Why insurance is a further catalyst for growth in Myanmar?
08 May

Why insurance is a further catalyst for growth in Myanmar?

Insurance is an important global service – vital to commerce and private individuals.

1.) Why is insurance important to an emerging market?
2.) How does insurance underpin market-entry and business operational risk?
3.) Why Myanmar?
4.) What does it mean for Myanmar?

1.) Why is insurance important to an emerging market?

When an economy is growing quickly, as with Myanmar, insurance services play an important role in managing risk. For companies, their shareholders will demand insurance to protect their investments. Import and export activity requires insurance. Individuals, benefiting from a booming economy, with increased spending power, should be able to obtain insurance for their homes, family, life and health. Insurance is a catalyst allowing, and protecting, further growth in the economy.

By the structure of syndication an insurance provider can spread the risk of their portfolio with syndicates and insurance companies. This level of security provides confidence that is even more important in emerging markets. The insurance structure is often a group of insurance companies who work with contracts within the group. This allows even high value items to be insured with confidence. It is important to understand the strength that this structure provides.

One of the best known is Lloyd’s of London. In fact Lloyd’s is not an insurance company but a “marketplace”, which started in 1686. Today these insurers and reinsurers sign Terms of Business Agreements (TOBAs) linking their companies. This assures the insurance user that the risk is covered. The Lloyd’s market motto is Fidentia, Latin for confidence. Authorised financial backers and syndicates provide a collective resource to cover insurance claims.

“Improving access to insurance is particularly valuable for people with low incomes, who often struggle to manage unforeseen financial shocks.” (Sigma Insurance report, part of Swiss Re Group). The report emphasises, “these people are particularly vulnerable to shocks such as illness, incapacity to work, and the effects of natural catastrophes and extreme climate events, such as droughts. For insurers, opening up a new risk pool of several million customers on the cusp of transformative growth is an attractive proposition to embrace inclusive insurance of emerging consumers. It also helps close the protection gap for a large segment of the world’s population”. There are also patterns of microinsurance emerging in many countries, specifically designed to help low income individuals and families.

Another company with a focus on emerging markets and market entry is Willis Towers Watson who conclude, “Ultimately the goal is to secure a growth path and enhanced profitability which is sustainable”.
Unlike day to day decisions for purchases, such as your weekly shopping for food or larger items, insurance needs care. You are hoping it will never be needed but you have to trust the insurance provider will cover you in case of loss. Insurance is like the oil in the engine of commerce that keeps it running. If a company or individual needs to borrow funds, the lenders will demand insurance. Insurance can calm transactions by removing risk exposure that un-protected could block a deal. Insurance allows both companies and individuals to benefit from a more stable route forward. This applies to both huge conglomerates and small companies. Insurance is the logical, sensible service to adopt.

Over the years there have been cases worldwide of catastrophes. In one incident a factory caught fire and exploded. In another, chemical leakage has contaminated water courses. In one case the company was under-insured. The damage was so great to the region, local government and citizens took the company to court and won. The court awarded damages far in excess of the insurance value the company had chosen, indeed by a factor of 100, leading to the collapse of the company, with disposal of remaining assets. Taking insurance makes sense, but so does the careful and appropriate selection of cover.

It is not in the scope of the document, but it is interesting to note the growth internationally in a pattern to conform to international solvency standards. These are designed to protect consumers, retain financial stability and build trust in insurance companies. There are also deposit insurance systems (DIS) to create confidence for depositors.

In the words of Sigma (part of Swiss Re Group), “Emerging Markets will Drive Global Insurance Growth over Next Decade. Our forecasts show that emerging Asia will lead the charge for premium growth, expanding by three times the world average over the next two years.”

2.) How does insurance underpin market-entry and business operational risk?

There are many types of insurance to cover a range of risks across a wide range of industry and businesses. Policies will state what is covered and what is not included. It all comes down to managing risk. There is:-

Operational risk – the risk of a change in asset value following losses.

Business risk – the risk that results from wrong decisions e.g. backing new products, strategies or services.

