How to start a small business in Myanmar

Starting a small or medium enterprise (SME) in Myanmar is an increasingly attractive option for global investors. The allure has only heightened since 2015 when the Directorate of Investment and Company Administration (DICA) introduced significant changes to streamline registration procedures.¹ This enhancement not only provided a more transparent roadmap for company registration in Myanmar it also paved the way for smoother investment applications. This strategic transformation played a pivotal role in enhancing the ease of doing business in the country, consequently attracting increased investment from diverse sectors.

With its swift economic progression and an abundance of resources, Myanmar is steadily emerging as a desirable destination for businesses. Aspirants keen on establishing a footprint here should be adept in the requirements and nuances of the registration process. A deep understanding of how to obtain a certificate of incorporation, adherence to Myanmar's regulatory framework, and an appreciation for its culture are essential elements for establishing a successful SME in this country.

As we venture deeper into the details, the first order of business is to get the foundational prerequisites for the formation of a company in Myanmar right. Let's navigate through these primary requirements that are pivotal for every entrepreneur.

General requirements for the formation of a company

Following your decision to start a small or medium-sized business in Myanmar, the primary step is familiarising yourself with the mandatory prerequisites. This knowledge serves as a foundation to ensure your company’s endeavours align with Myanmar's legal landscape. Understanding these basic requirements not only helps avoid potential pitfalls, it also streamlines the registration process, making it hassle-free.

• Allowed foreign ownership: Myanmar offers a welcoming environment for foreign investors. You can set up a wholly foreign-owned company in the majority of sectors. However, it's crucial to be aware that some business activities, such as defence-related manufacturing, tour guide services, and specific retail establishments like mini-markets, remain restricted. The List of Restricted Investment Activities outlines these regulations in detail.² Some sectors are entirely off-limits for foreign investors, while others mandate a partnership with a local entity.
• Minimum capital requirement: There's no overarching minimum capital threshold for foreign-owned companies in Myanmar. However, depending on the nature of the business, distinctions exist. Service sector enterprises necessitate a starting capital of at least US$50,000 while manufacturing entities demand a minimum of US$150,000.³ A capital injection of US$50,000 from the parent company's equity is mandatory for those aiming to establish a branch or representative office.
• Registered address: Securing a registered business address is vital. Whether you opt for a virtual setup or a physical establishment, this address acts as your company's official presence in Myanmar. While a foreign-owned entity can lease a physical office for up to two years initially, any extended tenure requires subsequent approvals.⁴

Deciding your business structure 

Regardless of whether it is a small or medium enterprise, selecting an appropriate business structure is foundational when starting a venture in Myanmar. Your choice of legal entity not only reflects your vision and strategy but also determines factors like ownership distribution, financial obligations, and liability scope. Amidst Myanmar's business landscape, several types are made available to foreign investors. Each offers unique benefits and prerequisites that align differently with diverse business aspirations. Here’s what each structure entails.

Limited liability company (LLC)

An LLC is a legal structure where the company’s members are not personally liable for its debts or liabilities. It combines the aspects of both a corporation and a partnership/sole proprietorship. Its flexibility makes it a popular choice among foreign investors in Myanmar. There are different types of LLCs:

• Wholly foreign-owned LLC: Tailored for those desiring complete control over their operations in Myanmar. There isn't a blanket minimum capital requirement; however, the service sector requires a capital of US$50,000, whereas the manufacturing sector needs US$150,000. As the designation implies, foreign investors retain 100% ownership.

• Local LLC: An LLC is deemed local if its foreign ownership stake is capped at 35%. This structure facilitates foreign investors' entry into the Myanmar market, benefiting from local insights and connections. Like its wholly foreign-owned counterpart, sector-specific capital requirements apply.

• Joint venture LLC: A suitable option when complete foreign ownership isn't permissible. A joint venture involves at least one local and one foreign shareholder. The necessary starting capital is US$50,000.

Alternative business structures in Myanmar

While LLCs are a favoured choice, Myanmar offers other distinct structures catering to varying business needs and visions:

• Public limited company (PLC): An ideal route for those aspiring to be listed on the stock exchange. A PLC mandates a minimum of seven shareholders and a starting capital of US$50,000. Those seeking a spot on the Yangon Stock Exchange should note the capital requisite of US$500,000.

