The recent World Bank’s “Doing Business 2014” report says that Myanmar is one of the most difficult places to do business, ranking it in the bottom ten of the table (182 out of 189) in terms of ease of starting a business.
The result is not at all unexpected as Myanmar grapples with more than 50 years of economic mismanagement, an evolving legal framework, dysfunctional banking system and poor infrastructure.
There is a correlation between risk and return. Myanmar being an emerging market is a high risk market. Myanmar is not for the faint hearted. I would not recommend my clients to put their retirement money into Myanmar. However, as Myanmar is coming in from a very low base – we can expect the Myanmar’s GDP to grow by at least 7 percent for the next 20 years.
Looking at it by sector, if you are starting a business in sectors regulated by the State Owned Economic Enterprises Law (SOEEL) – for example mining, oil and gas or telecommunications that are reserved for the state – yes, it can be quite mind boggling.
Sectors regulated by SOEEL may require foreign investors to find local JV partner, enter into a production sharing contract with the state or bid for a licence in an open tender. Due to the myriad of government regulations and opaque decision making process it can be quite uncertain and frustrating for foreign investors. Although the Myanmar government has made efforts to improve this over time it is still an issue for many foreign investors.
However, if you just want to start a service company under the Myanmar Companies Act – it is quite simple and straight forward. Example of a service company would be business advisory, marketing and advertising or engineering services – the paperwork and steps required are not that onerous.
The company can be 100 percent foreign owned with just two shareholders. You can normally get your temporary business licence within two weeks and the business can be up and running within a month. Of the minimum capital of $50,000 only half needs to be remitted into your company’s bank account upon incorporation, the other half of the capital needs to be remitted only when the business licence is due for renewal at the end of the fourth year. So basically you can start a service business with only $25,000 of initial capital and get the business up and running within a month.
The World Bank’s “Doing Business” Report follows a template in order to make it comparable across different countries being measured – it does not measure by sector or industry nor does it profess to do so.
Myanmar is not a hard place to do business if you know what you are doing and you have the right local partner.
Andrew Tan is the managing director of Consult-Myanmar Co Ltd. Consult-Myanmar is a 100 percent Singaporean-owned company that is incorporated in Myanmar. Consult-Myanmar provides business advisory, business partner search, company incorporation and immigration service to foreign investors that are interested to start a business in Myanmar.