Business success is not 100 percent certain. Questions arise, such as, is our strategy correct? Entering a new region and market adds to the risk. Insuring your developments adds strength and confidence to your entire company operation, especially in the new region, assuring both customers and investors. Insurance helps companies manage their operational risks. A crisis without insurance also leads to a reputational risk for the company. Also, if you are entering a new region there are compliance risks if you do not fully understand comply with national laws and guidelines

3.) Why Myanmar?

All regions, sectors, industries, commerce, families, and individuals benefit from insurance. The World Health Organisation estimates that 100 million people a year fall into poverty due to unexpected medical costs.

The value of insurance is even greater today due to the wider range of insurance cover that is now available. In India there is even a test phase for rainfall insurance that has been provided for 600 farmers.

Myanmar has a remarkably low take up of Insurance. Most citizens in Myanmar do not use insurance services. There are approximately 55 million citizens in Myanmar. Until 2013, Myanma Insurance was the sole insurance service in Myanmar. Myanma is a state controlled service. The range of insurance had been relatively limited by global standards. The opportunities in Myanmar for insurance providers are enormous.

Now, insurance and insurance broking business is conducted through either a company incorporated in Myanmar or a company established outside Myanmar with an established place of business in Myanmar.

The huge opportunity in Myanmar is recognised by insurance companies – alongside the huge risks for companies and individuals if they continue in old patterns and do not use insurance services.

Changes in regulations in Myanmar are very significant for the insurance sector. It is widely recognised that the Insurance Sector in Myanmar needed to change, to respond to huge increases in trading and overall economic activity in Myanmar. Last year official statements stated that work was underway “to solve the problems of the insurer and the insurance companies in line with law and rules, to establish the Open Insurance Market Operation, to establish the Pure (Perfect) Competition Market, to be non-monopolistic stage, enable to operate the co-insurance by the local/foreign companies, to have heterogeneous products, to create free entry to and exit from the insurance industry and to collect the transparent and free information in Insurance Sector of Myanmar”.

Asia and the Far East has the largest potential for growth in insurance policies. Providers realise that they must grab market share, be the first entrant wherever possible. It is easier to grow client volumes in emerging markets.

Many reports echo patterns around the world where Insurance companies are strong investors in national bond markets, so this is another boost for Myanmar. Reports indicate that at present in Myanmar the insurance sector accounts for 0.07pc of GDP.

4.) What does it mean for Myanmar?

Reduced risk, more attractive environment for investors, further spurs for growth and prosperity. The global insurance industry, after years of development, is well practiced in spreading their insurance risks, so they can be sure they can reimburse the claimant and or company if a claim is submitted. For Myanmar, the exponential rise in exports and imports, the rapid rise of construction of residential and commercial sites, and growth year on year of sales and the range of products available, all means insurance is more important. Asset values rise and need to be insured.

Furthermore, changing and unpredictable weather patterns add importance to insurance, so this is a sensible practice for business and individuals – insure your trades, possessions, and also obtain the benefits of health insurance. Companies who do not offer staff benefits such as health insurance, may find that staff leave for a competitor, who does provide insurance. It is still a candidates’ market in Myanmar, with more vacancies than candidates for many roles.

The range of risks that can be covered continues to grow. In general terms, forms of insurance include:-

  • General Insurance: This is any insurance policy but does not include life insurance comes under general insurance.
  • Fire Insurance.
  • Marine Insurance: This includes cargo insurance, hull insurance and freight insurance.
  • Miscellaneous Insurance: home insurance, credit insurance, vehicle insurance. There are many other types of general insurance.

It is a sad fact that emerging countries tend to be affected by insurance gaps. There are increasing reports of natural catastrophes. This hits emerging economies and citizens. With insurance, you have the reassuring fact that help is at hand.

The MOPF’s announcement No 1/2019 officially permits companies wishing “to operate the business of insurance, underwriting agency or insurance broking with foreign investment” to open for business in the country. FocusCore opened in Myanmar to help companies become established here and our services have grown to provide a full range of corporate services. We are delighted to see this development that will be of value to existing and new companies in Myanmar. Our extensive network of contacts covers Government and Commercial Sectors, allowing us to offer you efficient and informed guidance to facilitate your profitable company operations in Myanmar. Come to Myanmar now and see how this growing market can be a positive expansive step for your company and investment.

