Transparency of the Regulatory System
Regulatory and legal transparency are significant challenges for foreign investors in Burma. The regime State Administration Council (SAC) peremptorily issues and enforces laws, regulations, and notifications without explanation. The current law-making process is opaque, and the regime has made amendments to laws without public consultation. (Note: Since the coup, there has not been a functional parliament. End note.)
The regime is not legally obligated to share regulatory development plans with the public, conduct public consultations, or offer advanced notification of rulemaking.
There is no centralized online location similar to the Federal Register in the United States where key regulatory actions are published in Burma. The military regime announces some regulatory changes via state media or in the Commander-in-Chief’s public addresses, but copies of the changes are usually not easily accessible nor routinely posted and can be contradictory or missing key elements.
There are no oversight or enforcement mechanisms to ensure the regime follows administrative processes.
Under the Myanmar Investment Law, the MIC serves as the regulatory body and has the authority to impose penalties on any investor who violates or fails to comply with the law. Investors have the right to appeal any decision made by the MIC to the government within 60 days from the date of decision.
Under the military regime, there is no espoused commitment to transparent public finance and debt obligations. There are allegations that the military is instead incurring off-budget debt and using funds beyond those allocated in the budget. Prior to the coup, public financing and debt obligations, exclusive of contingent liabilities, were made public and transparent. The budget and budget reports were routinely published on the Ministry of Planning, and Finance website: https://www.mopf.gov.mm/ prior to 2021. Since the coup, the military regime changed the fiscal year from October 1 to September 30 to April 1 to March 31.
Post-coup, the military has published a few budget documents, including the budget law, citizen budget, and quarterly execution budget reports. Budget proposals, state-owned enterprise (SOE) financial statements, and supplementary reports on the budget, debt, and end-of-year are no longer available. Details regarding the budget allocations for defense expenditures are not transparent, a problem exacerbated by the military coup. Burma publishes its debt obligation report on the Treasury Department’s website: https://www.mopf.gov.mm/my/page/finance/ . The Public Expenditure and Financial Accountability (PEFA) program last reviewed Burma’s public finance system in 2020.
The military regime does not promote or require environmental, social, and governance disclosures to help investors and consumers measure investment social and environmental impacts; governance of investment activity post-coup is no longer predicated on rational and consistent rules. Businesses seeking to legally extract mineral resources, however, are required to prepare an environmental management plan to receive a license to mine from the regime. Burma is no longer a member of the Extractives Industry Transparency Initiative following its delisting in February 2024, and there remain significant risks connected to mining of rare earths, base metals, gold, and gemstones in Myanmar (see 2024 Supplemental Business Advisory for Burma).
International Regulatory Considerations
Burma has been a member of the Association of Southeast Asian Nations (ASEAN) since July 1997. As an ASEAN member state, Burma’s regulatory systems are expected to conform to harmonization principles established in the ASEAN Trade in Goods Agreement (ATIGA) to support regional economic integration. Burma’s regulations, however, do not conform to ASEAN’s regulatory standards or international norms.
Prior to the coup, the government had been making progress on legal reforms to ensure the country’s regulations and standards reflected international norms or standards, including ASEAN-developed standards. In an example of ASEAN regulatory harmonization, Burma officially joined the ASEAN Single Window in March 2020 with the launch of the National Single Window Routing Platform, which streamlined the import process by adopting the ASEAN Certificate of Origin Form D. That reform was reversed post-coup. Imports to Burma now require one of a limited number of import licenses, the requirements for which change frequently and present considerable spoilage risk to companies importing products with a limited shelf-life or requiring uninterrupted cold-chain storage.
Burma is a WTO member, but it does not regularly notify draft technical regulations to the WTO Committee on Technical Barriers to Trade.
