myanmar

Indonesia

Vietnam

Malaysia

Philippines

China

Brunei

Thailand

Singapore

LITERACY RATES (2015)

Trade & Investment

9

The country maintains a trade deficit gap that’s projected to close as economic output increases

MYANMAR TRADE 2016

Total Imports

US$17

Billion

Total Exports

US$11

Billion

Major export products:

Crude oil and natural gas

Minerals

Garments

Agricultural products

Major import products:

Machinery and transport equipment

Manufacturing goods

Vehicles

MYANMAR’S TOP TRADING PARTNERS (IMPORT & EXPORT) 2016

Source: Myanmar Central Statistical Yearbook

HIGHLIGHTSUS$ Billion

US$ Billion

Exports FY’16 - US$ 11.3 billion,

US$ 2.6 billion from agriculture,

US$ 9 million from livestock,

US$ 510 million from fisheries,

US$ 843 million from mining,

US$ 215 million from forestry

goods,

US$4.8 billion from industrial

products and US$ 1.4 billion from

other sources.

Source: Ministry of Commerce

0

5

10

15

20

2012 2013 2014 2015 2016

Import

Export

MYANMAR IMPORT-EXPORT VALUE

Source: Ministry of Commerce

1.7

1.8

3.7

4.8

11

India

Japan

Singapore

Thailand

China

10

Note: Other sectors include Agriculture, Livestock &

Fisheries, Mining, Oil and Gas, Construction, Hotel and

Tourism, Industrial Estate and other services.

FDI has dropped in 2016 and is projected to be lower in 2017

Source: DICA

49%

Transport &Communication

Manufacturing

Power

Real Estate

Others

TOTAL INVESTMENT IN APPROVED FDI PROJECTSFDI BY SECTOR 2016-2017 (End of November)

Source: DICA

0

500

1,000

1,500

2,000

2,500

3,000

3,500

MAIN ASIAN INVESTORS BY

INVESTMENT CAPITAL FY’ 2016

(End of January 2017)

TOP 5 MANUFACTURING

PRODUCTS

Agricultural processing

Wood and wood

products

Garments

Electronics

Footwear

US$

Million

0

1

2

3

4

5

6

7

8

9

10

2011 2012 2013 2014 2015 2016

US$

in b

illio

n

• Investment amount in 2016 is lower than in 2015 due

to various government changes and investment

policies.

• Manufacturing and Transport & Communication

received highest levels of FDI, while there was

virtually no FDI investment in agriculture, mining,

construction and industrial estate.

Source: DICA

1111

The nascent market is poised for growth & holds a high potential, but not without its challenges

• Payments can still be

somewhat archaic despite

influx of ATMs and overall

improvements

• The Ministry of

Electricity is not immune

to power outages

• Telecoms have changed

Myanmar over night

12

Logistics and infrastructure remain a critical challenge . . .

A recent study by Asian Development Bank (ADB) showed that improving national and

international transport systems and services could increase Myanmar’s GDP by 21% by

2030.

The Global

Competitiveness Index

2015-2016

Myanmar

Score (1-7)

Rank

(out of 144)

Quality of overall

infrastructure2.4 135

Quality of roads 2.3 136

Quality of railroad

infrastructure1.8 96

Quality of port infrastructure 2.6 123

Quality of air transport

infrastructure2.6 132

Note: World Bank’s Logistics Performance Index is based on opinions of freight forwarders on key

logistic topics such as customs clearance efficiency, ability to track cargo, etc.

13

. . . with lots of room for improvement

1414

• Agriculture sector employs majority of working population, yet still faces shortages

• Skilled labor is scarce

• Lack of vocational schools forces factories and companies to invest in specific training programs

• Companies have provided incentives for management overseas to come to Myanmar and train employees to overcome the lack of skilled labor gap

In addition to infrastructure challenges, lack of skilled labor in Myanmar requires investment in training

15

Trading opportunities cross cut B2C and B2B industries driven by market fundamentals…

B2

C

Country background Increasing disposable

income

Increasing GDP

Large and young population

Opportunities FMCG

F & B

High-tech/ Consumer Electronic

Medical/ Pharmaceutical

Education ServicesB

2B

Country background

Weakness of supporting industries

Increasing trading within TPP countries

Developing manufacturing industry

Growing local market

Opportunities Electronic and machinery component

Raw Material

Healthcare equipment

High value services (Financial, IT Consulting….)