International Chambers of Commerce highlight the potential in Myanmar
12 Feb

International Chambers of Commerce highlight the potential in Myanmar

International Chambers of Commerce in Myanmar from Australia, Britain, Europe (EU), France, Germany, Italy, and The United States have come together as signatories to publish their encouragement for more foreign investment in Myanmar. Their compatriots, and indeed investors from many more countries are investing in Myanmar as the economy continues to grow.

The text explains, “Having been in isolation for so long, Myanmar now requires the broad regeneration of its economy to meet the demands of modern-day trade. As a result, there exists a significant range of private sector investment opportunities across every sector of the economy. Existing investments by our members contribute significanty to transformative social and economic development from within Myanmar,” [with] established international standards of corporate governance and sustainable responsibility.”

Last year The Government of Myanmar published the Myanmar Sustainable Development Plan (MSDP) for 2018 – 2030 providing a long term vision to attract US$200 billion. The plan also highlights the fact that Myanmar is the largest country in mainland Southeast Asia with a population of 53 million and located strategically between China and India. Myanmar plays a significant role, geographically, economically and politically, in the most rapidly advancing region in the world. A country that has been isolated for much of the past six decades.

In our January blog we reported on the highly successful Invest in Myanmar Summit. The message is clearly spreading far and wide and is being heard by companies.

Companies investing in Myanmar are listed from 49 countries by the Directorate of Investment and Company Administration (DICA). The top 16 by value are shown below with China, Singapore, Thailand and Hong Kong companies heading the list with the UK listed as N°5.

Foreign Investment of Permitted Enterprises as at 31 December 2018 (US $million).

1 China 20353.528
2 Singapore 20337.703
3 Thailand 11124.715
4 Hong Kong 7900.472
5 U.K 4517.663
6 Republic of Korea 3892.136
7 Vietnam 2161.103
8 Malaysia 1963.124
9 The Netherlands 1531.671
10 Japan 1183.921
11 India 763.567
12 France 549.740
13 U.S.A 432.796
14 Indonesia 274.530
15 Canada 203.594
16 Australia 145.799

Total 80126.675 (US $million)

FocusCore also saw the potential in Myanmar and we opened our offices here in 2014. The range of overseas companies we are helping grows not only in quantity but also across the growing range of countries they represent. We have said before that Myanmar is seen as the last area to emerge on the global stage, offering substantial growth potential across all sectors. Yes, companies need to follow Myanmar guidelines and we in FocusCore are here, specifically, to help companies start trading in Myanmar – quickly. We also provide up to date advice on the various investment incentives that may apply to each sector and region. Call us today to gain valuable information and grow your operations in the region.

Central Bank of Myanmar (CBM) allows local private banks to receive up to 35% equity from foreign banks.
06 Feb

Central Bank of Myanmar (CBM) allows local private banks to receive up to 35% equity from foreign banks.

In our blog of last November we outlined the news of a new Directive, issued by the Central Bank of Myanmar (CBM), authorising wholesale banking to be supplied by foreign banks to foreign corporates, foreign financial institutions, and local companies partnered with local financial institutions. A very significant step.

Then in December, news of a service to provide background checks for lenders that was opening in Myanmar – Myanmar Credit Bureau Limited, MCBL. Ready for new loan services to expand in Myanmar.

Now, on January 29 Directive No 1/2019 confirms the planned change for local banks, allowing up to 35 percent investment from an overseas institution. The local banks receiving the funding will not need to change their registered status as a Myanmar company, providing that the 35 percent rule is not exceeded.

This is all part of the changes introduced via The Myanmar Companies Law. This is very positive news for local banks, who seeking more capital, will now be able to boost further the growing economy.

Nevertheless each local bank institution will need to obtain authorisation prior to the investment. FocusCore, established in Myanmar since 2014, is here to help organisations obtain approvals, permits and visas to operate in Myanmar and overseas firms who wish to invest in local companies. Clearly, our detailed knowledge of the constant wave of liberalising changes in company incorporation and funding regulations is vital. We can provide you with information and resources so you can choose and place your investment and start operating rapidly in Myanmar.