Legal System and Judicial Independence
Burma’s legal system is a combination of customary law, English common law, statutes introduced in the pre-independence India Code, and post-independence legislation. If there is no statute regulating an issue, courts are to apply Burma’s general law, which is based on English common law as adopted and modified by local case law. Each of Burma’s states and regions has a high court, with lower courts in each district and township. Per the 2008 constitution, the president appoints high court judges, and the chief justice appoints district and township judges through the Office of the Supreme Court of the Union. The Union Attorney General’s Office law officers (prosecutors) operate sub-national offices in each state, region, district, and township.
Immediately following the 2021 coup, the military regime replaced several members of the Supreme Court with judges. The military regime placed dozens of townships under martial law, where court proceedings are conducted by military judges. Military courts now represent a parallel judiciary in Burma that regularly tries civilians for a variety of alleged crimes, ranging from minor offenses such as using a Virtual Private Network (VPN) on a phone or violating a curfew in a martial law zone to acts of terrorism.
The regime’s Ministry of Home Affairs, led by an active-duty military general appointed by the Commander-in-Chief, controls the Myanmar Police Force, which files cases directly with the courts. The attorney general prosecutes criminal cases in civilian court and reviews pending legislation. Commander-in-Chief Min Aung Hlaing appointed the current attorney general, Dr Thida Oo, the day after the 2021 coup. The Attorney General’s Office was reorganized as a separate ministry on August 30, 2021.
Burma does not have specialized civil or commercial courts, so to address long-standing concerns of foreign investors regarding dispute settlement, the government acceded in 2013 to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). In 2016, Burma’s Parliament enacted the Arbitration Law, putting the New York Convention into effect. However, the Arbitration Law does not eliminate all risks around arbitration. There is a limited track record of enforcing foreign arbitration awards in Burma, and inherent jurisdictional risks remain in any recourse to the local legal system. Most foreign businesses seek arbitration in a third country, despite the risk that the award cannot be enforced in Burma.
State-owned enterprises (SOEs) enjoy several preferences, including serving in some cases as both a business and regulator, enjoying preferential land access in or near critical infrastructure like seaports, river ports, electricity, and roads and rail, as well as access to low-interest credit. The legal framework for SOEs remains unclear and fragmented. SOEs are not provided for under the 1989 State-Owned Economic Enterprises Law but rather through a series of directives for individual SOEs from the respective ministries charged with overseeing them. Burma still requires a legal framework to govern SOEs, especially for regulations over SOE accounting, performance benchmarks, and SOE oversight and transparency.
Certain regulatory actions may be appealed and are adjudicated by the respective regime ministry. For instance, according to the Myanmar Investment Law, investment disputes that cannot be settled amicably are “settled in the competent court or the arbitral tribunal in accordance with the applicable laws.” An investor dissatisfied with any enforcement action made by the regulatory body has the right to appeal to the government within 60 days from the date of that action. The relevant ministry may amend, revoke, or approve any decision made by the regulatory body. This decision is considered final and conclusive.
Although foreign companies have the right to bring suit and defend themselves in local courts, there remain serious concerns about the post-coup lack of impartiality and independence of Burma’s courts. In addition, procedural limits over courts’ actions and judgments, particularly those of military courts, are severely lacking and can result in the arbitrary application of laws. Appellate courts suffer from similar deficiencies, including a lack of independence from the military regime.
Laws and Regulations on Foreign Direct Investment
The Myanmar Investment Law outlines the procedures the MIC must take when considering foreign investments. The MIC evaluates foreign investment proposals and stipulates the terms and conditions of investment permits with potential national security implications. The MIC does not record foreign investments that do not require MIC approval, so small investments may go unrecorded. Foreign companies may register locally without an MIC license, in which case they are not entitled to receive the benefits and incentives provided to foreign companies under the Myanmar Investment Law.
There is no “one-stop shop” for investors except in Special Economic Zones (SEZs). Burma has established three SEZs on the books – Thilawa, Dawei, and Kyaukphyu – with preferential policies for businesses operating there, including “one-stop shop” service. However, of the three SEZs, only Thilawa is currently in operation.
