Doing business in Myanmar

Doing Business in Myanmar: Your Guide to Success

Myanmar has recently opened up after almost 50 years of isolation and military rule. Now, it’s a place with exciting Myanmar business opportunities. Florian, who has lived here a long time, shares his knowledge. He talks about how patience and building strong relationships are key.

Florian warns not to overlook local partners. They could have studied at top schools in Singapore, Australia, or Britain. He says knowing these details makes a big difference in doing business here.

Key Takeaways

  • Myanmar has been isolated for almost 50 years due to self-imposed isolation and military regimes.
  • Building connections and trust in Myanmar requires considerable time and effort.
  • Local business partners may have international qualifications from Singapore, Australia, or Britain.
  • Foreign investments hit a record USD 9.4 billion in FY 2015/16.
  • Myanmar’s economic and strategic advantages present strong potential for long-term growth and investment.

Understanding the Myanmar Business Environment

Myanmar has a unique business world because of its past isolation and the control of the military. The Myanmar Business Environment Index, or MBEI, helps us look at how well the economy is run. It looks at ten different areas like the cost to get in, how easy it is to use land, and if the country is secure. The goal is to help the economy grow in a good way for everyone.

The MBEI in 2019 checked on 4,874 businesses in 67 places. The 2020 MBEI, done by The Asia Foundation, looked at 5,605 businesses in 76 areas. It added new ways to measure and make things clearer about the business scene in Myanmar.

Unique Characteristics

Myanmar has over 53 million people, with most being under 40. Workers here make about $120 each month. Good changes in buildings, like towers, have been made by companies like Huawei and ZTE. These have improved places like Yangon, Naypyitaw, and Mandalay.

About 90 out of every 100 people here use mobile phones. Also, more than 10 million people are on Facebook. This shows Myanmar is quickly joining the digital world.

Business Culture Insights

Knowing Myanmar’s way of doing business is very important. People often give gifts. Handshakes are common greetings. For meetings, it’s best for women to dress modestly. Wearing business clothes is also okay.

Saying “yes” doesn’t always mean full agreement. It can just mean the person understands. Being publicly critical or disagreeing can shame someone. This can hurt your business relationship.

Myanmar faces challenges because some things are not clear, there’s not great infrastructure, and the legal system can be better. Still, the country is open to foreign investment. It has agreements that make it easier to do business with countries like Australia. Australian companies are growing in areas such as energy, building, finance, and banking in Myanmar.

Setting Up a Company in Myanmar

Starting a business in Myanmar means knowing the right steps. You should learn about the registration process and gather the right documents. Luckily, the Myanmar New Companies Law (MCL) offers a simple and good way for local and foreign business owners.

Company Registration Process

Setting up a company in Myanmar begins by registering with the Directorate of Investment and Company Administration (DICA). First, decide your business type. This could be a Sole Proprietorship, Private Company Limited by shares, or others. It’s important to follow Myanmar’s laws. For instance, foreign investors are allowed to have up to 35% share in local companies. Public companies need at least three directors, with one being a Myanmar citizen living here frequently.

After choosing your business structure, you should get ready to submit key documents. Then, do your registration on MyCO through the DICA portal. Myanmar doesn’t ask for a set minimum capital, which is good news for small businesses and startups.

Necessary Documentation

The documents needed for company registration Myanmar are detailed. They include legal and business operation information. Here’s what you’ll need:

  • Company name
  • Company constitution
  • Primary business activities
  • Compliance declaration
  • Registered office address in Myanmar
  • Director and shareholder details
  • Financial documents
  • Land rights (if applicable)

Foreign businesses also get benefits in Myanmar. This is from the country’s Special Economic Zones (SEZs). These zones offer tax breaks and custom duty cuts, making Myanmar a more attractive place to set up shop.

The economy of Myanmar has been growing steadily. The World Bank has been giving financial help. The country’s government is working hard to update and diversify its exports. With a large market, plenty of resources, and diverse cultures, Myanmar welcomes foreign investors to start their businesses here.

Myanmar Investment Climate

Myanmar is welcoming more foreign businesses through its new interest in foreign investment. With policies that encourage global companies to join the economy, Myanmar is a mix of opportunities and challenges for investors.

Foreign Direct Investment Policies

Myanmar has made its investment rules to bring in foreign money. The country’s Investment Law lets foreigners put up to 35 percent into local companies. This creates chances for international businesses to grow. But, changes in politics have made some investors unsure. After a political disturbance, foreign investment from the U.S. dropped. The U.S. even paused its trade deal with Myanmar. This made doing business more complex. Still, the U.S. government says it’s for proper and fair business in Myanmar.

Tax Incentives and Benefits

Myanmar tries to catch the eye of investors by offering tax benefits. Companies might get a break from paying taxes or reduce costs. Special economic zones also help out. Businesses in these areas can pay less for imports and may not have to give VAT. These perks make doing business in Myanmar more attractive.