Foreign Insurance companies see huge potential as Myanmar allows them to operate.
09 Jan

Foreign Insurance companies see huge potential as Myanmar allows them to operate.

September 2018 FocusCore Myanmar published a blog with the headline “MYANMAR opens its doors to Overseas Insurance companies – contact FocusCore today”.

Now, following more work on processes to liberalise the insurance sector in Myanmar, events have led to the official Announcement No. 1/2019, 2 January 2019, by the Ministry of Planning and Finance, MOPF, entitled “Insurance Market Liberalization for Foreign Entities in Myanmar”. This is part of the Myanmar Insurance Sector Liberalization Roadmap. This announcement grants permission to companies who wish “to operate the business of insurance, underwriting agency or insurance broking with foreign investment”.

Change had become visible in 2013, when eleven licences were granted to local companies. The aim of the Government being to develop the insurance sector. Prior to 2013, the only source of insurance was via Myanma Insurance. Myanma Insurance is a state-owned insurance company, founded in 1952, a monopoly. It started as a life insurer but later broadened its scope to underwrite both life and non-life insurance.

Now, both foreign and local insurance companies are invited to submit their Expression of Interest (Eol) and/or the Request for Proposal (RfP), in order to transact insurance business in Myanmar. The announcement further states that, The Financial Regulatory Department (FRD) “will facilitate the clarifications and discussions on the Eol and/or the RfP”.

Local composite insurers are mandated by the MOPF to operate as separate life insurance and non-life insurance entities paving the way for foreign entities to associate or partner with local insurers. The licensing guidelines provide various options.

Life Insurance Companies
Option 1: Allowing not more than 3 licenses for foreign life insurers as 100% wholly owned subsidiaries;
Option 2: Allowing foreign life insurers with a life/composite representative office in Myanmar to form joint venture with local life insurers.

Non-life Insurance Companies

Allowing foreign non-life insurers with non-life/composite representative offices in Myanmar to form joint ventures with local non-life insurers. Non-life insurance has very low penetration, only 0.05% of GDP. Over 80% of the market is in fire/property insurance. These initiatives are attracting more investment from overseas. Once a licence is granted, the agreement states that the insurance company must buy Government Bonds. So further overseas capital is entering Myanmar.

FocusCore made its first investment in Myanmar in Spring 2014. Since then we have expanded our range of corporate services, helping companies across many sectors to start and operate successfully in Myanmar. Now, seeing the low penetration of insurance to date and the huge opportunity, many more will take note. This will add further benefits for risk management and another boost for the prosperity of the economy.

Myanmar Credit Bureau Limited will open in Myanmar
17 Dec

Myanmar Credit Bureau Limited will open in Myanmar

A service to provide background checks for lenders is finally going to open in Myanmar – Myanmar Credit Bureau Limited, MCBL.

Over the last three years a lot of effort has been expended to achieve this important milestone. Loan facilities already had a boost earlier this year in November, when the Central Bank of Myanmar (CBM) authorised banks from overseas to offer wholesale financial services. Clearly, the availability of a credit bureau will make loan authorisation faster, perhaps with preferential rates for those with a good credit score. The ranking of Myanmar in the “ease of doing business” global listing will also receive a boost.

The bureau licence is shown on the CBM website, Myanmar Credit Bureau Limited 17.5.2018 No. (2), Sibin Road, Yankin Township, Yangon. Banks are applauding the news, stressing that loans are already being provided yet this will surely add to the growth of loan facilities available, adding that decisions will arrive sooner because background checks will be easier. It was in 2017 that the Directorate of Investment and Company Administration (DICA) signalled their approval with the proviso that data collected is also sent to the MCB.

The agreements were signed by MCBL with Equifax New Zealand Services and Solutions Ltd. There will be training for staff of the Credit Bureau, with also resources from the CBM. This is expected to take 12 months, so do not expect the bureau offices to open immediately.

MCBL has a 60 percent holding from the Myanmar Banks Association, and 40 percent from Asia Credit Bureau Holding Company, Singapore. Mr Khin Maung Aye is Chairman of the Myanmar Banks Association (MBA) and current Chairman of the Co-operative Bank PLC (CB Bank), which is one of the key banks in Myanmar’s private commercial banking sector.

