As per Notification 15 of 2017 (“Restriction List”) under the Myanmar Investment Law 2016 (“MIL”), retail and wholesale activities are now permissible with approval from the Ministry of Commerce (“MOC”) to foreign investors. The English translation of the Restriction List (non-binding) contains ambiguity, since it states “trading and wholesale services” and not “businesses”, while the Myanmar version of the Restriction List (binding) states “trading and wholesale businesses”. We have also received unofficial confirmation of this position from the authorities at the Myanmar Investment Commission (“MIC”) who informed us that the Restriction List actually states ‘businesses’ and not ‘services’.
Through unofficial communication with the MIC, we were informed that despite the MIL permitting trading and wholesale business, at present, there is no framework or notification from the MOC that explains the qualification requirements in detail. The MOC’s rules or regulations concerning trading and wholesaling activities for foreign investors are yet to be publicized or announced.
During our unofficial call with the MOC, they informed us that the MOC is still in the preparatory phase of issuing rules and regulations for retail and wholesale businesses for foreign investors. The MOC officer stated that the relevant rules and regulations for the retail and wholesale business are under discussion and will be issued to the public (Myanmar wholesaler and traders in particular) at a later unspecified date for their views and comments. The Union of Myanmar Federation of Chambers of Commerce and Industry (“UMFCCI”) is expected to play a vital role in formulating appropriate terms and conditions for allowing foreign nationals to engage in trading and whole sale businesses.
Therefore, it cannot be stated with any degree of certainty what terms and conditions can be expected. However, by looking at previous trends of the MOC, such as when they permitted foreign participation in trading five limited commodities (seeds, pesticide, fertilizers, medical equipment, and construction material), one may realistically expect that a joint venture requirement will be imposed.
Nonetheless, pending the issuing of the above mentioned MOC rules and guidelines, we can still approach the MIC for approval, which will in turn refer the matter up to the MOC. The MOC may impose certain conditions (on a case by case basis) on the authorization of the particular trading/wholesale activity.
We notice that the MIC granted a license to PUMA Energy permitting it to operate a domestic retail and wholesale business for machine oil on May 2017. This indicates that in future, the MIC may accept applications from and permit foreign investors planning to sell machine oil, to engage in such retail trading subject to MOEE approval. In conclusion, we expect that retail and wholesale businesses will be permitted for foreign participation depending on the business activities, once the MOC rules and regulations are issued.
William D. Greenlee Jr, Partner