Year Economic Indicator Value
2021 Economic Contraction -18%
2022 Economic Growth Forecast 1%
2023 Economic Growth Forecast 3%
2021 Corruption Perceptions Index Rank 140/180
2022 Corruption Perceptions Index Rank 157/180
2021 Global Innovation Index Rank 127/132
2022 Global Innovation Index Rank 116/132

Despite hurdles, Myanmar keeps working to attract new business. Through smart tax breaks and friendly policies, the country hopes to grow. This aims to draw in businesses looking to expand their horizons.

Myanmar Market Entry Strategy

To get into Myanmar’s market, you need to be smart and plan well. You should know all about the opportunities and problems there. And your strategy should mix what’s known locally with what works around the world.

Market Research and Analysis

Making a successful entry into Myanmar needs detailed research. You must look at how people buy, what’s hot in the market, who you’re up against, and the rules. For example, because the country’s GDP dropped by 18% in 2021 but is set to grow by 3% by September 2023, this info is key for your plans.

And with about 80% of trade done at the borders, these points of entry are critical.

Distribution and Sales Channels

Picking the right ways to sell your goods in Myanmar is important. You should think about the limits in moving things around and consider working with local partners. Data on U.S.-Myanmar trade, showing a $692 million goods import in a year, proves there’s a big chance to sell.

Getting to know and respect Myanmar’s business customs helps a lot. It makes things run smoother and can open up more parts of the market for you.

The table below gives key info to guide your market entry strategy in Myanmar:

Fiscal Year Total Trade (in millions USD) Trade Deficit (in millions USD)
2021 866 720.9
2022 866 936.7
2023 (up to June) 63.6 313.4

In short, an effective entry into Myanmar’s market takes hard market study and knowing how to move goods around. Always consider the unique Myanmar way of doing business.

Doing Business in Myanmar

Starting a business in Myanmar needs more than just money and a plan. It’s crucial to know the myanmar business culture. Here, businesses often have family members leading both the board and management. This shows a deep family business tradition.

The Myanmar Investment Law (MIL 2016) offers perks to foreign investors. They can hold up to 35 percent of local companies. This law is part of Myanmar’s push to welcome more foreign money. But, dealing with new regulations and their sometimes confusing application can be tough for new investors. This is because of a mix of limited expertise and different laws sometimes not aligning well.

Getting financial support is a big hurdle for many companies, especially small and medium ones. Loans in Myanmar often need personal backing, like your home. This makes it hard to get funds. Also, the country lacks a good electronic system for collecting taxes. This makes business activities harder and can lead to higher prices for consumers, as taxes on goods may not be accurate.

For business success, being patient, staying persistent, and integrating local insights are key. Showing respect for business cards is considered polite. Also, the word “yes” might not always mean a clear agreement. Knowing these things can make talks and running operations smoother. Men usually don’t shake hands with women first.

  1. Market Entry Strategies: To enter the market, consider partnerships. Also, learn about the myanmar business culture and do thorough market research.
  2. Engagement and Reforms: The government is working to make things better for foreign companies through legal changes and interaction sessions.
  3. Technology and Industry Focus: It’s important for Myanmar to improve in technology and focus on growing different industries to increase its profits.

In 2013, companies from Australia like ANZ, Woodside, and Bluescope Steel began working in Rangoon. This was encouraged by a trade agreement with ASEAN, Australia, and New Zealand. Yet, doing business in Myanmar faces challenges like poor infrastructure and a weak legal system. Overcoming these obstacles will be key for future business success in Myanmar.

Exporting to Myanmar

When you think about exporting to Myanmar, know it involves tackling complex Myanmar business regulations and Myanmar customs procedures. Updated regulatory advice came in the 2024 business advisory. It highlights the risks involved in dealing with rare earth elements, gold, timber, and aviation services. To have a smooth export process, businesses must follow Myanmar’s laws and procedures closely.

Export Regulations

In Myanmar, exporting is closely watched. Before anything else, businesses must register for international trade. This registration lasts for five years. The Exporter/Importer Registration Certificate costs MMK 200,000 plus MMK 3000 for online service. Some goods, like diamonds and arms, can’t be exported. Also, for certain goods, exporters need a license. These licenses last three months but can often be extended. By following all the rules, businesses can stay on the right side of Myanmar business regulations.

Customs Procedures

Myanmar is working on its customs to make things smoother. The Myanmar Automated Cargo Clearance System (MACCS) is part of this effort. As an exporter, you must meet high standards for your products. This includes making sure they are safe and following technical standards. You might need permits to show your products meet these standards. It’s important to know what the technical rules are in the countries you’re exporting to. Following the WTO rules on this can help a lot.

Aspect Details
Export/Importer Registration Valid for up to 5 years
MMK 200,000 registration fee
MMK 3000 online service fee
Prohibited Goods Diamonds, Crude Oil, Ivory, Arms and Ammunition
Export Licenses Issued by the Department of Trade
Valid for 3 months, extendable by additional 3 months
Customs System Myanmar Automated Cargo Clearance System (MACCS)
SPS Requirements Enforced by various departments, following international standards
TBT Requirements Permits certifying product conformity, managed by the Department Of Research and Innovation

Doing business and exporting to Myanmar means paying close attention to the details. It’s key to stay in the loop with the changing rules and systems. This is how you make it in Myanmar’s lively business scene.