One bank Director echoed the applause adding that the news was “monumental”.

Myanmar has the lowest of loan totals across the region. The arrival of this service will boost to new levels the growing economy – that has the highest annual growth forecast in the region.

The news was also welcomed by the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). The joint general secretary U Aung Kyi Soe said “Lenders can assess the risk of providing loans to SMEs based on the information provided by the credit bureau, said of the UMFCCI. The credit bureau will contribute to banks. Our fellow ASEAN countries have also established successful credit bureaux”

FocusCore opened in Myanmar to help companies become established here and our services have grown to provide a full range of corporate services. We are delighted to see this development that will be of value to existing and new companies in Myanmar. Our extensive network of contacts covers Government and Commercial Sectors, allowing us to offer you efficient and informed guidance to facilitate your profitable company operations in Myanmar. It is not unreasonable to predict this credit scoring service will expand to cover many more in the country, boosting buying power across the board. Come to Myanmar now and see how this growing market can be a positive expansive step for your company and investment.

Myanmar: Foreign Banks now allowed to provide banking services to local companies.
11 Nov

Myanmar: Foreign Banks now allowed to provide banking services to local companies.

A new Directive has been issued by the Central Bank of Myanmar (CBM). Wholesale banking services are now allowed to be supplied by foreign banks to foreign corporates, foreign financial institutions, and local companies, who are partnered with local financial institutions.

These changes are arriving as widely predicted, although it cannot be over stated that this is a very significant step. This will trigger a huge wave of change to further boost the economy

Duties of the CBM include fostering “Cooperation and Coordination with internal and international banks and financial institutions”. It was recognised that the CBM should become increasingly independently to “lay down” monetary policies”. Indeed, a flow of Directives have been announced over recent years.

A major change arrived in December 2017. The CBM authorised foreign banks to supply funds for export and associated services to companies. It was in relatively recent times, in 2013, that a Directive was published to allow privately owned banks, with approved dealer licences, to participate in the trading of foreign currencies. How things have changed.

It is not that long ago that foreign banks were granted licences to operate in Myanmar and the number of licences has been growing. There are now 13.

In August 2018 U Win Thaw, Director General of the CBM Governor’s Office and Director General Foreign Exchange Management confirmed that banks could “expand their services to include import trade financing. A change from December 2017, when trade financing was allowed, but only for export purposes.

Now, The Bank has moved further with this announcement: –

To allow foreign banks to supply all forms of financial services to local companies.

The CBM web site confirms that GDP growth for Myanmar is 6.8%. This will now grow further as new sources of finance immediately become available.

Now eyes will be watching for more banks to be authorised, more branches, and (when?) the huge potential – new services retail customers.

In July foreign nationals received the green light allowing them to invest on the Yangon Stock Exchange, thanks to the Myanmar Companies Law. Many see the next step will be to allow investment from foreign nationals based in other countries.

So how should you now view the opportunities in Myanmar?

Many changes have been arriving, electronic company registration, increased levels of corporate governance and reporting to meet global standards. Extensive positive forecasts from recognised authorities. Here are examples from The World Bank:-

Myanmar

  • 2001 GDP USD 6.478B
  • 2016 GDP USD 63.225B

Myanmar Growth

  • 2018 – 6.7%
  • 2019 – 6.9%
  • 2020 – 7.1%

Even for the power house China, World Bank forecasts for 2018, 6.4%. Myanmar has a higher growth forecast than China.

FocusCore started in Myanmar five years ago. We saw the opportunities, saw the potential available for foreign companies to start trading in Myanmar. Our forecasts and results are meeting all our expectations.

We have expanded our range of services, from initially helping companies with Incorporation and Visas, to include bookkeeping, legal, staffing and much more, with immediate solutions to allow your company may start trading here.

The tide of change is undeniable. Come and join us in Myanmar and benefit from the growing economy that has support from the highest levels.

Hong Kong Investors eye Myanmar.
07 Nov

Hong Kong Investors eye Myanmar.