1616

Myanmar’s SWOT

Strengths

• Lowest wages in ASEAN

• Abundant workforce with

fast-learning skills

• Young population with high

consumption demand

• Rich in natural and agricultural

resources

Opportunities

• Attracting manufacturing

investment from China

• Increasing income generates

demand for higher-value

products & services

• Positive impacts of Free

Trade Agreements

Weaknesses

• Under-developed infrastructure

• Legal uncertainty

• Weak supporting industries

• High corruption and low

transparency country

• Insufficient education, specifically

in vocational training

• Poor utility availability and

reliability

Threats

• Competition from regional

peers

• Trade restrictions in key

markets

• Regional political uncertainty

• Re-imposition of sanctions or

other restrictions

S W

O T

Singapore-Myanmar Relationship

18

Singapore has played an integral role in engaging and supporting Myanmar as it develops

1966

Diplomatic

Relations

established

2015 2016

Announced 30 days

visa exemption for

Myanmar nationalities

Held 5th Singapore -

Myanmar Joint

Ministerial Working

Committee

20101984

Yangon

Embassy

opened

2016

50th anniversary of

diplomatic relations

• The Singapore Prime Minister Lee Hsien Loong visited Myanmar in 2016 as a first visit in the new civilian government term. In the visit, the Prime Minister and Myanmar’s newly elected president, U Htin Kyaw, discussed strengthening economic ties between the two countries by renewing and updating the MoU of the avoidance of Double Taxation agreement and signing bilateral investment treaty.

• State Counsellor Daw Aung San Suu Kyi travelled to Singapore on an official visit at the end of 2016 where she provided an overview of the Myanmar government’s domestic preoccupations, particularly in the areas of job creation, infrastructure, education, electricity generation, and public health.

• Under discussion is also Singaporean support for vocational training in Burma, and further bilateral trade agreements on tourism and trade.

Signed Singapore-

Myanmar Technical

Cooperation Program

(SMTCP)

2012

Agreed double-

taxation agreement

with Singapore and

Myanmar

Appendix

Operating Conditions

21

LABOR REGULATIONS

STANDARD WORKING TIME

Standard workday: 8 hours / day and not

exceeding 48 hours / week

Maximum working days per week: 6 days

Typically, manufacturing companies work 48 hours/

week. Office employees’ working hours range from

40-44 hours/week (depending on the policy)

Standard annual leave: 10 days after an employee

has worked for 12 consecutive months

OVERTIME

MANDATORY SOCIAL CONTRIBUTION

Employers can ask employees to work

overtime, but must be voluntary and cannot

exceed 16 hours/week

Overtime wages are 200% of hourly pay

Mandatory contribution in Myanmar includes

Health Insurance, Social Care Insurance and

Employment Injury Benefit Insurance

Employer’s contribution is 3% on top of the base

salary of workers

Workers’ contribution is 2% of the base salary

22

ELECTRICITY

Source: Tractus Research 2017

REGIONAL COST COMPARISION

Yangon City Electricity Supply Board supplies electricity in Yangon

City and Electric Supply Enterprise covers the supply of power to the

rest of the country

The Residential segment remains the largest consumer, with 74% of

the total, 3.6% by the industrial, and 1.6% by the residential sector.

Installed capacity of Myanmar reached 4,805 MW in 2015, with more

than two-thirds coming from hydropower.

About 70% of the population has limited or no access to electricity.

Even major cities like Yangon still experience power outages, limiting

economic activity.

Foreign investment is not allowed in the trading of electricity or

inspection services in the sector.

