Overview

Burma faces significant market challenges and obstacles, including difficulty for businesses to obtain accurate and relevant market and financial data, as well as a shortage of well-educated and trained workers. The country’s infrastructure remains a barrier to growth: less than 40 percent of the country’s road network is paved and half of the population lacks access to all-weather roads and electricity.   

The military regime-enacted import and export limitations and foreign exchange control measures, as well as the ongoing depreciation of the Myanmar kyat (MMK), have led to real price inflation that is approaching +15-20 percent a year. Producers in-country have had to reduce the variety of their inventory and product sizes and increase local inputs over foreign ones as a result. Supply chain interruption and electricity shortages also limit manufacturing capacity and economic productivity. 

Impact of 2021 Coup

The military coup had a significant negative impact on the country’s economy, already weakened by the COVID-19 pandemic. A protracted cash flow issue is the most serious economic challenge. Banking sector vulnerabilities, armed conflict, restrictions on exports and imports, unstable foreign exchange policies, and targeted international sanctions have also affected the economy and significantly reduced Burma’s international trade and investments. In addition, the military regime continues to order restrictions on internet connectivity in conflict zones that comprise at least 40 percent of Burma’s territory.  These restrictions impact mobile banking transactions for businesses and foreign remittance transfers.  Widespread power outages of up to 20 hours per day have also affected businesses, particularly manufacturing.   

Reputational Risk

Burma’s market has been subject to growing reputational risk following the military’s 2017 attacks on the Rohingya people in Rakhine State.  On March 21, 2022, Secretary of State Blinken determined that members of the regime’s military committed genocide and crimes against humanity against Rohingya.

The February 2021 coup exacerbated that risk when it returned military regime control to many areas of the country.  See the Supplemental Business Advisory released in November 2023 at 2023 Burma Business Advisory.

Following the 2021 military coup, market challenges include:

· An unstable political situation and safety concerns for foreigners and local employees.

· New and complicated restrictions on exports and imports policies.

· Financial and banking sector volatility, including foreign exchange controls.

· A legal and regulatory framework based on customs and government discretion rather than codified legislation.

· Inadequate physical infrastructure, including communications and transportation networks.

· Education inequality and an underqualified workforce.

· Electricity shortages.

· Limited access to telecommunications outside of large cities.

· No standard law on public-private partnerships (PPP).

· Intellectual property laws with limited enforcement or implementation.

· Judiciary lacks independence and experience in commercial litigation and arbitration.

For investors remaining in Burma, considering new investments, or seeking to exit the market, it is important to undertake a comprehensive due diligence review of operations and plans, considering applicable sanctions, restrictions, and human rights abuses. Visit the U.S. Department of State Investment Climate Statements website for additional information.