In October the Myanmar Investment Commission (MIC) launched the Myanmar Investment Promotion Plan (MIPP). The aim, to attract more than USD 200 billion over the next 20 years.

This has been work in progress that started some years ago with assistance from the Japan International Cooperation Agency (JICA) to promote foreign investment in Myanmar.  Events are moving quickly. Inertia is growing.

The Myanmar Investment initiative is led by U Thaung Tun, Chairman Myanmar Investment Commission (MIC).  In June 2018, U Thaung Tun was in Hong Kong, and in his keynote speech he said, “We are aware that Hong Kong is one of the best places in the world to do business. We see the strength of its financial services, capital raising, expertise and technical know-how. Myanmar recognizes Hong Kong’s distinctive role as a super-connector in the Belt and Road Initiative. Hong Kong is the 4th largest investor and major trading partner of Myanmar. Total Trade volume, US$ 386 million: Import US$ 23 million, Export US$ 363 million. 10.28% of total FDI flow in Myanmar”.

The published event headings invited participants to:-

  • Participate in Myanmar’s first government led public promotion in Hong Kong
  • Interact with Senior Government Officials to understand Myanmar’s progressive reforms
  • Learn how Hong Kong investors can participate in existing Myanmar investment opportunities
  • Feel the warmth and beauty of Myanmar’s culture landscape and people

U Thaung Tun was back in Hong Kong on October 16 for The Myanmar Investment Promotion luncheon together with a Senior Government delegation. He met with Hong Kong’s Chief Executive, Mrs. Carrie Lam Cheng Yuet-ngor. (She was appointed in June 2017). The visit included the widely publicised Investment Promotion Event with attendees from 130 Hong Kong companies and foreign companies located in Hong Kong. Also of note was the announcement by the Myanmar Government confirming visa exemptions for Hong Kong Passport holders. This was warmly welcomed by Mrs. Carrie Lam Cheng Yuet-ngor. The event was also attended by senior officials, from the Hong Kong (Special Administrative Region) Government, and commerce and economic development councils.

U Thaung Tun emphasised the positive stance of the Myanmar Administration, adding “The investment body is ready to create an investor-friendly environment and is already making investment regulations more efficient and effective for investors”.

There are several initiatives that show more and more activity with China. In September, Myanmar and China signed a memorandum of understanding creating the China Myanmar Economic Corridor (CMEC), within the Belt and Road Initiative. Part of the 1,700-kilometer corridor will link Yunnan Province in China to Mandalay, Yangon and Kyaukphyu Special Economic Zone (SEZ).

Last year, Myanmar had announced progress in the ASEAN Free Trade Area policy and this could also work well with the Belt & Road Initiative of China. This is especially of note for Myawaddy, in Kayin State that would be part of the Asian Highway 1. The town will become an international Border Logistics Hub and Commercial Zone. The Myanmar Government has created a team to review similar facilities at Hong Kong, Shenzhen and Macao.

The pace and interest is clear, and investment is set to grow even more rapidly, creating new opportunities for joint ventures, and grow demand for commercial product and services fuelled by the growing economy and growth of incomes.

We in FocusCore are totally committed to helping companies start in Myanmar. From Company Incorporation to staffing to bookkeeping and compliance and much more – with also fast track solutions so your company can start trading very quickly.  Call us today.

Myanmar: Tax changes due but tax very low compared to % GDP across Asia.
22 Oct

Myanmar: Tax changes due but tax very low compared to % GDP across Asia.

The Government in Myanmar is reviewing tax laws with potential changes expected in the near future. For companies, correct tax reporting will be even more important. Selecting the correct corporate structures, accounting and management procedures will be imperative.

Reports indicate that one of the Government’s objectives is to broaden the tax net, to extend the range of areas from which tax is derived.

Government expenditure has indeed been increasing, so an increase in available budgets bodes well for more new projects. Investors can expect more JV opportunities. There have been enormous changes and substantially higher levels of investment in Myanmar, with more on plan, and these project costs have to be met.

If you have been following news outlets and or our blogs you will know that a raft of changes in laws and regulations have been arriving with the aim (that is producing exactly this desired result) of encouraging even more investment from overseas.

