Active black market discourages foreign firms, says minister

The prominence of the domestic black market continues to discourage prospective foreign investors from entering the country, according to Minister of Commerce U Win Myint.

Foreign firms are worried that black market goods are often sold at unfairly low prices because importers avoid paying import duties and taxes as well as following proper regulations, and in many instances the products are counterfeit.

U Win Myint said the ministry’s mobile enforcement teams are crucial to stemming the flow of illegally imported and counterfeit goods and improving the domestic business environment.

“If not, the country’s trade will not increase and foreign investors will not trust the market and not come and invest,” he said on June 21 at his Yangon office.

Mobile enforcement teams have been sent to target Yangon’s main sea and airports this month, after previously focusing on illegal land border trade. The teams are known partly for suppressing the black market trade in liquor in December 2013, which resulted in an alcohol shortage on many Yangon shelves.

U Win Myint’s comments come as some large international firms have raised concerns about goods being illegally sold in Myanmar.

Officials from Japanese manufacturer Canon Inc said they are holding off on setting up a Myanmar production facility until Intellectual Property (IP) laws are enacted and enforced.

Analysts generally regard Myanmar’s intellectual property environment as quite weak, with a full set of modern laws on patents, trademarks, industrial designs and copyright still not yet passed by parliament. Enforcement of existing rules has also been flagged as an issue.

Canon products such as ink cartridges are being widely imitated on a wholesale level in Myanmar, getting in the way of future investment, said Inez Siantar, a Singapore-based Canon representative at a Yangon press event on June 19.

Canon’s genuine products are imported from China to Myanmar, and marked by a distinct hologram on the cardboard packaging, but imitations are readily available on the local market.

“We see in Yangon often the cardboard box was made in Myanmar and the ink cartridges are [knockoffs] imported from China,” she said. “I think that’s terrible.”

The firm began one local lawsuit on unlawful use of IP in 2010, and it still is not settled, said Ms Siantar.

Daw Tin Ohmar Tun, chair of the ASEAN Intellectual Property Organisation, said that modern IP laws will solve many of these problems.

Traders however say the black market comes about in response to unmet demand.

U Myo Hlaing Swe, a trader from Muse on Chinese border, said that restrictions on imports of many goods meant businesspeople are encouraged to work outside the rules.

“If there is market demand, businessmen will try to fill it in various ways, even if there are official limitations. In my opinion the government needs to put its trade policy in line with the country’s real situation,” he said.

The Ministry of Commerce’s mobile enforcement teams seized goods valued at K17.5 billion (US$17.9 million) from November 1, 2012, through to June 26, 2014.

Ministry of Commerce economics advisor U Maung Aung said the ministry has been keen to build a trade policy in line with international practices, and has been cooperating with the World Trade Organisation on a trade policy review.


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