Doing Business in Burma

Updated January 29, 2014: The U.S. Treasury Department Office of Foreign Assets Control
(OFAC) fact sheet on sanctions policies in place against Myanmar. The fact sheet summarizes
the current laws and licenses Americans must abide to operate in Myanmar.

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Market Overview (Video clip)

Burma is going through a period of major political, economic, and social reform. Foreign
investors from around the globe are seeking to enter a market that has been largely isolated
from the world economy for over two decades. Until 2012, Burma was virtually off limits to U.S.
companies due to U.S. sanctions against Burma including bans on investment, the importation
of Burmese products into the U.S. and the export of financial services from the U.S. to Burma.
Although non-financial U.S. exports to Burma were permitted, very little trade flowed in that
direction due to the reputational risk involved in doing business in a country ruled by an
oppressive military junta.
In March 2011, Burmas military government transitioned to a nominally civilian one and
initiated a series of small but significant democratic reforms which led to Secretary of State
Hillary Clintons visit in November 2011, the first visit of a U.S. Secretary of State in more than
50 years. In April 2012, the government held a parliamentary by-election that was considered
largely free and fair by the international community. In the by-election, the opposition National
League of Democracy (NLD) party won 43 out of the 45 seats contested, or approximately
seven percent of all seats in parliament. Aung San Suu Kyi, Nobel Peace Prize winner and
head of the NLD, became a member of parliament for the first time. The Parliament is
dominated by the ruling Union Solidarity and Development Party (USDP), and both the upper
and lower houses of Parliament have 25% of their seats reserved for the military.
On January 13, 2012, Secretary of State Hillary Clinton announced that the U.S. would appoint
an Ambassador to Burma for the first time since 1990. In May 2012, she announced that the
U.S. would ease certain financial and investment sanctions on Burma in response to the
historic reforms taking place in the country. On July 11, 2012, the Department of Treasury
issued two general licenses which allow new U.S. investment in Burma as well as authorize the
exportation of financial services to Burma. On the same day, Ambassador Derek Mitchell took
up his post in Rangoon. Shortly before President Barack Obamas historic visit to Burma in
November 2012, the Administration further eased sanctions by allowing Burmese exports to the
U.S., with the exception of rubies and jadeite. On the occasion of Burmese President Thein
Seins visit to Washington, D.C. in May 2013, the U.S. and Burma signed a Trade and
Investment Framework Agreement (TIFA) to promote dialogue and cooperation on trade and
investment issues. The easing of sanctions is part of a broader effort to help accelerate broadbased economic growth and recognize and encourage continued political and economic
reform.

Some U.S. economic sanctions remain in place, including restrictions on doing business with
the military or individuals or companies on the Specially Designated Nationals (SDN) list, which
is compiled and maintained by the U.S. Treasury Office of Foreign Assets Control (OFAC).
In addition to political reforms, the Government of Burma (GOB) has begun to implement more
open market policies. In April 2012, it abandoned a fixed exchange regime in favor of a
managed currency float. In November 2012, it approved a new Foreign Investment Law (FIL) to
encourage more foreign investment, including by offering incentives to foreign companies.
Between March and May 2013, it removed trade license requirements on the import and export
of over 600 products. More tariff reforms are expected as Burma prepares for ASEAN free
trade integration in 2015. In addition, the GOB approved legislation in July 2013 that provides
for the Central Bank of Myanmars (CBM) autonomy in setting and managing monetary policy.
Nevertheless, poor policymaking, lack of rule of law, a heretofore stunted banking system,
inadequate infrastructure, and a weak education system hold back economic growth in Burma.
Political intervention, corruption, and centralized state control continue to hamper investment in
some economic sectors. Although the GOB has undertaken important macroeconomic reforms,
detailed information on new legislation or implementing regulations is opaque and often
unavailable. The government controls extractive industries, sources of capital, educational
institutions, movement of labor, and access to official information. The countrys abundant
natural resources have kept production in the extractive sectors on a generally upward path,
though far below potential. Production in historically strong sectors such as agriculture,
fisheries, and forestry has been flat or declining due to a combination of underinvestment, low
productivity, restrictive government policies, and poor macroeconomic conditions.
Burma is largely an agricultural economy. Agriculture, livestock, fisheries, and forestry account
for 40-50 percent of GDP, and around 70 percent of Burmas population relies on these sectors
for their livelihoods. Beans and pulses, rice, timber, and marine products are the primary
agricultural exports. Burma's mining, oil and gas, and energy sectors also supply significant
exports, though revenues are opaque. The manufacturing and service sectors remain
undeveloped. The informal economy is very large and includes activities from currency trading
to education to commodity trade. Unrecorded border trade is very common along all of Burmas
borders. According to unofficial reports, the most commonly smuggled exports are illicit
narcotics, gems and jade, and timber; the most common smuggled imports are consumer
goods, medicines, vehicles and vehicle parts, electronics, fertilizer, and diesel fuel.
Growth is picking up in Burma. The IMF estimated 6.5 percent GDP growth in 2012-13 with a
forecast of 6.75 percent growth in 2013 -14, driven largely by commodity exports and foreign
investment. According to Burma's Central Statistical Organization (CSO), Burma ran a trade
surplus in 2011- 2012 of $810 million. The largest export by value was natural gas (from two
offshore foreign-operated production sites), followed by teak and hardwood, pulses and beans,
marine products, garments, metals and ores, and various other agricultural products.
Burmas major trading partners are Thailand, Singapore, China, India, Malaysia, Japan, and
South Korea. In 2012, the United States exported $67.8 million worth of products to Burma, a
39 percent increase from 2011. Major U.S. exports to Burma were electrical machinery, cereals,
optical and medical instruments, vehicles, and other machinery and miscellaneous items. The
U.S. did not import any products from Burma in 2012 due to import sanctions which were
relaxed in November that year. In the first four months of 2013, imports from Burma rose to
$3.7 million.