Competition and Antitrust Laws
Burma enacted its first Competition Law in 2017 aimed at protecting public interest from monopolistic acts, limiting unfair competition, and preventing abuse of dominant market positions and economic concentration that weaken competition. The Myanmar Competition Commission serves as the regulatory body to enforce the Competition Law and its rules, chaired by the regime’s Minister of Commerce with the director general of the Department of Trade serving as its secretary. Members also include a mixture of representatives from relevant line ministries and professional bodies, such as lawyers and economists.
Post-coup, foreign companies, particularly in the telecom and energy sectors, have divested hundreds of millions of dollars in telecom and energy infrastructure, resulting in further market consolidation. In other areas like aviation, the domestic market is dominated by one private company and one SOE, both of which must purchase jet fuel from another monopoly SOE. The result of limited competition in some sectors is higher input prices for many goods and services in Burma, particularly refined fuels, and electricity, but also in other critical inputs, including sugar, edible oils, fertilizer, and pesticides.
Expropriation and Compensation
The 2016 Myanmar Investment Law (MIL) prohibits nationalization and states that foreign investments approved by the MIC will not be nationalized during the term of their investment. In addition, the law stipulates that Burma will not terminate an enterprise without reasonable cause, and upon expiration of the contract, an investor is guaranteed the withdrawal of foreign capital in the foreign currency in which the investment was made. Finally, the law states that “[the Burma] government guarantees that it shall not terminate an investment enterprise operating under a Permit of the Commission before the expiry of the permitted term without any sufficient reason.”
Despite the MIL, there are numerous examples since 2016 of partial or complete asset expropriation, particularly of foreign companies during the current military regime. There is a significant risk of nationalization and expropriation by the military regime, particularly in the energy, financial, and telecommunications sectors.
Both foreign-owned mobile telecom and energy firms have departed Myanmar since the military coup, some without selling their assets, while others waited months or years to obtain regulatory approvals. To obtain regulatory approval, foreign companies are often compelled to transfer their commercial interests and Burma-domiciled property to regime-linked entities and SOEs. If sale proceeds are not received outside Burma, then foreign companies also face confiscatory exchange rates for repatriating the proceeds of a sale.
Dispute Settlement
ICSID Convention and New York Convention
Burma is not a party to the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of other States. In 2016, the Parliament enacted the Arbitration Law, putting the 1958 New York Convention into effect (see international arbitration below).
Investor-State Dispute Settlement
Burma does not have a Bilateral Investment Treaty or Free Trade Agreement with the United States.
There are no reported investment disputes by U.S. persons against the government of Burma.
International Commercial Arbitration and Foreign Courts
Under the 2016 Arbitration Law, local courts must recognize and enforce foreign arbitration awards against the government unless a valid ground exists for refusal to enforce the award. Valid grounds for refusal include one or more parties’ inability to conclude an arbitration agreement; the invalidity of the arbitration agreement or its lack of compliance with applicable laws; lack of due process if the award falls outside the scope of the arbitration agreement; or the award is not in force or has been set aside.
There is no public record of foreign investor disputes with state-owned enterprises.
Bankruptcy Regulations
In February 2020, Burma passed the new Insolvency Law. The law adopted the UNCITRAL Model Law on cross-border insolvency, providing greater legal certainty on transnational insolvency issues.
The legislation established an insolvency/bankruptcy regime that addresses both corporate and personal insolvency, with a focus on protecting micro-, small-, and medium-sized enterprises. With regards to personal insolvency, the law encouraged debtors to enter a voluntary yet legally binding arrangement with their creditors. This agreement allows part or all the debt to be written off over a fixed period. The law also provides equitable treatment for creditors by enabling an orderly liquidation process to ensure creditors receive maximum financial recovery from the property value of a non-viable business.
The Insolvency Law also established the Myanmar Insolvency Practitioners’ Regulatory Council to act as an independent regulatory body and assigned DICA the role of Registrar, with the authority to fine individuals contravening the Insolvency Law. In addition, a court can order an individual to make good on the default within a specified time.
