Four retail-wholesale JVs permitted to operate

Six months after allowing foreign investors to register and participate in the domestic retail and wholesale sector in May, the Ministry of Commerce (MOC) has so far permitted four joint ventures between foreign and local investors

Under notification 25/2018 issued on May 9, the MOC allowed 100 percent foreign-owned businesses to operate in the retail and wholesale sector in Myanmar. On July 26, the MOC issued standard operating procedures (SOP) for retail and wholesale business registration and a priority list of 24 products and items.

Among the four companies is AEON Orange Co Ltd, which is a joint venture between Japanese retailer AEON Co and its local partner Creation Myanmar Group of Companies (CMCG). The JV distributes 15 out of the 24 products on the priority list. AEON Orange opened its first supermarket in North Okkalapa, Yangon, and acquired 14 supermarkets operated by Hypermart Asia Co, an affiliate of CMGC, in 2016.

The MOC also permitted MYCARE Unicharm Co Ltd, the Japanese wholesaler which distributes personal care products such as diapers, sanitary napkins, wet wipes and cosmetic puffs, to enter the domestic market.

Local wholesaler Pacific Andaman (SEA) Co Ltd, which distributes cleaning products and food and beverages, and retailer City Mart Holding Co Ltd, which operates supermarkets and mini marts, have also been given permits to invest.

Meanwhile, a list of foreign investors including from Thailand and South Korea have expressed interest in setting up businesses in Myanmar, according to the MOC. On September 3, the International Finance Corporation (IFC) said it would loan around US$25 million to Metro Wholesale Myanmar Ltd, the 85:15 wholesale joint venture between Germany-based Metro AG and Singapore-listed Yoma Strategic Holdings.

Under the rules of retail and wholesale business issued by MOC, 100pc foreign-owned firms must make initial investments between US$3 million and $5 million to operate a retail or wholesale business, respectively, in Myanmar.

Meanwhile, for joint ventures with foreigners where the local investor has at least a 20pc equity ratio, the initial investments necessary for retail and wholesale are $700,000 and $2 million.

While opening up the domestic retail and wholesale sector to foreign ownership has succeeded in generating rising investor interest, local concerns have also grown.

Chief among those concerns is foreign competition. In fact, local retailers say there should be restrictions placed on foreign firms that directly compete with local SMEs and mom and pop shops.

Last month, the Myanmar Retailers Association said many local operators are not ready to withstand competition from savvier and much larger foreign competitors, adding that they will be more prepared when they have better infrastructure as well as financial and technological support from the government.

SOURCE: MYANMAR TIMES

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