Since its transition to a democracy in 2011, Myanmar is in the midst of an economic transformation, aiming to attract foreign investment and reintegrate itself into the global economy.
Thanks in part to its abundant natural resources, gross domestic product (GDP) is expected to grow by a healthy 6.9 percent a year between 2014–2019, up from an estimated 5.5 percent in 2013–2014. Greater inflows of foreign capital should support the expansion in real GDP, helping one of Asia’s poorest countries to improve living standards for all citizens.
The government will continue to pursue a wide-ranging program of reform, with a focus on economic expansion and alleviating poverty. Multilateral agencies have re-established their presence in the country and will increase their support for the government’s efforts. The IMF already provides extensive policy advice and technical assistance on economic reform, and in January 2014 the World Bank announced a US$2 billion aid program to improve healthcare and electricity provision. In 2014–2018 many further changes are planned, including new legislation on mining and banking.
Fair competition among companies has become a major priority, to hasten the path towards economic liberalization and protect the interests of consumers. Although some national laws contain provisions for consumer rights, there is no dedicated legislation. And although the new constitution has a provision for fair competition, there is no comprehensive law on competition. The consumer protection law will cover foods, drugs and commodities such as refrigerators and cars.
Foreign direct investment grew from US$1.9 billion in 2011–2012 to US$2.7 billion in 2012–2013. Most of this funding went into the energy sector, the garment industry, and the information technology and food and beverages sectors. The FDI Law restricts or prohibits foreign investment in a range of industries “that can be carried out by citizens”, such as agriculture, livestock, fisheries and manufacturing and services. It also limits foreign investment in sectors that could affect the natural environment and public health. However, the regulations do permit 20 percent foreign ownership in a firm in these sectors, so long as a citizen of Myanmar owns the remaining 80 percent.
The economic reform process continues, with an emphasis on removing further regulatory restrictions to trade and investment, improving the provision of essential backbone services and reducing corruption in order to improve Myanmar’s business environment. The government has also relaxed restrictions on trading in foreign exchange by local private banks and eased the withdrawal of foreign exchange by foreign nationals.
A registered Myanmar branch of a foreign entity that does not enjoy incentives under the Myanmar Foreign Investment Law (MFIL) is subject to income tax at 35 percent — as are other non-resident entities. Commercial tax for specified services is applied at 5 percent of gross sales. Myanmar has a progressive tax system with a top personal tax rate of 20 percent for resident citizens, rising to 30 percent for resident foreigners. Non-resident foreigners are subject to a flat tax rate of 35 percent. Immovable property situated in Yangon is subject to property taxes, covering general tax, lighting tax, water tax and conservancy tax.
In Myanmar, KPMG has its office located in the city of Yangon.