The Mandalay City Development Committee (MCDC), a government municipal body, ordered the factories to suspend operations on May 2 after finding fish nearby that died from water pollution.
The factories are located in an industrial zone near Taungthaman Lake, some 10 kilometres south of Mandalay.
"They violated instructions on wastewater management, so we decided to suspend all operations of the factories," said Thet Naing Tun, co-secretary of MCDC.
Taungthaman Lake is one of Mandalay's most famous tourist destinations, home to the world's longest and oldest teakwood bridge, which spans 1.2 kilometres across the shallow lake.
"Last year, almost all of the 460,000 tourists to Mandalay visited Taungthaman Lake and U Bein Bridge, so it is very important to maintain them well," said a senior regional government official.
"We are now planning a lawsuit against these factories, because such violations are intolerable," he said.