Click here to read Part II - Time to Investigate I
Click here to read Part III - Time to Investigate II
WHY YOU CAN AND SHOULD MOVE INTO MYANMAR NOW?
1. Leverage on the uncertainty surrounding new foreign investment law
2. First mover opportunity
3. Organizational investments will continue to increase
1. Leverage on the uncertainty surrounding new foreign investment law
Since the introduction of the new Foreign Investment Law (FIL) 2012, critical discussion regarding the legislative framework ambiguity has never ceased; emphasizing on the lack of clarity in the foreign investment regulations. Many has the perception that the FIL as a set of rules cast in stone and restricted activities to foreigners will continue to be constrained permanently.
However on the contrary, many legislative changes have been seen made over the past 3 years and we are seeing a new economic landscape under new FIL.
The earliest major change came whereby foreigners no longer required a local partner to start a business in the country, and were able to legally lease property with the enactment of the new FIL in 2012. Following which, there has been expansion of the list of economic activities (under Notification 49/2014) that have been allowed for foreign investors as joint ventures with Myanmar citizens and types of activities that are subject to specifically prescribed conditions.
As of recent, we even seeing fewer economic activates types that are prohibited for foreign investors under Notification 96/2015 issued on 11 November 2015 by Ministry of Commerce, we are seeing an increasing ease in the trading restrictions on foreigners whereby joint ventures companies are now allowed to trade on selected agriculture products and hospital equipment.
Laws are constantly proposed and legislated, procedures are also simplified and enhanced i.e. the new Investment Law Of [2015] currently drafted to replace ‘The Myanmar Citizens Investment Law, Pyidaungsu Htluttaw Law No. 18 of 29 July 2013’ and ‘The Foreign Investment Law, Pyidaungsu Htluttaw Law No. 21, 2012, 2 November 2012’. This encourages foreigners to have a greater foothold in terms of inbound investment along with increased flexibility to thes investment structure.
For a copy of the new Investment Law Of [2015], please download it here.
We are looking at the FIL like an unfinished book that was published. Ideas are still flowing in, work is still in progress and new chapters are still unfolding. Various aspects are ‘fluid’ and subject to negotiation, especially the major foreign projects regulated under the Myanmar Investment Commission (MIC) which in a way, can be discussed on a case by case basis, depending on the economic benefits the investment can bring for the economy.
2. First mover opportunity
Several multinational companies have already taken their first step, gaining an early mover advantage. This allows them to take advantage of the popular industries which are still in their early development stage. They get their name familiarized with the locals, giving them a longer lead time to establish networks before the real race starts with the remaining players – an operating model which other foreign companies should look at and emulate for their entry into the country.
Some of the major deals that were seen between 2013 -2015 in some of the sectors are:
INFRASTRUCTURE
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OIL & GAS
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CONSTRUCTION
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RETAIL & CONSUMER PRODUCTS
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FOOD & BEVERAGES |
Despite many challenging aspects i.e. regulatory uncertainty, human resources issues are expected to persist in the next couple of years. Myanmar has been consistently experiencing a growth rate of around eight percent. Foreign investments in Myanmar will not cease to increase, presuming that the government does not backtrack on its economic reforms.
Many sees the influx of foreign investment in recent years a catalyst for positive change, as the government is subject to international public and media’s careful scrutiny which certainly promotes greater accountability and transparency in the investment framework.
Click here to read Part II - Time to Investigate I
Click here to read Part III - Time to Investigate II
Editor's Note: This post is Part I of a 3-part series. Part II will be published on 23 Mar 2016. Stay tuned.