Key Challenges in Myanmar

The business scene in Myanmar is full of hurdles for investors. A big problem is the unstable political situation. After the military coup in 2021, things got worse. The country was already struggling from COVID-19. Now, the kyat’s value dropped and prices went up. This is not good for foreign investors.

Overcoming Bureaucratic Hurdles

Myanmar’s red tape makes doing business hard. Regulations here are complex and unclear, slowing things down. Every year, prices rise by +15-20%. This makes it vital to have simple procedures.

Also, less than half of the roads are paved. This makes moving goods tough, which is crucial for businesses. Companies need local experts to help them understand Myanmar’s rules.

Building Trust and Relationships

To do well in Myanmar, trust and relationships are key. Many people here don’t have good roads or electricity. But, engaging with them is still important.

Businesses should show they are in for the long run. This can really help. Some big companies have left, like Chevron and British American Tobacco. This shows the value of strong local ties for keeping business stable.

Challenge Impact
Political Instability 18% economic contraction in 2021
Inflation Increased to 16% in 2022
Transportation Inefficiency Less than 40% of roads are paved
Electricity Shortages Power outages up to 20h/day
Internet Connectivity Affects mobile and foreign remittances

So, doing business in Myanmar needs careful planning and strong relationships. Knowing and dealing with these challenges is a must for success in this promising, yet demanding, market.

Business Culture in Myanmar

Learning about Myanmar business practices is crucial for success there. Networking and social events are very important. These blend with formality and respect in business dealings.

Networking and Social Engagements

In Myanmar, personal relationships are very significant. A good introduction can lead to a successful deal. Business networks often include friends and relatives, promoting trust.

Golf is a top choice for networking. It helps build strong business connections.

Aspect Description
Building Relationships Third-party introductions are crucial
Networking Activities Golf is popular for business networking
Trust Networks Business networks often include peers and relatives

Local Business Etiquette

Local etiquette in Myanmar highlights respect and honor. At meetings, removing your shoes is a must. This shows respect and cleanliness.

Handshakes can be tricky between men and women. Gifts and business card exchanges are important. They show good manners and sincerity.

  • Shoes off in the office is normal.
  • Giving and receiving gifts shows respect.
  • Talk softly and avoid being loud.
  • Have balanced eye contact to be polite.
  • Show respect for the oldest person in the room.

Myanmar’s business practices reflect its diverse culture and strong Buddhist traditions. The country has its own unique business atmosphere. This is different from its neighboring countries and was shaped by past political isolation.

More integration with the world is bringing change. This includes more modern banking, more women in business, and English in business talks. These changes show a growing global outlook in Myanmar’s business world.

Myanmar’s Bilateral Agreements

Myanmar is keen on strengthening its ties for better economic growth. It has signed several important agreements with other countries. These deals help in boosting businesses and making the investment climate better.

ASEAN Free Trade Area

Being part of the ASEAN Free Trade Area is a big win for Myanmar. This trade deal cuts down tariffs between ASEAN nations, Myanmar included. This step has helped Myanmar mix better with its regional neighbors. It has also encouraged more outside investments. Such moves have lifted Myanmar’s economy, with its GDP expanding at a healthy rate.

ASEAN Free Trade Area

Double Tax Avoidance Agreement with Singapore

The deal with Singapore on avoiding double taxes is a big deal for businesses operating across borders. It ensures that companies don’t pay taxes twice on the same income. This makes ventures between Singapore and Myanmar more appealing. Through this, Myanmar seeks more global investments, adding to its growth prospects.

Myanmar has additional perks for those investing. It gives tax breaks, up to 7 years, based on where companies set up shop. Areas like Zone 3 offer the longest breaks to attract more businesses, especially to underdeveloped regions.

Also, Myanmar has deep investment connections with top players globally. Important nations like the United States, Japan, and China, along with ASEAN members, have agreements with Myanmar. These pacts are designed to protect and support foreign investments in Myanmar. They make the country a bright spot for those looking to expand or start anew.

Conclusion

Doing business in Myanmar is full of complex challenges and exciting possibilities. It’s the 7th largest ASEAN economy, with a GDP of $63.99 billion in 2023. Yet, its GDP per capita has dropped to $1,180, and poverty hit 40% in 2022.

The country’s economic growth is slow at 3% in 2023 due to conflicts, inflation, and lack of electricity. The 2021 coup derailed many economic gains of the past decade. This situation made sectors like garments, tourism, and retail struggle. Now, Myanmar’s economy is more driven by personal connections. Laws have become tighter. In 2022, the Financial Action Task Force marked Myanmar as a high-risk place for money laundering and terrorist financing.

Despite these challenges, Myanmar provides chances for success. Its rich resources, key location, and a youthful population of around 54 million are major strengths. A guide from Dezan Shira & Associates, experts in foreign investment across Asia, can help. For those ready to think long-term, understand Myanmar’s local conditions, and forge strong local ties, succeeding in Myanmar is possible.

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