The relaxation of Canada's “special economic measures” that have been applied to Myanmar has been widely publicized. The changes have been complemented with high profile visits to the region by the Prime Minister, the Minister of Foreign Affairs and the Minister of International Trade. With the announcement of a new Canadian embassy to open in Yangon this year, this recently closed-off country is now attracting a great deal of attention. Given Myanmar’s rich diversity of natural resources, strategic geography and attractive demographics, there are many business opportunities across a range of industries and sectors, including in mining, energy, infrastructure and engineering.
Since being sworn in on March 30, 2011, President Thein Sein has made significant improvements to the openness and stability of Myanmar, although ethnic strife is a serious problem and significant human rights violations have been alleged.
Canada has been more cautious than other western countries in normalizing trade relations with Myanmar. This guarded approach is evidenced by the Special Economic Measures (Burma) Regulations which forbid business dealings with a specified list of people and entities, classified as designated persons. These Regulations continue to prohibit Canadians from dealing in property, entering into transactions, making goods available or providing financial services to former and current senior officials of the prior military regimes, their family members and any entities owned or controlled by them.
While these restrictions may appear limited, it is important to note that the three state banks in Myanmar - the Myanmar Investment and Commercial Bank (MICB), the Myanmar Economic Bank (MEB) and the Myanmar Foreign Trade Bank (MFTB) - are all designated persons under the Regulations and Canadians are prohibited from dealing with them. It may, however, be possible to obtain a permit from the Minister of Foreign Affairs to carry out an otherwise prohibited activity.
The government of Myanmar also places restrictions of foreign investment within the country. The Foreign Investment Law, as amended November 2, 2012, and the Foreign Investment Rules, enacted January 2013, restrict certain types of business activities from occurring without government approval. Such restricted activities include using or producing hazardous chemicals, undertaking activities which may cause damage to the environment and bringing hazardous or poisonous waste into the country. Foreign investment is monitored and approved by the Myanmar Investment Commission (MIC) which published a list of restricted activities that are prohibited for foreign investors or may only take place as part of a joint venture with a local citizen or public contract. These activities are listed in MIC Notification 1/2013.
In April of 2012, currency exchange reforms were also announced. Before these reforms were introduced, the three state banks mentioned above were the only entities authorized to open foreign currency accounts. The use of foreign currency accounts has now been expanded to at least 17 banks. However, Myanmar trade laws currently require foreign investors to import a required amount of capital into Myanmar before being granted a permit to trade and this foreign capital investment must still be deposited with either the MICB or the MFTB.
So while Myanmar is undeniably more open for business than it has been in recent memory, the floodgates are not entirely wide open to Canadians, particularly for large-scale foreign business activities. Before deciding to invest in Myanmar, investors need to conduct a careful analysis of the banking and business laws that will apply and determine whether their potential activities are indeed feasible.