The recent World Bank’s “Doing Business”² report says that Myanmar is one of the most difficult place to do business ranking it at the bottom of the table (189 out of 189) in terms of ease of starting a business.
If you look at the result it is to be expected due to more than 50 years of economic mismanagement, with an evolving legal framework, dysfunction banking system and poor infrastructure overall. Like I always say
“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 client 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% 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 & gas or telecommunications sectors 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% foreign owned with just 2 shareholders. You can normally get your temporary business licence within 2 weeks and the business can be up and running within a month. With a temporary business licence you can open a bank account, enter into a contract (eg a lease agreement) or bid for a tender. Of the minimum capital of US$50,000 only half need to be remitted into your company’s bank account upon incorporation, the other half of the capital need to be remitted only when the business licence is due for renewal at the end of the 4th year. So basically you can start the service business with only US$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.
The views expressed above are those of the author and not necessarily represent the views of the government agencies, companies or individuals mentioned in the article. Read our complete disclaimer policy here.
¹ Andrew Tan is the Managing Director of Consult-Myanmar Co Ltd. Consult-Myanmar is a 100% Singapore-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.
² World Bank “Doing Business 2014” Report at http://www.doingbusiness.org/data/exploreeconomies/myanmar
This article appeared in the 28th Nov 2013 print edition of Myanmar Business Today – a bilingual English Myanmar business journal that is published weekly in Myanmar and Thailand. See http://mmbiztoday.com/articles/myanmar-not-hard-do-business