With the issuing of Notification 15 of 2017 (“Restriction List”) under the Myanmar Investment Law 2016 (“MIL”), retail and wholesale activities by foreign investors are now permissible with approval from the Ministry of Commerce (“MOC”). The MOC has also announced the imminent circulation of Notification 25/2018 on trading and wholesaling activities for foreign investors. This will lay down the framework, guidelines, and required qualifications for these activities in detail. The notification will soon be published on the MOC’s website.
This is a welcome strengthening of the MOC’s positive trend in opening up the economy to greater levels of foreign participation and investment. This builds upon previous developments such as when they permitted foreign participation in the trading of six limited commodities (seeds, pesticide, fertilizers, medical equipment, agricultural equipment and construction material). The MOC has now issued a notification allowing for unrestricted wholesale and retail activities by foreign companies, joint ventures, and local companies (with initial capital exceeding USD 7 million).
All operations of wholesale and retail shall meet the following qualifications:
|Joint Venture Companies||Foreign Companies||Joint Venture Companies||Foreign Companies|
|Investment capital (excluding rental fees) must not be less than USD 2 million.||Investment capital, (excluding rental fees) must not be less than USD 5 million.||Investment capital, (excluding rental fees) must exceed USD 700,000.||The investment capital, excluding rental fees, shall be no less than USD 3 million.|
|The equity ratio for a Myanmar citizen must be no less than 20%.||The equity ratio for a Myanmar citizen must be no less than 20%.|
Provided that an enterprise satisfies these qualifications, it will then need to apply for a Retail and Wholesale Registration certificate with the following documents:
- Incorporation certificate;
- MIC endorsement/MIC permit;
- Recommendation letter from the relevant city development committee; and
- A detailed list of the business plan, location, and initial capital regarding the contemplated retail and wholesale activities.
The following restrictions apply to all Retail and Wholesale operations:
No Myanmar companies, foreign companies, and Myanmar-foreign ventures will be allowed to engage in wholesale or retail activities for products that are prohibited for retail and wholesale under any existing laws, notifications, or regulations.
No foreign companies or foreign joint-venture companies will be allowed to operate mini-markets and convenience stores with a floor area of less than 929 square-meters, including retail activities.
All Myanmar companies, foreign companies, and Myanmar-foreign ventures engaging in wholesale or retail activities must abide by all relevant Myanmar laws, rules, and regulations, and must not engage in any unfair competition practices in the course of selling goods or rendering services.
Through the issuing of Notification 25/2018, the MOC has now streamlined and dramatically eased the otherwise tedious process of foreign investors attempting to actively engage in Myanmar’s retail and wholesale sector. The significance of these recent developments cannot be overstated, and they will be sure to exert profound effects on foreign investor confidence and levels of participation in the coming months and years.
The information provided is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.