Should potential investors be concerned about new taxes?

Digging deeper into this question reveals some interesting facts. The results will surprise you and encourage you to invest in Myanmar. Why?

Here are some results of a short review we completed comparing levels of tax versus national GDP in Myanmar.

In 2015 for Myanmar, total tax as a percentage of GDP was 4.9%. In Thailand, as a comparison, total tax was 17 percent of national GDP. Myanmar has consistently shown a percentage that is considerably lower than most other countries in Asia, indeed anywhere in the world. If you are reviewing investment opportunities in Asia and choosing in which country to invest, the recorded figures for Myanmar are noteworthy.

Percentage of Taxes Collected to GDP

Country2013 2016
Myanmar5.53%6.41%
Thailand16.91% 15.51%
Source: The World Bank

 

When tax revenues do rise, which is expected, Myanmar has excellent growth forecasts:-

  • GDP: Expected to grow by 6.6% in 2018 and by 7.0% in 2019.
  • Inflation rates: “Forecast at 6.2% in 2018 and 6.0% in 2019.
  • Per capita GDP growth: Expected at 5.9% in 2018 and 6.3% in 2019.
    Source ADB Bank

A fully electronic tax recording system is to be introduced. In April 2017, The Government announced a “Modernization of Public Finance Management Project (MPFMp)”. Myanmar received US$ 30 million from the World Bank, and a US$25 million grant from the UK and Australian governments towards the costs for “Modernization of Public Finance Management systems”. The project has multiple aims including supporting “efficient, accountable, and responsive delivery of public services” and improved “External Oversight and Accountability”.

Recent announcements by U Min Htut, Director General of the Internal Revenue Department confirm that potential changes are under review. U Min Htut was appointed in May 2013.

A more timely reporting system will pave the way for fines to be introduced for late payment of taxes, adding to the importance for all companies to have in place a correct corporate tax management and reporting structure.

FocusCore has been operating in Myanmar since 2014, providing a wide range of corporate services from Company Incorporation, MIC Application Services, Corporate Secretarial Services, Staffing, Payroll & Bookkeeping Services, License & Permit Services, Tax & Compliance Services, to finding the perfect office space.

Myanmar Companies Law 2017 – the changes, and how these help your company.
03 Oct

Myanmar Companies Law 2017 – the changes, and how these help your company.

We have received many calls from companies seeking more information on the changes that came into effect in August of this year, via the Myanmar Companies Law.

Here is an overview of the major changes and some detail that answer many of the questions we received. Please contact us for more detailed information on how the beneficial changes relate to your company.

Regulations in the previous law, placed restrictions on company operations and investments from overseas. For the majority of cases the new rules now encourage investment from overseas.

All company documents, including those of incorporation are brought together within a new electronic registry.

SubjectCompanies Law 2017Previous Regulations 
Minimum Number of Shareholders required One Two
Minimum Number of Directors required One Two
Share ClassesPreference, Ordinary, Redeemable/ConvertibleOrdinary Shares
Stipulated duties of DirectorsClear explanation of requirementsDefinition not clearly outlined
Restriction on trading operationsTrading authorised with up to 35% investment in Joint Venture with a Myanmar Company. Also for "permitted sectors" 100% foreign ownership is authorised.No licence available
Reporting of DividendsThese need not be solely from profits. A test of solvency is introduced, to protect creditors, to assure company can reimburse creditors if required.From profits only
Company IncorporationOne ConstitutionBoth Memorandum and Articles of Association

The English translation of the law comprises 184 pages so there is of course considerable more detail. These changes, including those within the new Myanmar Investment Law, bring positive changes.

For the majority of trading activities, foreign investors may take up to a 35% stake in a local company before the company is categorised as a foreign company. Under the previous law, a local company was classified as a foreign company even if just one share was allocated to an investor from overseas.

Overseas investors may also now own up to 35 percent of shares in a company listed on The Yangon Stock Exchange.

For a private company only one Director or Shareholder is required. Note, any further person even if not officially appointed, who “acts as if appointed as the position of Director”, is deemed to be a Director. Public companies require at least three Directors.

