This OECD Investment Policy Review of Myanmar represents the first international co-operation with the Government of Myanmar on investment climate reform. Undertaken in partnership with the Secretariat of the Association of Southeast Asian Nations (ASEAN), it charts the dramatic economic reforms in Myanmar since 2011 and draws lessons from the earlier reform experience after 1988, as well as from other countries that have undergone similar transformations.

Myanmar stands at a crossroads. After decades of economic isolation, the government is launching an ambitious agenda to strengthen the economy, tackle poverty and promote sustainable and equitable growth. These comprehensive reform efforts are being followed closely by the international community, including by international investors.

After years of economic isolation, the government of Myanmar has initiated a wide range of reforms to open its economy to foreign trade and investment. As set out in the Framework for Economic and Social Reform, the reform programme includes: budgetary and tax reforms; monetary and financial sector reforms; liberalisation of trade and investment; food security and agricultural growth; land issues; and improvements in infrastructure availability and quality. The country stands to benefit from greater global and regional economic integration, with its rich natural resources base, young labour force and strategic geographic location between India and China.

The transformation of Myanmar from decades of isolation mirrors, on a smaller scale, the dramatic changes in Eastern and Central Europe in the 1990s, as well as the opening of both China and Viet Nam. The challenges for Myanmar in simultaneously engineering a political and economic transition are enormous. Reformers in the Myanmar government have laid out their ideas in the Framework for Economic and Social Reform, including budgetary and tax reforms; monetary and financial sector reforms; liberalisation of trade and investment; food security and agricultural growth; land issues; and improvements in infrastructure availability and quality.

This chapter discusses trends in foreign investment in Myanmar and assesses the scope for future growth and diversification of FDI inflows. It considers the role of sanctions in impeding investments in the past and looks at how investors have reacted to the two reform periods, both after 1988 and since 2011.

This chapter looks at reforms by the government in the area of human and labour rights in Myanmar. Environmental considerations are discussed in . It also considers how international standards of responsible business conduct can be introduced by investors in the context of Myanmar’s reform process and looks at ways in which governments from the home countries of investors can encourage further reforms in Myanmar in this area and at the different ways in which they have sought to ensure that enterprises from their countries act responsibly when investing in Myanmar.

This chapter examines the quality of investment policies in Myanmar and the level of legal protection granted to investors in the country’s regulatory framework for investment. It covers the admission, regulation and protection of foreign direct investment in Myanmar and ascertains whether the principle of non-discrimination features in investment laws. It also looks into the expropriation regime, the existing framework for protecting intellectual property rights and the conditions imposed upon foreign investors when accessing land. The adjudication of commercial and investment disputes as well the country’s investment treaty practice are two other building blocks of a sound and protective investment policy framework that are also addressed.

As part of a process to develop a sound, broad-based business climate, investment promotion and facilitation can help attract new investors and retain existing ones, especially in smaller, more remote markets or those countries with a recent history of macroeconomic and political instability. Effective investment promotion highlights profitable investment opportunities, by identifying local partners and by providing a positive image of the economy. Promotion should not be seen as a substitute for more general policy reforms or try to camouflage underlying weaknesses in the investment climate. This chapter analyses Myanmar’s efforts to promote its private sector, in particular through investment promotion and facilitation measures. It also addresses the role of special economic zones, SMEs and investment linkages in the country’s overall private sector development strategy.

This chapter explores the question of how Myanmar can make its tax system more efficient at mobilising revenue, while creating a business-friendly regime conducive to investment and growth. It looks at the bottlenecks within its current tax system, especially its tax incentives regime, and at how the efficiency of the system could be improved.

This chapter looks into Myanmar’s challenges for developing its financial sector and current reforms being implemented by the government. It begins with a brief description of Myanmar’s financial sector stage of development, followed by an assessment of regulatory deficiencies that have prevented the development of the banking sector. It looks into regulatory asymmetries between private and state-owned financial institutions that prevent greater competition in financial sectors and examines briefly some current institutional framework challenges that discourage the development of financial services in the country. This chapter also outlines the government’s recent reform efforts to modernise Myanmar’s financial sector and expand access to finance, including recent reforms to introduce more competition to the banking sector by allowing the entry of foreign banks. This chapter also briefly covers challenges and reforms being implemented to build Myanmar’s capital market.

This chapter examines the challenges for advancing private sector participation in infrastructure in Myanmar. It looks into the challenge of infrastructure access and financing in the country, as well the prospects for infrastructure investments following Myanmar’s transition to a more open economy. The chapter also reviews recent and announced reforms and the remaining obstacles for creating an institutional and regulatory environment suitable for private participation in infrastructure. These issues and other sector-specific issues are then discussed for three key infrastructure sectors: transport, telecommunications and electricity. Green infrastructure is addressed throughout the chapter and in balance with Myanmar’s need to build infrastructure assets for growth.

This chapter considers briefly three other policy areas contained in the Policy Framework for Investment (PFI): corporate governance of state economic enterprises, trade policy and human resource development.

Promoting sustainable private investment in agriculture is crucial to enhance agricultural growth, maximise the development benefits of investments and achieve food security. This chapter highlights key policy challenges to be addressed to attract more and better investment in agriculture, drawing from the OECD Policy Framework for Investment in Agriculture. The first section examines the context for agricultural investment. The second section provides an overview of Myanmar’s investment policy in agriculture, focusing particularly on the land tenure system, the regime for foreign direct investment and the tax incentives offered to agricultural investors. The third section identifies key challenges to promote responsible investment in agriculture that can effectively contribute to sustainable economic and social development. The last section examines specific sectoral policies that can encourage investment in agriculture, namely financial sector development, trade, access to inputs, infrastructure development, human resource development and research.