Source: World bank

Electricity Availability & Quality

Population % without electricity 47.6%

Electrification rate 52%

Quality of electric supply index 2.8

Ranking 117

70%

22%

8% Hydro

Natural gas

Coal

POWER SOURCE

Source: Power Sector Development in

Myanmar, ADB 2015

19

16

16

12.48

11.5

11

8

6.97

Cambodia

China

Phillippines

Indonesia

Myanmar

Thailand

Malaysia

VietnamCent/Minute

23

WATER

Source: WHO/UNICEF JMP 2015

WATER COST COMPARISION Myanmar Water Availability & Quality in 2015

Urban water supply coverage 93%

Rural water supply coverage 74%

Total water supply coverage 81%

Total sanitation coverage 88%

Water Quality Index 77/100

Source: Tractus Research 2017

SANITATION COVERAGE

WATER SUPPLY IN MAIN CITIES

Water services do not reach a large proportion of the

urban population. Most people in urban areas rely on

untreated private water supplies.

Total water withdrawal is less than 5% of the

renewable available; around 89% of it is for

agriculture, 10% is for municipalities, and 1% is for

industries.

Approximately 91% of the total water withdrawal

comes from surface water and 9% from groundwater.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%Sanitation Coverage in Myanmar

Source: Myanmar Census Data 2015

94.2

82.3

77

59.2

51

45

36

35

Indonesia

Vietnam

Myanmar

Phillippines

Malaysia

Thailand

Cambodia

China Cent/M3

24

TELECOMMUNICATION

FIXED LANDLINE COST

29 million Mobile subscribers

0.14 million Broadband Internet

Users

17.2 million 3G subscribers

0.53 million Landline subscribers

TELECOMUNICATION AVAILABILITY 2014

Note: The fee is calculated based on the cost of calling from a fixed landline to

a local mobile within country.

Source: Tractus Research 2017

Source: UTC, DICA, MMRD research

Telecommunications in Myanmar have experienced significant

developments in recent years with the installation of three new

operators; Norway’s Telenor and Qatar’s Ooredoo in 2014, and

Vietnam’s Viettel recently.

In 2012, Myanmar’s international bandwidth was below

15Gbps representing 0.3 Kbps, which is below Laos’ 0.4,

Cambodia’s 0.8 and Vietnam’s 5.2. In 2015, the bandwidth

increased to about 70Gbps (1.3 kbps per capita).

Myanmar’s mobile phone penetration rose

to about 60% in 2015 from just 4% at the

beginning of 2012.

US$1.93 billion of FDI flows into the

transport & communication sector in 2015.

96% of internet users in Myanmar use

social media. Facebook is the most popular

with 93% using it, followed by Viber (80%)

and Twitter (6%).

16

10

10

9

8.8

6

5

4

Thailand

China

Phillippines

Indonesia

Malaysia

Cambodia

Vietnam

Myanmar Cent/M3

Legal & Tax

26

LEGAL SYSTEM AND REGULATION REGIME

Myanmar doesn’t have standardized IP laws though one is being

drafted currently

With a lack of IP laws, the following laws exist:

Penal Code (1860)

Merchandise Marks Act (1889)

Specific Relief Act (1877)

Sea Customs Act (1878)

Registration Act (1908)

Science and Technology Department Law (1994)

ENVIRONMENTAL REGULATIONS

IP PROTECTION LAW

In Dec 2015, the new Environmental Impact Assessment (EIA) Procedure

in collaboration with ADB and IFC was released

To identify possible consequences of projects on socioeconomic

development, and to minimize their impact on the environment

IN PRACTICE Publication of Cautionary Notice in

a local newspaper is the only

process to notify public of any

infringement on the right of the

patent ownership

IN PRACTICE The legal framework of Myanmar is outdated, and is frequently changed. Foreign investors might encounter regulation changes

related to laws, regulations, and notifications.

The legal system is undergoing major changes to better align commercial statues.