A company can be incorporated if one Director is ordinary resident in Myanmar. A person is considered resident if they are in Myanmar for at least 183 days within a period of 12 months.

The entire process to obtain permission to trade is now much simpler and no requirements remain that stated the objectives of the company had to be defined.

If a company’s constitution is changed, notice must be provided within 28 days from the date of passing of the special resolution. Then and only then is the change effective.

Annual returns must be filed within 28 days of the financial year end, for each trading year, with no period exceeding 15 months when no return has been filed.

Note: An overseas corporation that ceases to trade in Myanmar must register the change within 21 days.

Rules for smaller companies are simplified. A small company means a company that is not a public company or subsidiary of a public company and has no more than thirty employees. Annual revenue should be less than a stipulated figure, currently this is 50,000,000 Kyats. Protection for smaller companies is improved.

All these changes not only open the door for foreign companies and investors but also bring good news to existing Myanmar companies seeking new sources for further investments.

The Company Law was announced last year by Mr. U Aung Naing Oo, Director General of The Directorate of Investment and Company Administration (DICA). He also stressed that the changes that would enhance corporate standards in Myanmar, with the clear aim to establish world class standards in Myanmar.

FocusCore is here to help you with your Company Incorporation, together with all the initial and ongoing procedures for trading in Myanmar and we offer a wide range of corporate supporting services. Contact us today and join the growing range of overseas companies now trading in Myanmar.

Myanmar opens its doors to Overseas Insurance companies
03 Sep

Myanmar opens its doors to Overseas Insurance companies

From 1st October 2018 insurance companies from overseas will be authorised to trade in Myanmar.

This huge change for Insurance Companies, that also benefits all companies in Myanmar and the Myanmar Bond Markets, was confirmed by Mr. U Zaw Naing, Secretary to The Insurance Business Regulatory Board (IBRB). U Zaw Naing holds a number of posts including Chairman of the Myanmar Institute of Directors. He also outlined the new plan to select Insurance Consultants, who will then review companies submitting requests for licences to operate in Myanmar.

(1st October 2018 is the start date for the Financial Year 2018-2019. Last November The President, U Htin Kyaw recommended changes to the fiscal year start date. The fiscal year now runs 1 October to 30 September).

This change in regulations for the insurance sector is very significant. It is widely recognised that the Insurance Sector in Myanmar needed to change, to respond to the huge increases in trading and overall economic activity in Myanmar. Last year official statements stated work was underway “to solve the problems of the insurer and the insurance companies in line with law and rules, to establish the Open Insurance Market Operation, to establish the Pure (Perfect) Competition Market, to be non-monopolistic stage, enable to operate the co-insurance by the local/foreign companies, to have Heterogeneous products, to create free entry to and exit from the insurance industry and to collect the transparent and free information in Insurance Sector of Myanmar”.

The IBRB is responsible to the Ministry of Planning and Finance (MoPF), who issue operating licences for the Insurance sector. Only recently they had announced some changes, allowing foreign insurers to operate through a company incorporated in Myanmar. Going further back, prior to 2013, the only source of insurance was via Myanma Insurance. As of Autumn 2017, 24 foreign insurers had opened “Representative Offices” in Myanmar with the objective of building contacts.

It is widely reported that this is next big economic boost for Myanmar. It is not going un-noticed. For example, a report recently issued by Munich Reinsurance Company recognises the importance of growing markets in many areas, and ASIA was highlighted. Myanmar shows the most opportunities. Most citizens in Myanmar do not use insurance services. There are approximately 55 million citizens in Myanmar.

Many reports echo patterns around the world that confirm Insurance companies are significant investors in national bond markets so this is another boost for Myanmar. As for revenues in Myanmar, publications show that at present in Myanmar the insurance sector accounts for 0.07pc of GDP.

The forecasts for growth are higher than our forecasts created in 2014, when FocusCore decided to open our offices in Myanmar – to provide a world class service to help companies start operating in Myanmar. Reports for Insurance revenues in other countries show the huge revenues in this sector – and Myanmar is now opening its doors to overseas insurance companies.  Please contact us today – if you are an Insurance company or from another sector as you will also benefit from the availability of wider and more flexible insurance services for your company.