According to the Directorate of Investment and Company Administration (DICA), around 71,000 companies have officially registered since 1988 when Myanmar amended its investment laws.
This number is lower than the official figures in other ASEAN nations. However, DICA’s director general U Aung Naing Oo stressed that the real number of companies in Myanmar is much higher than official figures suggest.
“We have the lowest number of registered businesses in the region, so we need to make the company registration process quicker and easier. Legalising more companies can only help to boost our economy,” he said to reporters on August 27.
Cambodia, which has a population of around 15 million, has 156,200 registered companies. Thailand has 1.22 million and a population of over 67 million, and Malaysia, with around 30 million citizens, has over 1.13 million registered firms.
Vietnam has 370,000 companies for more than 90 million people and even Laos, which has a small population of around 2 million, has 84,770 registered businesses – higher than Myanmar’s figure, said U Aung Naing Oo. Myanmar’s population is 51.49 million, according to 2014 provisional census results.
Many companies choose not to apply for a Myanmar licence, as the registration fee is higher than in other Asian countries. This is a barrier to legalising business, said U Aung Naing Oo. Company registration costs K1 million (US$784) in Myanmar.
“Even in Singapore the company registration fee is only $100,” said U Nay Lin Zin, owner of an import-export firm. He added that applications are usually delayed and that companies have to demonstrate their business structure as part of the registration process, which can cause problems for smaller firms.
Businessperson U Myat Thin Aung said that the cost is too high for start-ups. “Because of this, some companies choose not to register,” he said.
However, DICA cannot reduce the fee this year, as it has budget targets to meet, U Aung Naing Oo told media. The Union budget for fiscal year 2016 includes K10 billion in company licence fees, he said.
“For this financial year we have to continue under the same model, but we are considering a change for next year,” he said, adding that DICA is looking at making the process easier for small and medium-sized enterprises.
“We are trying to make it as easy as possible to register. We are going to launch an online registration system and introduce incentives for small businesses in the coming financial year,” he said.
DICA is working with the Asian Development Bank to provide an online registration service, and is pushing to enact revisions to the Myanmar Companies Act of 1914.
This is part of a wider push to clean up the companies register. On August 26, DICA published a notice in state media, asking all foreign and local companies to confirm in writing that they are still in business, by a September 14 deadline.
The aim is to work out which firms are still operating, U Aung Naing Oo told The Myanmar Times last week. “Many companies don’t properly report to us regularly. That means they are probably not in operation and I need to make sure our data is not inflated,” he said.
“On the other hand, some unscrupulous people intentionally set up companies, evade tax and disappear without proper liquidation. I need to strike these from the list.”
Once the deadline has passed, any business that has not reported to DICA according to section 247 of the Myanmar Companies Act will be de-registered, he added.
The Companies Act gives DICA the power – subject to a notification process – to dissolve inactive businesses. However, some still appear confused about the consequences of failing to comply.
“As it is unclear which provisions of the Myanmar Companies Act the notification refers to – and indeed the legislative basis for DICA issuing the notification – it is unclear what potential consequences a non-compliant company could face,” said a September 2 note to British Chamber of Commerce members.
Lawyers said that while the exercise is fairly straightforward, the timeframe is quite short – just 13 working days after the date of the notification.
Source: Myanmar Times