HIERARCHY OF MYANMAR GOVERNMENT

Government

Executive

President & Cabinet

Legislative

Assembly of the Union

House of Nationalities

House of Representatives

Judiciary

Supreme Court

27

STRUCTURING AN INVESTMENT

In Myanmar, the types of companies fall

into several categories:

Private company by Myanmar citizens

Public company by Myanmar citizens

Foreign service company

Foreign manufacturing company

(under Foreign Investment Law)

Branch or representative office of a

foreign company

Joint venture company with the

government of Myanmar

Association/nonprofit organization

Manufacturing and related services of arms and ammunition

Conservation and management of natural forests

Prospecting, exploration and production of jade/gemstones

Production of minerals on a small-medium scale

Supervisory control of electric power system

Inspection of electrical works

Air navigation services

Exploration of minerals including gold in the river and waterway

Pilotage

Cross ownership between print media and broadcasting media

service without approval of the Union Government

Periodicals in languages of national races including Myanmar

FORMS OF BUSINESS ORGANIZATION

PROHIBITED INVESTMENTS

INVESTMENT APPROVAL PROCESS

IN PRACTICE

Licensing procedures are mostly centralized

and handled by the union government

It’s not uncommon to find discrepancies

between laws and practices by government

agencies

Document Submission

Proposal Assessment

Team Meeting

Comments from

Relevant Government

Agencies

Myanmar Investment

Commission Meeting

Receive Investment

Permit

28

TAXATION

Resident companies (Companies

incorporated under the Myanmar

Companies Act (MCA) or Myanmar

Foreign Investment Law (MFIL): 25%

Non-resident companies (Branch

offices of foreign companies which are

not registered under MCA or FIL) : 25%

CORPORATE INCOME TAX (CIT)

Nationals / Resident Foreigners:

1-25% taxed on base of a

progressive rate

Non-resident Foreigners

(residing less than 183 days per

year in Myanmar): 1-25% taxed

on base of a progressive rate

PERSONAL INCOME TAX (PIT)

Companies operating in Myanmar are

typically subjected to the following

common taxes:

Direct Tax

Corporate Income Tax

Personal Income Tax

Capital Gains Tax

Withholding Tax

Indirect Tax

Commercial Tax

Special Goods Tax

TYPICAL TAX

Resident Citizens/ Resident

Foreigners: 10%

Non-resident Foreigners: 10%

Oil & Gas Industry – 40% to 50%

CAPITAL GAINS TAX

SPECIAL GOODS TAX (SGT)

SGT is introduced to replace

commercial tax on a list of 16 special

goods that are imported and/or

purchased from local

producers/manufacturers

SGT rates are ranging from 5% to

120%

On top of SGT, a commercial tax of 5%

will also be imposed on special goods

(on the selling price inclusive of SGT)

at the point of importation/sale of

special goods

COMMERCIAL TAX (CT)

There is no value-added tax

in Myanmar

A commercial tax is imposed

on a wide range of goods,

imported into or produced in

Myanmar, trading sales, and

services

Registration for commercial

tax is required when the

amount of income from sales

and services for an income

year is MMK 10 million or

more

There is no commercial tax

on the export of goods with

very few exceptions

29

TAXATION

Companies incorporated under Myanmar Foreign

Investment Law (MFIL) or SEZ Law can enjoy CIT

exemption

CIT exemption of up to 5 consecutive years (Companies

under MFIL)

CIT exemption of 7 years (Investment businesses operated

in an exempted zone or exempted zone businesses)

Exemptions from payment of import duty on equipment,

materials, means of transportation and other goods for

implementation of investment are also available from

Myanmar Investment Commission (MIC) or SEZ

Management Committee

INCENTIVES

TRANSFER PRICING

Myanmar has no formal transfer pricing

regulations

Under Chapter VII of the Income Tax Law,

taxpayers who have filed their annual tax return

may also be required to “produce supporting

evidence, accounts and a list of properties”

There is no explicit penalty for transfer pricing

assessments, nor is there an explicit penalty for

not having transfer pricing documentation.

However, for tax shortfalls in general, a penalty

not exceeding 10% of the tax may be imposed.

Payments subjected to withholding tax are interests;

royalties for the use of licenses, trademarks, patent rights

etc; payments made under contracts or agreements for

procurements and services made within the country

Applicable to both domestic and cross border payments

WITHHOLDING TAX

30

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Copyright © Tractus Asia Ltd. 2016

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