• Branch office: Operating directly under the guidance of its parent company, a branch office can issue invoices in Myanmar. This format, which requires a singular shareholder and representative, has a capital benchmark of US$50,000. However, the overarching parent company bears all liability for its branch's endeavours in Myanmar.

• Representative office: Solely crafted for liaison or promotional activities, this office type has inherent operational boundaries. Although the capital threshold is US$50,000, it is restricted from exploring manufacturing or garnering revenues. Main tasks revolve around market research, viability checks, and information aggregation.

Navigating the company incorporation process

Having settled on your preferred business structure, the next phase is to legally solidify your company's presence in Myanmar. The incorporation process, though comprehensive, can be streamlined if one is well-prepared with the necessary prerequisites. The Directorate of Investment and Company Administration (DICA) emerges as the central body overseeing this registration procedure, ensuring every local and foreign entity complies with the stipulated Myanmar Companies Law 2017 guidelines.

1. Initiating the incorporation process

Begin by finalising your business name, ensuring it resonates with your company's ethos and differentiates you in the market. Concurrently, determine a registered address in Myanmar. This step is significant as foreign-owned entities can lease a physical space for an initial two years. Any extension beyond this requires additional approvals.

2. Documentation for the business incorporation certificate

The foundational stage of incorporation mandates an application to DICA. This application encompasses several documents:

• Form A of the Myanmar Companies Regulation 1957.
• Draft Memorandum and Articles of Association.
• A detailed questionnaire providing an overview of your business intentions.
• Descriptions of intended business activities in Myanmar.
• Financial projections for your company's first year of operations.
• Evidence showcasing the financial credibility of your enterprise or the individuals involved.
• In certain scenarios, a resolution from your Board of Directors might be required.

DICA grants a temporary permit upon successful application, allowing you to trade and further the registration process.

3. Completing the incorporation

After securing the temporary permit, several steps await completion. You'll need to present a declaration of registration, authenticated versions of the Memorandum and Articles of Association in both Burmese and English, a disclosure of the registered office location, and a certified translation of all documents. Additionally, ensure you have a comprehensive list of Directors on hand. For foreign branches operating in Myanmar, it's obligatory to provide details of representatives responsible for communication and official notices. As a final touchpoint, every shareholder involved in the company should ratify the entire incorporation application. This endorsement must be done in the presence of a certified legal or accounting professional in Myanmar.

Once all these steps are meticulously followed and the necessary approvals garnered, your company stands officially incorporated in Myanmar, ready to begin its entrepreneurial journey in this burgeoning economy.

Post-registration 

After successful registration, the journey doesn't end. Operational fluidity demands a series of post-registration commitments and procedural alignments. Ensuring these steps are diligently followed will set the foundation for smooth business operations and help avoid unforeseen regulatory issues.

• Capital injection: The financial groundwork of your venture starts with injecting at least 50% of the agreed capital. This establishes your company's intent and provides a buffer for initial operational expenses.

• Documentary updates: Furnishing a regularly updated list of the company’s directors and shareholders is imperative. This aids in transparency and ensures the authorities recognise all stakeholders.

• Company seal: In a world that's becoming increasingly digital, the traditional company seal holds its symbolic and legal weight. Acquiring an official company seal fortifies your organisation’s authenticity in official dealings.

• Tax and social security registration: With your company in place, you must embed it within Myanmar's fiscal framework. This means registering for taxes and ensuring employed personnel are enrolled for social security, safeguarding their rights and welfare.

The procedural complexities might seem daunting initially, but with each step, you're solidifying your business's foundation in Myanmar. This foundation not only helps in the smooth running of daily operations but also in building trust with local stakeholders and authorities.

Elevating global operations with DHL Express

In today's fast-paced business world, having a capable logistics partner like DHL Express is invaluable, especially when expanding from Myanmar to international horizons. Their expertise in overseas shipping simplifies the intricacies of imports and exports, streamlining your global operations.

With a DHL Express business account, you don't just get logistics; you gain an edge with competitive shipping rates that ensure quality without compromising cost. Time is of the essence, and DHL Express understands this, consistently ensuring timely deliveries that fortify customer trust and loyalty.

Venturing internationally requires more than just ambition; it requires the right partnerships. By signing up for a DHL Express business account, you're not just shipping parcels; you're paving the path for your Myanmar enterprise to embrace boundless global possibilities.