Investors looking to invest in Myanmar are often confused by the country’s system of investment procedures. A common question I receive is about Permits to Trade. What are these permits exactly?
A Permit to Trade is basically a certification that the government issues that allows you to operate your business. It was put in place to make sure that the State is aware of the kinds of businesses being operated in Myanmar – all foreign businesses are required to have one. Permits to Trade are handled by the Company Registration Office in Naypyidaw. While there are officially three kinds of Permits to Trade (manufacturing, services and trading) I’ve never heard of anybody receiving a ‘trading’ Permit to Trade. Therefore in practice you will either receive a ‘manufacturing’ or ‘services’ Permit to Trade. Permits to Trade are valid for three years after which they must be renewed in Naypyidaw.
If you don’t wish to qualify for the incentives offered by the Foreign Investment Law, you can start your business by fulfilling the minimum amount of foreign capital required to receive a Permit to Trade as specified below:
Manufacturing (Industrial) Permit to Trade – KS 1,000,000
Services Permit to Trade – KS 300,000
The above amounts are still calculated at the official exchange rate which is currently about 6 Kyat/dollar. This means that you will need to invest a minimum of around $167,000 for an industrial company (although as we stated above, most manufacturing companies choose to invest under the Foreign Investment Law which has separate capital requirements) and about $50,000 for a services company.
When you submit your application for a Permit to Trade, you will need to deposit 50% of this capital into a Myanmar bank account. Up until 2012 the only banks that accepted accounts for this purpose were the Myanmar Foreign Trade Bank (MFTB) and the Myanmar Investment and Commercial Bank (MICB). In 2012 private sector banks were allowed to start operating in the commercial banking sector, but this area remains a bit murky, so most investors deposit their money in one of the two above-mentioned banks. The remaining 50% of the capital must be imported into Myanmar within one year. While the minimum amount of capital is calculated at the official exchange rate, foreign investors may keep their imported capital in dollars, and can generally exchange it at market rates. Investors who want to qualify under the Foreign Investment Law have separate minimum capital requirements.